What's the difference between a charity and a social enterprise?
If you’ve been looking at getting a job in the third sector, chances are you’ll have come across the term “social enterprise.” But what is it? And what makes a social enterprise different from a charity?
Before we delve into the differences between them, let’s look at what the two have in common.
Both types of organisations aim to tackle social problems and make a positive impact on society.
To confuse things further, many social enterprises have charitable status. But they can only be granted this if the purposes of the organisation are exclusively charitable and for public benefit.
However, charities and social enterprises achieve their goals in different ways.
How they get their money
This is the biggest and most important difference.
Charities rely on grants and donations to fund their activities. They don’t make a profit. But this isn’t the case for social enterprises. They earn at least 50% of their income through selling products or services and reinvest in their business to continue making a positive social impact.
This makes them a sort of middle ground between a charity and a standard business.
What they do with their money
Charities have to be registered as non-profits, meaning they use 100% of the money they receive on operational costs and their cause.
Some social enterprises are also non-profits. Others aren’t. If they’re ‘for-profit’ they still have to spend the majority of their income on their cause.
How they’re registered
In the UK, charities have to be registered with the Charity Commission, but social enterprises can register in a number of ways, for example as limited companies, co-operatives, unincorporated associations, CICs (community interest companies), sole traders, or charitable incorporated associations.
In a practical sense, this means there isn’t a standard one-size-fits-all set of regulations for social enterprises. How a social enterprise is registered depends on things like its size, aims, activities, and resources.
How they’re run
In the UK, charities have a board of trustees – a group of volunteers who govern the charity. They also have volunteers to help keep things running.
A social enterprise usually has a board of directors who are paid.
While some social enterprises work with volunteers, it’s less common than it is with charities.
Final word
The lines between the two, particularly from a public perspective, can be a little blurred. But the main thing is, they both focus on a cause they care about and dedicate time and money towards making the world a better place.
If this is what you want out of your career, both charities and social enterprises are great places to work.
We can take the stress out of the search. Call us on 0203 750 3111 or email info@bamboofundraising.co.uk to find out how.