Social Enterprise in Focus : FINACOOP, France

Since the recession and banking crisis, consumers have been a lot more proactive in choosing where they shop and what they buy. This has supported social enterprise in its growth and long may this continue! In this blogpost, we want to show you that it’s not only social enterprise products but also social enterprise services that are offer. So we’ve made our way to FINACOOP in France where we spoke to their Director, Mathieu Castaings. It’s well worth the read in both English and French!

Can you give us a brief background as to what led to FINACOOP being established?

As soon as I got my chartered accountant diploma, I started working on the project of an accounting firm dedicated to the Social and Solidarity Economy (SSE). The legal status matter soon arouse and according to me, the most accomplished in terms of democracy and inclusion of stakeholders is the SCIC (Société Coopérative d’Intérêt Général), the French form of a social cooperative. Today, among the members, in addition to the chartered accountants, FINACOOP include also employees, bénéficiaries, and partners. All of them being divided in 5 categories, 2 of which are chartered accountant thereby guaranteeing the valuable independance of the profession. Being a regulated profession, FINACOOP had to subcribe to the Ordre des Expert-Comptables and its registration was… refused! The Ordre des Experts-Comptables considered the SCIC as incompatible with  its professional ethics. An appeal and a political battle later, FINACOOP was finally registered and since July 2016, the cooperative has been rising steadily for the greatest happiness of all and has been progressively generating greater adherence by our beautiful profession.

Le diplôme d’expertise comptable en poche, j’ai travaillé le projet de monter un cabinet dédié à l’ESS. La question du statut juridique s’est vite posée et selon moi, le plus abouti en termes de démocratie d’entreprise et de démarche participative de l’ensemble des parties prenantes est la SCIC (Société Coopérative d’Intérêt Général). Du coup, parmi les sociétaires, FINACOOP d’intègre en plus des expert·es-comptable, les salarié·es, les bénéficiaires et les partenaires. Tout ce petit monde réparti en 5 catégories dont 2 d’expert·es-comptables totalisant la majorité des votes en assemblée générale ; et ainsi garantissant la précieuse indépendance de la profession. Sauf qu’en bonne profession réglementée, FINACOOP a du s’inscrire à l’Ordre des Experts-Comptables, et là c’est le refus ! L’OEC considère le statut SCIC comme incompatible avec la déontologie du métier. Lol ! Un recours et une bataille politique plus tard, l’inscription de FINACOOP est validée ! Et depuis juillet 2016, le cabinet ne cesse de grandir pour le plus grand bonheur de tous et toutes suscitant au fur et à mesure une plus grande adhésion de la part de notre belle profession.

You’re the first SCIC accounting firm, how has this been received by other companies in the industry and the general population?

In a general way, we receive enthusiastic support, as we are the first accounting social cooperative and therefore the ‘trend-setters’. The innovative approach in both in the legal form and our « specialisation » in the SSE is met with a certain amount of enthusiasm. That said, it is true that for people and professionals who are not familiar with the cooperative sector or SSE, that our approach is absolutely incomprehensible. Their entrepreneurial model is far too reduced to the image of a « boss », associates who are exclusively chartered accountants, a pyramid hierarchy, a profession reduced to tax optimisation with some big associations and foundations as clients so as to bring a little extra soul. For sure, setting an example is necessary! And we love the idea!

De manière générale, l’accueil est assez enthousiaste, nous sommes la 1ère SCIC d’expertise comptable et il est vrai, nous faisons figure de précurtrice (précurseur). L’approche innovante tant dans la forme statutaire que dans notre ‘spécialisation’ pour l’ESS rencontre un certain engouement. Après, il est vrai que pour les personnes et professionnel·les très éloigné·es du milieu coopératif et de l’ESS, notre démarche est juste incompréhensible. Leur référence entrepreneuriale est bien trop réduite à un patron, des associé·es uniquement expert·es-comptables, une organisation pyramidale, un métier réduit à de l’optimisation fiscale avec quelques grosses associations et fondations comme clientes pour gagner un supplément d’âme. Pour sûr, un travail pédagogique est nécessaire! Et on aime ça!

What is actually involved in being a SCIC?

