What is the Social Economy?

Definition:
“The part of the economy between the private sector and the public sector which engages in economic activity in order to meet social objectives and is now recognised and revered to as the third sector”. Or to put it simpler: A community group which provides a service within the community and is delivered by the community for the benefit of the community and any profits generated by the enterprise are retained within the community.

Examples of Social Economy

Role of Social Enterprise
Social economy enterprises are businesses that trade in the market place in order to fulfil economic and social aims, which bring people and communities together for indigenous economic development and social benefit whilst maintaining three core values, these being  an enterprise focus, social objectives and community ownership.

Enterprise Focus
This is the term which describes the provision of a product or service into the market place through a viable trading concern, which is usually a company limited by guarantee. Any profits that are generated from the sale of the goods or service are re-invested back into the business. A social enterprise differs from a private or public company in that business directors receive no financial gain from any profits made. When a business has an enterprise focus, its objective is to become self-sufficient and economically sustainable and not grant dependent.

Social Objective
This refers to the driving force behind the establishment of a community business, and means that an explicit social aim is addressed. Social aims can be to create employment opportunities in a community which suffers from high unemployment, or to provide training opportunities and capacity building for individuals who need to improve their skills in order to return into the labour market or to provide an essential service within the area. Examples of essential services could range from a crèche to meals on wheels or conciergefor the elderly.

A social objective also encompasses ethical values, responsibility for the environmental impact of the project in terms of preservation of natural resource and protected buildings, pollution or litter control. In addition a social objective usually generates from a negative consequence for example a high rate of vandalism caused by youth in an area, this problem is recognised and addresses by the provision of a youth club in the community. This in turn may create positive opportunities for the youth.

Community Ownership
This describes an organisation with a governance and ownership structure based on the participation of stakeholders. This can be simplified as an organisation ran by the people for the benefit of the people. It also advocates that no individual personally benefits from the business, especially directors as all profits are put back into the business and are used to provide additional services to the product portfolio of the business.

Structure of a Social Economy Enterprise
Social economy enterprises are governed by a board of volunteer directors who have set up  a company limited by guarantee and may or may not have acquired a charitable status  and operate as employee-owned businesses, credit unions, co-operatives, development trusts, community business, social firms, intermediatelabourmarket companies or charity trading arms.

Employee-Owned Businesses
This is a group of persons from a particular occupation or trade who share ownership, distribute responsibility and encourage a collective sense of ownership and responsibility for a business that they all work in and manage. Basically an employee owned business is owned by the people who work for it.

Credit Unions
Credit Unions are one of the oldest examples of a social economy enterprise. They are financial co-operatives established to provide savings and affordable loan schemes to persons connected usually by geographic area and are directed and controlled by a volunteer Board of Directors.

Co-operatives
These are businesses that are owned and democratically run by individuals with a sense of shared need and a sense of common purpose. They can be defined as structured for members by members and provide benefit for members. This structure usually evolves from a focus to protect local employment opportunities and are most commonly found in the agriculture sector, e.g. farming co-operatives which have extended into other sectors such as retail, banking, insurance, travel, housing and caring services.

Development Trusts
These are umbrella organisations which are community orientated with representation from all levels of the wider community. Their governing board is usually made up of a mixture of people, for example community representatives and local business people. Development trusts are usually concerned with property regeneration, development and management, community development, business opportunities, environmental improvements and trading subsidiaries.

Community Business
These are trading organisations which are established, owned and controlled by the local community which focus on local development and aim to create self-supporting jobs for local people; however, a community business may be defined by either geographic location, shared interest of a minority group over a wide geographic location.

Social Firms
Social firms are the creations of a supportive training and capacity building environment with a disability or for individuals who may have difficulties entering the main stream labour market with a long term view to becoming economically independent.

Intermediate Labour Markets
These are established to give fixed term employment contracts to the long-term unemployed providing work experience, training, acquisition of skills, personal development and job searches which enable individuals to re-enter the mainstream labour market.

Charity Trading Arms
These are subsidiaries of a social economy enterprise which trade in the market place as commercial entities enabling charities or voluntary groups to meet their objectives in innovative ways. Examples include restaurants, museums or high street outlets. The most recognised trading arms are sub units of Oxfam, Vincent de Paul and local hospice outlets.