On Friday, I read a short piece by Laurence Demarco, founder of Senscot, the network for social entrepreneurs in Scotland. Demarco – a popular figure in Scottish social enterprise who should probably be better known south of the border – is worried that the government seems determined to widen the definition of social enterprise to include anything it wants.
He is also concerned that a lot of profit-making businesses want to call themselves social enterprises because it sounds good and it helps them win business from local authorities. In the most worrying recent example, Andrew Lansley, the health secretary, decided to invent his own definition of social enterprise that includes government-owned organisations such as NHS foundation trusts.
Demarco’s problem with this is that this leaves the social enterprise sector open to public corporations, private enterprise, Uncle Tom Cobbleigh and all. Already, lots of people are calling themselves social enterprises even though they aren’t. Others are dithering about whether they are social enterprises or not.
As support grows for social enterprises, it becomes more and more useful to become one. And it becomes more important that the term is more clearly defined. Fortunately, there is already a reasonably clear definition of what social enterprise is: you can’t distribute the majority of your profit, and you must do something socially beneficial.
Any business that doesn’t meet that definition shouldn’t call itself a social enterprise.
Not that it’s a bad thing to distribute your profit. There are plenty of socially-focused businesses out there that do, and in many cases, this is a more sensible model. It’s one which can attract growth capital more easily – and obviously a bigger business can do more good. Also, if an entrepreneur has to risk his own capital to get a business up and running, he should be entitled to a reward when it works.
But they aren’t social enterprises. They should just be called something else. “Social business” is the term Demarco favours, and one already in use. Let’s use it.