It involves having a shared governance with all the categories of members, and making sure that they are able to participate according to their wish. They must be given the opportunity to reflect and participate in the strategic decisions of the firm such as the selection of bénéficiaries, partners, the hourly rate (Currently of 70€ /h) or the remuneration of chartered accountant. Basically every matter that aims to improve the commercial offer, the eco-system as well as working conditions. All of this requires working daily on the position as well as on the collective intelligence and decision making methods which is no simple matter, and it has been a preoccupation since our founding (hiring of an employee dedicated to the cooperative life, training and accompaniment on shared governance). Democracy with everything that goes with it in terms of transparency, power sharing and engagement also requires emancipation and reversing conditioning from a social and psychological perspective. There is much to do!

Cela implique d’avoir une gouvernance partagée avec l’ensemble des catégories de sociétaires, que ces dernier·es puissent participer selon leur souhait et possibilité à la réflexion et aux décisions d’enjeux stratégiques sur le développement du cabinet, le choix des bénéficiaires, des partenaires, le taux horaire (actuellement de 70€ HT/h) ou encore la rémunération des expert·es-comptables et toute autre question pouvant améliorer tant l’offre commerciale, l’éco-système que les conditions de travail. Tout cela nécessite de travailler au quotidien tant la posture que les techniques d’intelligence collective et de décision, ce qui n’est pas chose aisée, et a été une préoccupation dès notre création (embauche d’une salariée dédiée à la vie coopérative, formation et accompagnement sur la gouvernance partagée). La démocratie avec tout ce qui va avec en terme de transparence, de partage du pouvoir et d’engagement nécessite aussi un travail de déconditionnement et d’émancipation de représentation et comportement tant sociaux que psychologiques. Et il y a du boulot!

How do you think being a social co-operative can improve the sector?

For an accounting firm, the advantages of becoming a social cooperative are many. Facing the problems of turnover, people quitting the profession and demotivation, by choosing the cooperative and along with it participatory management should have a significant impact on employee involvement, the desire to work well and perpetuate the firm. The social cooperative makes the general interest even more alive, with an interest that is higher than the sole individual interest. Last but not least, to be in a social cooperative implies a limited pursuit of profit which puts forward the question of a fair wage policy and a more disciplined remuneration for the capital, a delicate issue.

Les avantages pour un cabinet à devenir une coopérative sont à mon sens multiples. Face aux problèmes de turnover, d’abandon de la profession (chiffres) et démotivation, faire le choix de la coopérative et avec cela d’un management participatif et de la propriété collective aurait un gros impact sur l’implication, l’envie de bien faire son métier et le désir de pérenniser le cabinet. La coopérative rend encore plus vivant la notion d’intérêt général de l’expertise comptable. En effet, là aussi et même particulièrement, il existe un intérêt supérieur aux seuls intérêts individuels. Et puis, autre notion déterminante, être en coopérative suppose une démarche de lucrativité limitée ce qui pose la question d’une politique salariale plus équitable et d’une rémunération du capital plus encadrée, point plus que délicat, vous en conviendrez.

What advice would you have for anyone wanting to set up a social enterprise?

I would advise them to consider that starting up a social business means a change of their entrepreneurial paradigm. This does not only mean having a social activity but actually changing the way we all work as a whole, with your community on every floor. There is the project in itself and the way you run it. We are fond of the idea that “the ways prefigure the end” rather that “the end justifies the means”. It also requires a strong financing plan and a system that puts the human being at the very centre, yourself, employees, partners, or the neighbour above. This requires a certain exigency which demands us to rethink our priorities, time management, emotions and ask ourselves about power and money sharing.

Je leur conseillerais de considérer que créer une entreprise sociale c’est changer de paradigme entrepreneurial, ce qui ne veut pas juste dire avoir une activité sociale mais belle et bien changer la façon dont on travaille dans sa globalité, avec l’ensemble des parties prenantes à tous les étages! Il y a le projet et la manière de le mener. Nous sommes adeptes de l’idée que “les moyens préfigurent la fin” plutôt que “la fin justifie les moyens”. Une démarche sociale efficace et pérenne nécessite tant une gestion et un plan de financement solides qu’un fonctionnement mettant l’humain au centre, soi, les collaborateur·rices, les bénéficiaires, les partenaires et la voisine du dessus. Cela demande une certaine exigence et cette exigence demande de revoir nos priorités, de revoir notre gestion du temps, de nos émotions, et d’interroger le partage du pouvoir et de l’argent !
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When you’re shopping for both products and services, check to see if there’s a social enterprise that offers the same, as then you’ll know what you spend is being invested and reinvested in social good.

