Firstport

Landscape & Myths

The chart and myths outlined below aim to show where social enterprise fits in conjunction with the voluntary sector and private sectors as well as answer some of the common misconceptions of social enterprise around legal structure, levels of trading and approach to profit.

The diagram above has been used by some to explain where social enterprise sits in relation to the both the mainstream business environment and the wider third sector. Again, this is often cause of much debate and in looking at this diagram it is important to note that while linear in layout the boundaries between different approaches are not fixed and can be very blurry.

Myths and misunderstandings

Myth 1 – Social enterprise is a legal form

SOCIAL ENTERPRISE IS NOT ITS OWN TYPE OF LEGAL COMPANY! Social enterprise can take a number of legal forms. Firstport has a number of draft constitutions to help you through this.

Myth 2 – All social enterprises trade and do not rely on grants

While social enterprises aim to develop in such a way that they are not grant dependent in the long term many will use grants to get established. They differ from the more traditional voluntary sector in that they plan to generate income outside of grant money. The divide is on intention and motivation not necessarily how this translates at a set point in time. There are differing views within the social enterprise scene on where this line should be drawn.

Myth 3 – Not for profit means no profit!

It does not! Given the confusion many people use the term "more than profit" to signify that while they aim to operate as a business and make a surplus that they have additional drivers than simply the financial ones in the ways they conduct their organisation.

Non-profit organisations can make a profit – what they cannot do is distribute profits to shareholders/individuals. Profits are instead reinvested into the company or put directly to meet the social objectives of the organisation.