DEFINING SOCIAL ENTERPRISE IN SCOTLAND
There is currently no legal definition of "social enterprise". A 5-point criteria were formed in 2010 by social enterprise support bodies as an alternative.
Social enterprises trade in many markets - selling goods and services to individual consumers, local authorities, government and private businesses. Social enterprises aim to make a profit just like any private sector business. However, 100% of their profits or surpluses are reinvested back into their social and/or environmental purpose. Social enterprises in Scotland have an "asset lock" on all their buildings, land and other assets i.e. only the community and society can profit from their work. Social enterprises must be sustainable in order to meet their social and/or environmental mission.
The term "social enterprise" shouldn't be confused with private businesses that simply operate in an ethical way, charities that don't do business (or trade very little) or public sector arms-length companies (ALEOs), though some of these may be on a journey as "emerging" social enterprises. The Voluntary Code of Practice for Social Enterprise in Scotland contains the full criteria.
As previously mentioned there is no legal definition. Definitions vary across the world and even within the UK. We believe in being inclusive and appreciating the value of other types of organisation - while being very clear about what we mean by "social enterprise". A robust debate about definitions, within a constantly evolving business landscape, is something we welcome.