In recent years, social enterprise has gained significant

traction in the United Kingdom. It's a powerful business model

combining profit making with social impact. In this week's

From Creative Passion to Profit, I'm going to be looking at social enterprise,

the different types of models and outlining what they are. And it has

great relevance for creatives who often work

with the social enterprises or run their own, are involved in

the organizations that deliver that social impact while

still making a return.

Now, social enterprise organizations have the objective of

addressing social and environmental issues while

generating sustainable revenue. Now, there are a variety of business

models in the United Kingdom and structures and it's crucial that we have a

good awareness of what those are if we're going to be involved, engage or

support the these ventures. Now, one of the more popular models is

what's called a community interest company, CIC for

short. Now, it's a popular model amongst UK social

enterprises and they are designed to ensure that any

surpluses and profits generated are primarily

reinvested to deliver that community impact or to address and

support the social causes they aim to address. Now, there's nothing

wrong with making profits. Profits are an essential requirement

for any individual and organization to continue to delivering

their why. Now, CICs operate with a specific

community purpose and they must also submit annual

reports on their activities. CICs offer a flexible

structure enabling social entrepreneurs to combine social impact

with a sustainable financial model. As a side note, within

a cic, which is essentially a company, a corporate body,

you can have one that's called limited by guarantee or one that has

shareholding, which can encourage external investment. The

second type of model that exists is a cooperative, or to give it its more

full name, a cooperative benefit society. Now,

cooperatives are also another popular and prevalent UK

business model within the social enterprise sector. Now, these

organisations are owned and democratically controlled

by their members. These members can be employees, clients,

customers or even the local community.

They operate on the principles of collective decision making,

shared profits and a focus on the well being of their members. So

we're going to use that term democracy. You could argue that a cooperative is

a very democratic body. Most of us will come across co ops

in the context of the famous supermarket joint. Now, co ops

often prioritize fair trade practices and promote social

and environmental responsibility. As we delve into

this topic, let's have a look at something called social enterprises Limited by

guarantee. Now, this is a structure commonly used by

organizations in the United Kingdom that reinvest their

profits, whether it's for social, environmental or other similar

goals. These enterprises do not have owners or shareholders

as you might meet in a normal private company. Instead, they have what

are called guarantors who agree to contribute a nominal

amount, typically a pound, in the event of the company no longer

trading or being wound up. Now this structure provides a level of financial

security while also aligning the mission of

the organization with its legal structure. Now while we

continue talking about that, let me mention a few other types of

social enterprise. Now there is the IPS, to give it

its abbreviation, an Industrial and Providence Society. These are often

referred to as cooperative or community benefit societies and

they are a legal structure specifically designed for social

enterprises. Now, IPSs, or industrial and Providence Societies

prioritize the well being of their members and the wider community,

emphasizing the democratic control and and shared benefits. This

enables social enterprises to access various tax benefits and

also funding opportunities available exclusively to

cooperative entities. The last model I'm going to mention, and this is by no

means an exhaustive list, is called a CIO or a charitable

incorporated organization. Now, a CIO is a legal

structure that is particularly suitable for social enterprises that have

their main objective being for charitable purposes. And there is

a legal definition of what a charitable purpose is. Now,

CIOs provide limited liability protection to the members while

allowing them to enjoy the tax benefits associated with charitable

status. So for example, if you are a registered charity,

if you receive donations, it's possible to claim what's called gift

aid, where if somebody gives for example £100, you as

the charity can claim back an extra £25

for from the tax office that's available to charities. It's not

available to the other entities that I've referred to. This structure

of a CIO is particularly beneficial for social enterprises

heavily focused on delivering public benefits and engaging in charitable

activities. Now before we conclude and summarize here folks, let

me also mention a company that's limited by shares. I mentioned it

earlier in the podcast. Now, a company limited by

shares is a common legal structure for social enterprises in the

United Kingdom. Now the concept of limited means means that if there are

problems with the business, with the organization, the individual

owners of that business, their exposure is limited to the

value of the shares that they've acquired. Now, shareholders may or may not

be involved in the mission of the social enterprise. So this structure

allows social enterprises to raise capital from

investors while also maintaining a focus on their social and

environmental goals. So if you do decide, for example, to

structure and set up a CIC limited by shares,

you can have a private investment coming in which would inject

some needed resources into your organization. So what can we

conclude and summarize? Well, understanding the different business models and

legal structures employed by social enterprises in the United Kingdom

is crucial for anyone who's interested in supporting

or starting such ventures. Whether it's through a cic, a cooperative,

or a cio, social enterprises are growing and

shaping a future where business and social impact go hand

in hand. And as my concluding comment here when you do

this, remember the idea of what's called substance over form.

Think about what your future landscape looks like and

design the structure around that. Don't say, let's set up a CIC

and then see if we can make it work. Check out the show notes for

a link. If you need any support and help, or any of these, then you

know where we are. For now. Plan it, do it. Profit.