‘Social enterprise’: does the definition need tweaking?

Third sector minister Angela Smith thinks so. Speaking at a Labour Party conference fringe event yesterday, she acknowledged that the current definition is “pretty broad” and in her view requires “a bit of tweaking” in order to address  some criticisms “on the left”.

In 2002, in its first social enterprise strategy, Social Enterprise: A Strategy for Success, the government defined social enterprise as:

“…a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners.”

This definition has been reiterated in each subsequent social enterprise policy document, including 2006’s Social enterprise action plan: Scaling new heights.

Interestingly, however, the Office of the Third Sector now also adds:

This means organisations that trade goods and services and use the majority of their profits for social and environmental goals.

How we define social enterprise has a critical impact on shaping wider attitudes towards, and expectations of, the sector, and OTS’s addition puts a necessary emphasis on trading and earned income, which surely are at the heart of social enterprise. Our definition/s should reflect this.

But perhaps more importantly, I think that any meaningful redefinition of social enterprise will also eventually have to address the issue of  proportion of income earned from trading. Many in the movement have already adopted a sort of ‘unofficial’ benchmark of 50%-plus income from trading to explain the kind of social enterprises they wish to support.

While the desire for a more inclusive ‘broad church’ definition of social enterprise was well-intentioned, I think it is now evident that in some respects it has made it harder rather than easier for people to understand the sector.

Revisiting the definition seems a necessary part of the current debate about awareness, profile and understanding of the sector. After all, if we can’t agree on how we explain social enterprise to ourselves, how can we explain it with clarity to anyone else?

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