Social Enterprise in Focus : Auara, Spain

We took a break from blogging in August. Now we’re back with a splash, quite literally, to talk to you about this social enterprise from Spain – Auara.

A twist from the traditional bottled water

‘The water with values’ has taken quite a huge step forward by placing itself as a social enterprise selling bottled water. Auara reinvests 100% of its dividends in providing safe drinkable water to those who need it as well as watching their environmental impact by using only bottles made from recycled plastic. The water itself is ‘homegrown’ from León in northwest Spain.

Furthermore, they don’t simply donate their profits to NGOs working in the field of safer water. Instead they involve themselves and work with local partners, providing them with co-financing. This way they can be there on the field, be a part of and see the social impact first hand. This allows them to be more confident and transparent when reporting to others.

Social and environmental impact

You may have heard that some companies are water grabbing or getting concessions on underwater reservoirs. Sometimes even underneath populations who don’t even have access to clean drinking water. Well here is a social enterprise working to provide everyone with access to that very thing. You can even stock their water if you want to or become an ambassador, so find out more on their ambassador page.

Social Enterprise in Focus : Electra Energy, Greece

Greece has been in the news far more than it probably wanted to over the past few years. Everyone knows about the beauty and history of the great country, however recently the focus has been on the economy and refugee crisis. In response to this, a number of initiatives have started, and the social enterprise sector has taken off. We managed to talk in-depth to Ignacio Navarro, general manager of the social co-operative Electra Energy, a Greek cooperative enterprise that focuses on the development of renewable energy social investments, aiming to produce, manage and commercialise renewable energy to it’s members and other communities.

Why and how did you start Electra Energy?

Back in 2016, the team of Electra worked together to set up investment plans for residents and farmers communities of the Region of Lamia (a rural town in Central Greece) aiming to replace their oil burning furnaces with biomass systems that burn leftover olive trees cuttings to produce heat and hot water. As a result of this promotion, the Municipality proposed the development of the first bio-energy school community of the Region, turning the old oil boiler into a biomass combustion unit, and engaging the local community to clean their forests and provide their feed-stock to the school. The project served as inspiration to the founding members in the ambition of setting up a legal enterprise and promote initial services, technical consultancy and networking.

Electra Energy was thus launched in September of 2016, and the main purpose is to create job opportunities through the promotion and development of collective investments on renewable energy. Electra forms part of an Eco-system of social enterprises related to the promotion of sustainable energy, and it is co-partner of the organization SEYN (Sustainable Energy Youth Network) a non profit organization established in Belgium, who act as a mentoring and educational body for new entrepreneurs interested on the promotion of sustainable energy transitions.

What legal form did you adopt and how does this help or hinder you?

In Greece there are many different cooperatives enterprises which operate under different frameworks and operational rules. Electra Energy Cooperative was launched as a “KoinSEp -Koinonikes Sindeteristikes Epixiriseis N4430/2016”, defined as an economic, business, productive and social activities undertaken by companies or associations, whose purpose is the pursuit of collective benefit and service general social interest.

Compared to other existing frameworks, this legal form is the most flexible and involves less financial and legal risks to its members, a fact that was crucial during the constitution since the founding members wanted to test the business approach by running the minimum cost and risks at least during the initial steps, and it was also the form requiring less amount of administrative work and time for it’s constitution.

What are the social and environmental goals that get funded through your profit?

Our goal is to find collective investments to develop and produce renewable energy in Greece, and to be able to be launched as an energy supplier to compete in the local markets, always aiming to the social added value of giving open membership, participation and support to new and existing members.

During the first ten months of operation, we have focused on community engagement, networking with potential stakeholders, and identifying project opportunities that align with the principles and objectives of the organization. Right now the cooperative is initiating the permiting process for a small wind turbine in North Greece and participating in the legal work to allow better legislation to allow an investment on solar self consumption for multiple tenants.

The cooperative aims it’s economical activity to grow and attract social investments based on the principle of “renewable energy as a common good”. A common is a shared resource managed by a community who create rules to make the resource durable. The resource cannot be monopolized by one or a group of individuals. We aim to create business models that preserves these principles while contributing to create innovative and smart products and services to improve the quality and efficient of the Greek energy market. Electra Energy business activity aims to be aligned with three basic principes of the cooperatives enterprises (International Cooperatives Alliance): Fair and Easy Access to Common Goods, Energy Tranition in the Hands of Citizens and Fair Supply.

