Main heading

Social Enterprises have three common characteristics:

Enterprise Oriented: they are directly involved in the production of goods and services and the provision of services to a market. They seek to be viable trading concerns, making a surplus from trading.

Social Aims: They have explicit social aims such as job creation, training and provision of local services. They have ethical values including commitment to local capacity building. They are accountable to their members and the wider community for their social, environmental and economic impact.

Social Ownership: They are autonomous organisations with a governance and ownership structure based on participation by stakeholder groups (users or clients, local community groups, etc) or by trustees. Surpluses are distributed for the benefit of the community.

The following framework has been devised in the Northwest of England to judge whether an enterprise meets these characteristics:

Enterprise Orientation

• Most recent audited accounts showing receipt of earned income through contract delivery, sale of goods or services.

Social Aims

• Statement of social aims and objectives in the governing document of the organisation (memorandum and articles of association, trust deed).
• Proof of activities or delivery of services to fulfil a social aim (Annual Report or Social Accounts)
• Statement in the governing document that the enterprises assets are held in trust for the constituency or community it serves and not to be sold off or distributed to workers, directors, members or other groups of stakeholders.

Social Ownership

• A democratic structure of governance shown in the governing document of the organisation which demonstrates independence and determines that the majority of seats on the governing body rests with representatives elected from the community of interest, geographical community, consumers of the organisations services or client groups.
• Accountability to the membership and to the wider community demonstrated by accounting for the organisations activities.
• A statement in the governing document preventing distribution of profits to members of the governing body other than any distribution of profits to which they would in any case be entitled as an ordinary member of the social enterprise (other than as a payment for work done for the organisation or for out of pocket expenses).

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