I often find myself in a situation where I am answering the question ‘so what is the difference between a Social Enterprise and a charity?’ A common question that can cause so much confusion, but it doesn’t need to. Both want to contribute to a social impact, and sustainability is at the forefront of their objectives.
What is a Charity?
I define a charity as a non-profit making organisation, who has a mandate of clearly define objectives that will make a social impact. In the UK you have to be registered with the charity commission and you have to have a board of trustees. The board of trustees are the ones who make the decisions and are the people who make sure that the charities objectives are being met.
What is a Social Enterprise?
A Social Enterprise can be set up to be a non-profit, or it can be for profit, but its overall aim is to solve a social problem. It is run as a business, but it works towards making an impact on someone’s life. Some Social Enterprises are non-profit and they aim to solve a social problem, and they reinvest the surplus into the business to impact another social issue.
The main differences
A charity does not aim to make a profit, and they often fund their own activities through donations as they have no fixed income. A Social Enterprise, on the other hand, can sell products or services with the profits reinvested in their business to continue making a social impact.
You will find, however, that some Social Enterprises are receiving grants or funding when they start-up.
Does it matter?
For me, I have always said that it doesn’t matter whether you are going through the charity route or the Social Enterprise route, as long as you are passionate about what you want to achieve and you are striving to create a social impact.
The differences between the two can sometimes become blurred, especially when they both aim to do a similar thing: help. Whether that be the environment, people or more.
- A charity is very clear about its aims and objectives
- A Social Enterprise does not have to be registered as a charity, you can be a limited company (In the UK)
- A charity has a board of trustees
- A Social Enterprise has a board of directors
- A Social Enterprise can be non-profit or for profit
If you are thinking of setting up a Social Enterprise, feel free to contact me here or on my Facebook group.
If you would rather listen to this advice than read it, check out my YouTube channel to hear about the differences.
My door is always open.