How have you managed to cope through this difficult financial time?

First steps are never easy and specially for a new enterprise. We also find obstacles in working with public authorities and speeding up licensing processes for the development of first projects that could bring us income. Out of the 9 founding members, 4 are unemployed, only one is part time employed in the cooperative and all the rest work on volunteer basis. However, from the beginning we all planned a two year grace period until we expect any substantial incomes that could cover at least some full time jobs within the organization. We currently have support from a German social investor, a lady aware of the Greek situation who liked our model and ambition and decided to cover some of the operational expensive until the cooperative can become self sustainable from it’s activities.

What advice would you have for would-be social enterpreneurs?

If there is anything I had to choose to say to them, (it would be to) work with people you like, have fun doing what you do, even if the idea is full of risks, always ask for help and advice but most importantly, don’t listen to all advice. Taking risks is a part of the activity and social entrepreneurship is full of risks and unknown paths. We may find that sometimes people tell us that what we are aiming to do is not possible, but it is, so remember to be open to advice but, always learn to trust your gut.

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A special thanks to Ignacio for a very informative interview about Electra, providing us with a few links to find out more about commons and the International Co-operatives Alliance. Feel free to join the SEYN network as well if you are involved in the field of sustainable energy.

Social Enterprise in Focus : New Leaf, Cambodia

Siem Reap, Cambodia holds a very special place in our heart as Michael spent 20 months working and volunteering there. He will never forget the huge smiles of the locals, the connection to nature, the rainy and the dry season and the friends he has there. Siem Reap is quite a hub when it comes to social enterprise, with a few examples dotted in and around the town.

One of these is New Leaf, a restaurant in Siem Reap that was established to provide financial support to charities engaged in education in Siem Reap province. It was set up solely for this reason as Ian & Georgina (the founders) had no other reason to establish a business here. We caught up with Ian to find out more:

Cambodia is a developing country, what’s the legal situation for social enterprise and how do you work?
As no legal framework exists for social enterprises in Cambodia, New Leaf was established as a sole proprietorship. As such New Leaf incurs tax as a normal business would. Setting up as an NGO was not an option as the primary activity of New Leaf is food & beverages, with only occasional direct engagement with those in need.

So what makes New Leaf a social enterprise?
New Leaf donated 100% of its profits to local charities until end 2016. Now New Leaf donates 30% to charity and 20% is shared by New Leaf’s Khmer staff. To date New Leaf has donated around US$40,000 to 15 charities.

What were the initial steps in starting the business and how does it run now?
Georgina and I worked on a business plan to assess the financial viability and subsequently the restaurant was fully financed by myself, Georgina and Eugene (a friend of mine). The idea was to create a business that was run by Khmer (Cambodians) to help Khmer. Neither myself nor Georgina planned to stay in Cambodia though – so we planned to manage it from overseas with periodic visits.

What challenges have you faced since setting up?
As a social enterprise, New Leaf operates as a responsible employer (fair wages, staff training etc) and champions environmental responsibility. Finding the optimal balance between these responsibilities and maximising its impact through profits adds to the challenge of being successful as a restaurant.

For example, the minimum compensation levels at several charities are significantly higher than a standard waitress wage. Therefore the decision to pay 20% of profits to our staff was (in part) driven by this.

What advice would you offer social entrepreneurs?
My advice to social entrepreneurs would be to focus on the business side first. If you are successful as an entrepreneur, then your ability to deliver social benefits is significantly improved. Before we opened I would say “if New Leaf loses money then we are just a loss-making business with no social impact.”
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Another example that no matter what your business is, it can be a social enterprise with the right planning and goals. As Ian said, making sure your idea is financially viable is so important, and we can work with you to test your idea. Lots of people have big hearts, but we need to make sure the business head is there too.

Interview with Michael Freer, founder of ensoco

ensoco wants to build both a local and international presence and support social entrepreneurs wherever needed. However, as with any legal entity it has to have a base somewhere, and therefore was founded in Split, Croatia by Michael, a British national.

