An introduction to trading and social enterprise

Rate this page

Rating statistics for this page

3.0 out of 5 from 70 votes

Breakdown

15 votes

14 votes

12 votes

15 votes

14 votes

Many non profit organisations look to develop income through some form of trading or social enterprise activity.

Definition of a social enterprise

Although not a legal definition, there is a consensus that a ‘social enterprise’ is a business:

• that operates primarily for social (including environmental) purposes
• where trading is the main source of income
• here the surplus is primarily reinvested for that social purpose in the business or the community in which trading is the main source of income.

See our guidance on setting up a charity for further information about types of social enterprise.

Introduction to trading

Some organisations cover many of their costs by generating revenue from their mission knowing that their clients will be unable to pay for their services at full cost. Other organisations have services free at the point of delivery (hospices, for example) and use trading as one element in a spread of income-generating activities to cover all their costs. In the last of these, their trading activities can be quite unrelated to their charitable activities and might include shops selling donated goods, Christmas cards, branded goods etc.

Look at NCVO’s Good guide to trading: getting ready for enterprise it covers the different types and extents of trading activity, the differing legal entities involved and the organisational planning entailed.

BluePrints for Enterprise is for you if you are new to social enterprise. The tool guides you through some of the demands of commercial life. It helps you think about your asset base, how you fit into the market and how you use resources. The guide is free and produced by Training for Life.

Top tips for trading

Do not confuse selling a few branded items as part of awareness raising with starting a full trading activity. The latter will require new/different skills and resources.

Take time to find out and learn from the experience, successful and otherwise, of other organisations.

Consider collaborative working to shorten the learning curve and spread the risk.

Source: Published with permission from Cass Centre for Charity Effectiveness. This material is taken from "Tools for Success: doing the right things and doing them right", published in June 2009. Download or buy your copy from Cass Centre for Charity Effectiveness.

People who are trading

Travel2Give operated as a high street travel retail business. After working with a local children's charity their priorities changed and now they are registered as a Community Interest Company. They sell holidays and work with travel operators to donate money to their charity partners. Read the Travel2Give case study.

TheGivingMachine was set up as a company to generate  donations to charities and schools through online shopping. Along the way they learnt a lot of about the attitudes of fundraisers and focussed their attention on the giving rather than the taking. Read TheGivingMachine case study.

Useful links

• Social enterprise information (Office of the Third Sector)
• Social Enterprise magazine
• UnLtd: supporting social entrepreneurs
• Corporate structure for charities factsheet: about different types of corporate structures including CICs. Produced by Law Works
• Charitable entities factsheet: what different types of entities (registered charities, CICs etc) can and can't do. Produced by Law Works.

Have your say

Share your experience of trading / operating as a social enterprise on the Trading and shops forum.