engage magazine issue 007/\'08 - Page 52

52 ASK ENGAGE Quick Guide HOW TO PART 7 Setting up a social Nowadays there is a great deal of talk about social enterprises and social entrepreneurs. In fact, according to government figures there are approximately 55,000 social enterprises in the UK right now. But what is a social enterprise? In this issue of Engage, Colette Machado defines social enterprise and explores the various options for the set up of a social enterprise. is elected to run the organisation on behalf of the members. They do not need to register with, or be regulated by either Companies House or the Financial Services Authority. If an unincorporated association has charitable objects (or aims), it can apply to the Charity Commission for charitable status and if approved will have to comply with the Commission’s regulations. Limited companies with a social purpose A Limited Liability Company (LLC) has an “objects” clause that sets out the company’s aims or purposes e.g. to regenerate an area or provide employment for people with learning difficulties. If you are a charity, you must have an object that the law defines as charitable, such as relieving financial hardship or promoting education. A LLC must register with Companies House but can also apply for charitable status if the organisation has exclusively charitable objects. A social enterprise is a business which is set up to meet a social objective, not to make money for its owner(s). It can make a profit but any profits made are reinvested into the company. There are several different structures for consideration and the one you decide to use will depend on ownership of the business, the style of it, including other factors. Trusts Trusts are unincorporated companies and are managed by trustees who do not benefit from the trust, but act on behalf of the community for whose benefit it is set up. Trusts have a trust deed which protects their social objectives. This covers the terms under which an individual or organisation is given assets. It also lists the intended beneficiaries and the conditions under which the trust’s assets may be used. Trusts are cost-effective to set up. If a trust has charitable objects and wishes to register as a charitable trust, it can apply to the Charity Commission and will be regulated by the Commission thereafter. Community benefit societies (BenComs) BenComs are incorporated industrial and provident societies (IPS) that conduct business for the benefit of their community. Profits are not distributed amongst members, or external shareholders, but returned to the community. BenComs are run and managed by their members who can apply for charitable status, allowing them to raise capital through public grants and charitable trusts. If approved, Unincorporated associations Unincorporated association status is usually chosen when several individuals “contract” to come together for a common purpose. Unincorporated associations are run informally and cost nothing to set up. A management committee engage | uk ISSUE SEVEN 2008