Split currently has an underdeveloped social entrepreneurship scene and therefore ensoco has been working with local partners in promoting and developing the sector. More recently, ensoco founder Michael attended Shift, a conference that focuses on professionals and businesses in the IT sector, to network and learn about how they’re actively promoting the sector and to share experiences.

ensoco is now working closely with startup.hr to encourage more startups to Split, and in turn hopes to see more role models and mentors that can encourage people to develop their own business ideas here. Here’s Michael giving a bit more information about why you should come to Split, with your idea and see what you can develop in this beautiful place on the Adriatic coast.

How socially responsible is your organisation?

At the same time as the social enterprise sector has risen, so has corporate social responsibility. Some people see the value in it, and recognise the great work being done, whilst others say it’s a token effort by companies trying to appear to be more socially or environmentally aware.

While this argument continues, there are various ways for companies to improve their social responsibility. So what about your organisation? Here we list a few examples of how organisations can start and continue to be socially responsible.

Donations + Sponsorship

Probably the most common way that organisations support their community, you may see company names appear at locally organised events such as fairs or fetes. Some NGOs also have regular corporate donors.

Implementing inclusive and equal HR practise

What’s the difference between your lowest paid and highest paid? How diverse is your company? Is there a gender pay gap? Different countries are tackling these in different ways by regulating companies, but certain companies are already publicly reporting on these areas.

Corporate Volunteering

Aside from money, hands and knowledge are also needed by the local community and NGOs, which is why some companies provide a match service. They may encourage employees to volunteer regularly, say once a month, whilst being pay, some also match any donations their volunteers raise, and finally other companies offer pro bono services which NGOs sometimes can’t find the funds for.

Certification

A few organisations go the whole hog and work to become social enterprises by following standards, such as BLab or Wirkt. Whilst others still need to meet their shareholders needs first and instead get certain international standards like SA8000 or ISO14001 to show they are acting in a socially or environmentally responsible way.

These are just a few examples of what organisations include in their corporate social responsibility strategy to work towards more socially and environmentally sustainable organisations. If you’re interested in finding out other ways, get in touch!

Social Enterprise in Focus : Balloon Ventures, UK

In this post we will learn more about Balloon Ventures, a social enterprise based in the UK with overseas operations, thanks to Jade Rogers, who recently volunteered for them in Kenya as part of ICS.

So Jade, tell us a bit about Balloon Ventures?
Balloon Ventures exist to support the growth and development of micro businesses and small-scale entrepreneurs to ultimately create sustainable development in Kenya, Ghana, Uganda and the Philippines. They achieve this by up-skilling entrepreneurs through business and financial training as well as offering them the opportunity to pitch for an interest-free loan to support their business.

Excellent! So what did you do during your volunteer placement?
My placement started off with a full week of curriculum training which we were to learn and later share this knowledge with our group of entrepreneurs. The curriculum mainly encourages you to think about business in a different way, looking at everything from entrepreneurship to creativity, innovation, added value and finance.

After an intense week of this training, we met our entrepreneurs. These were the 5 people we were going to be working alongside over the next 7 weeks, the people that were openly welcoming us into their lives and their businesses for support. My team consisted of a salon owner, a poultry farmer, a start-up hoping to create and sell fish aquariums, a fruit juice seller and a start-up hoping to have a successful dog-breeding business). There were a great variety of businesses and skills in my team and to me that was one of the positives of Balloon Ventures – the programme applies to variety of people.

We spent a good week getting to know each of our entrepreneurs individually, their businesses, their likes and dislikes and we quickly built a friendship with each of them.

From week 3 the programme began to get pretty intense, right up until the final week (week 8) with the entrepreneurs. We were required to spend 8 hours weekly with each entrepreneur working on their business and their pitch documents (a 30-page business plan that was needed if they were to pitch for a loan at the end of the programme). A lot of admin, idea testing, customer research, finance, data collection and even more admin happened within those weeks, all leading up to our final week with them.

Four of my entrepreneurs were pitching for the loan – granted this was not their priority, each of them joined the programme for the skills and free training that was available to them, this was an unheard of opportunity in their community, but the loan would be a nice bonus to boost their business. On that final week we ran through every detail in their pitch document with them, created our own public speaking workshop for them and made sure they felt fully confident to go forward in front of the pitching panel. I also happened to be on the pitching panel (for other entrepreneurs) and got to see the creativity and hard-work committed from everyone else on the programme. After an absolute rollercoaster of a week, the panel put forward their recommendations to Balloon’s loan officers and we held a farewell event with our entrepreneurs before leaving Nakuru.

