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Social enterprises have been around for many years, starting in the UK with mutual societies and co-operatives. More recently, social enterprises have focused on social and environmental issues, with entrepreneurs creating businesses that directly benefit the community, the environment or disadvantaged groups. Fiyaz Mughal OBE has played a significant role in establishing social enterprises both in the UK and around the world. As director of the social enterprise Faith Matters, Mughal works to reduce extremism and to improve interaction and discussion between faiths.

The Purpose of Social Enterprise

Social enterprises exist in order to solve a specific issue or improve social or environmental conditions. Social enterprises set themselves a mission, which is detailed in their governing documents. Generally, social enterprises are funded through trade, and the majority of the profits made will be put back into the business or project.

Creating a Social Enterprise

In many cases, social enterprises are founded by people who have a strong desire to make change – in the world, in their community or to the environment. Often, the founder of a social enterprise will go against the establishment, breaking the mould to find a way to achieve their goals.

Is a Social Enterprise a Charity?

Although there are many similarities between social enterprises and charitable organisations, there are also many differences. Put simply, a charity would have to make changes to how the business generates income, focusing more on trade than donations or grants, in order to be considered a social enterprise. Similarly, ethical businesses share many qualities with social enterprises, with the main difference being their core values; a social enterprise is working towards a specific social or environmental issue goal, whereas ethical businesses simply aim to limit their impact on these issues.

Starting a Social Enterprise

There are several very successful social enterprises in the UK that have become big brand names, including The Big Issue, Café Direct, Divine Chocolate, The Eden Project, and Fifteen, Jamie Oliver’s restaurant chain.

There are many ways to set up a social enterprise, and there are also several legal structures to choose from. Traditionally, social enterprises were mostly either the industrial and provident society or the company limited by guarantee. More recently, the Community Interest Company (CIC) was introduced as a new legal structure, which has made easier than ever to establish a new social enterprise.