That does sound pretty intense, but impressive at the same time. What were the main challenges facing entrepreneurs?

From working so closely with our entrepreneurs for 7 weeks, their challenges became our challenges and it was our role to provide solutions for them. A lack of capital was an obvious challenge for most business owners and start-ups in Nakuru, but from completing this programme it became apparent that their biggest challenge was the lack of business education and opportunities available to them. There is a huge copycat culture in Kenya – walk down any main street in any urban city there and you’re bound to find at least 5 – 10 of the same M-Pesa stores, phone shops, shoes shops and even pharmacies, not to mention the vast amount of tuk-tuk drivers all competing with each other for your service.

What the entrepreneurs needed most was the knowledge to increase their value proposition and to thoroughly understand the needs of their customers. I believe this is the most valuable and sustainable lesson the Balloon curriculum teaches the entrepreneurs throughout the programme.

That’s a great insight, and one that we’ve seen across the world. Finally, what did you learn about entrepreneurship during your placement?

I learnt to look at entrepreneurship in a different way. I learnt how important failure and risk taking is to the success of any business idea. Creating an idea can be easy, replicating existing businesses is also easy, but for a business idea to be original and to succeed, a fear of failure can’t be present. It sounds so simple but once implemented it can be so effective.

Aside from this, my team taught me the value of passion and dedication within entrepreneurship – when those failures took place and things didn’t go to plan for us it was their passion and dedication that made us start over with a fresh outlook.

Some excellent tips for any of our ‘wannabe’ entrepreneurs there Jade, thanks.

What struck us after interviewing her was the similarities shared around the world, especially in areas where there is a lack of business education or coaching. Balloon Ventures certainly help to fill the gaps, and we also aim to support this, albeit mainly for social entrepreneurs. Finally, as Jade mentioned at the end, failure often stops people trying, but if you look at any of the successful people in the world today, they all have experienced failure at some stage, and may do so again in the future. The key is to never give up, and learn from your mistakes.

Legal entities for social enterprise

Last blog post we explained how the definition of social enterprise varies greatly, and the rules in each country usually also change. Therefore we thought we would go a bit further and show you an example of two legal forms of social enterprise.

In the U.K.

The first is the “Community Interest Company”, a legal form of business that has existed in the United Kingdom since 2005. As of March 2017 there were more than 13,000 CICs on the register (CIC Association), quite a small number in our opinion when you consider it has existed for 12 years. That said the idea of being able to set up a legal social enterprise is fairly unknown, and something we hope to share.

As a CIC you can set up in a number of different ways – such as limited by shares or by guarantee, just like a ‘normal’ company. However, there are three additional rules. Please note we’re giving a basic overview, so for more information you can head to the Government website about social enterprise.

Firstly, you need to make a community interest statement. This sets out what activities you will carry out as well as who your beneficiaries are. You also have to state how your company will make a surplus.

Next, you have to ensure there is an asset lock, so that 65% of your profits are reinvested in your social or environment goal.

Finally, you have file a community interest report to demonstrate that you are meeting what you set out in the statement.

As you can see, the rules aren’t too detailed, making things fairly straightforward to understand and set up.

In the U.S.A

The other legal form we are showcasing today is the Benefit Corporation. This legal entity started in the United States (though not all states!) and now exists in Italy and soon in Australia. Please note that a Benefit Corporation in the legal sense is different to BCorp, a certification process we will look at another week.

Benefit Corporations enforce the idea that decisions should be made for the benefit of all stakeholders, not just shareholders, so goals other than profit can be considered. It has made it a key legal element to consider stakeholders. This is written into the constitution into the corporation making it essential that operations produce a public benefit.

Also, there is a large element on reporting around transparency, therefore carrying out an annual public benefit assessment report. This shows both internally and externally what you are doing and can be used as evidence to prove you are a Benefit Corporation, for example to investors or courts. This must be audited by an external independent standard. Most states require this to be publicly and openly shared.

Since legislation can vary from state to state, it’s important you check what applies to your state here.

For both countries, you can choose to start as one or you can convert to one. Please review the websites linked above for more information. Legal forms do not exist in every country yet, but there is definitely a strong movement across the world to create something that will not only promote social entrepreneurship but provide a legal framework for them.

What actually is a social enterprise?

It’s a question we often get asked, and it’s never an easy answer.

That’s not because we don’t know, but because depending on where you are there are normally different ideas of what exactly constitutes a social enterprise.

Let’s start with some generalisations to get the ball rolling anyway:

  1. A social enterprise must be transparent and open. Social entrepreneurs effectively put the way they act into their organisations – or they should do.
  2. A social enterprise should have a triple bottom line. This involves having social, environmental and financial goals and making sure they’re all taken into consideration when making business decisions.
  3. A social enterprise should make some money through trading on the open market. If all your money comes from government grants or contracts, then you may not be a social enterprise – more of an charity or NGO.
  4. A social enterprise has to reinvest a proportion of its profits into its social/environmental goal. This doesn’t mean reinvesting it into the business and buying yourself an Aston Martin Vanquish though.

Whoever we speak to in the social entrepreneurship sphere, they always provide us with those four themes. If we take a closer look at some areas, you will see how the definition varies from person to person, organisation to organisation and country to country.

  1. In some countries, social enterprises must publicly report on their social and environmental impact, as well as their financial accounts. They must engage all stakeholders in decision making and have open membership.
  2. In certain countries, you must explicitly state what each of your goals are (for people, planet and profit) when setting up, in others you have to have one main goal, be it environmental or social, and not be too clear elsewhere.
  3. We have seen that the percentage of money coming from trading changes from country to country. Some stating a minimum of 25% gives you social enterprise status, others 50%. There’s normally special dispensation for start-ups or NGOs converting over though.
  4. This has the biggest range. In Croatia, their strategy states 75% of profits should be reinvested, in the UK CiC’s (social enterprise legal form) is 65%, and the scale goes all the way down to not stating how much of your profits should be reinvested.

Furthermore, and outside the general rules, some countries state you must employ people from vulnerable groups to qualify and others state the government can never be the owner of a social enterprise.

Now you have a bit more insight into the complexities we sometimes face in explaining, but there are a few organisations trying to make things more precise and clearer, which we will discuss next time.

Social Enterprise in Focus : VITA ANST, Croatia

This week we head to Split in Croatia to meet a local social enterprise.

Social entrepreneurship is a growing concept in Croatia. In 2015 the government launched a five year strategy which aims to develop and promote social enterprise across the nation, creating it in partnership with some key players such as ACT Grupa and CEDRA HR. A number of initiatives over the last couple of years have seen more funding opportunities for start-ups, which has also enhanced the reputation and knowledge of existing social enterprises.

One such social enterprise (in this case a social co-operative) is VITA-ANST. Founded in 2009, they have experienced ups and downs over the years, nevertheless they continue in their commitment to support people with addictions. They run both an NGO (ANST 1700) and the social co-operative to enable them to run support programs as well as work in the rehabilitation and reintegration of people recovering from addictions. The social co-operative produce bright and colourful souvenirs for the tourist market, as well as bespoke frames for pictures or posters for the home.

We caught up with Gabrijela Frakić, Vice President of the NGO, to tell us more about VITA-ANST.

Why did you decide to open a social enterprise (socijalna zadruga)?
From the very beginning we offered therapy in the form of art and craft. Through this we realised we could create a self-sustainable model and therefore the need to open a social co-operative arose. It enabled us to separate the business (in terms of product placement) and social activities. It also meant it was easier to promote and sell things since at the time it wasn’t possible to do this through NGOs.
 
What has been the most difficult thing in running a social enterprise in Croatia?
There are a few current issues regarding social co-operatives generally in Croatia. There isn’t a defined status of social co-operatives in the tax system and furthermore there’s a general lack of support from local administration. In addition to this there is insufficient knowledge of social entrepreneurship generally. Finally, there’s a lack of development support such as training or workshops around capacity building and there aren’t many financial tools available for market expansion.
 
What advice would you give to individuals thinking of opening their own social enterprise in Croatia?
In terms of a co-operative, make sure all members have common interests and there is someone who can lead or manage everything with excellence and professionalism. Then, with the right vision, there are possibilities out there but you have to persevere and learn how to deal best with external issues such as the legal and economic situation. Finally, whether you offer a service or a product, ensure you are always improving the quality of what you offer. It may be slow at times but it will enable you to expand and reach wider markets.
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In our next blog post we’ll be explaining more about what a social enterprise is.