Types of Social Enterprises - Essay Example

These are institutions that offer loan facilities and other forms of investment opportunities to small businesses in a certain locality as well as to other social enterprises. The loans are provided to registered organisations and are provided at a much lower interest than banks offer (Gibbon & Affleck, 2008).

Small businesses and other social enterprises directly benefit the community through the provision of employment to the members of that community and the empowerment of the members who might have otherwise had no source of income. Thus, by community development finance institutions providing funding to the organisations when need arises, they enable the social enterprises to run more efficiently providing assistance to more people in the community (Praszkier & Nowak, 2012).

Development Trusts

Development trusts are social enterprises that are located in a community and managed and run by the community. Development trusts are aimed at boosting the community through the acquisition of real property. Development trusts usually work with other organisations and are not aimed at profit generation but rather at achieving self-sufficiency (Martin & Thompson, 2010).

Development trusts work with the community in the management of processes in the community that benefit the entire community. For example, developing alternative sources of energy for the community such as biogas and developing and managing playgrounds that can be used by the people in the community.

Fair Trade Organisations

These are organisations that set up to ensure that producers in the community receive a price that is fair for the goods that they produce. The organisations have all the required skilled members and professionals who speak up for business owners and protect them from buyers who might want to take advantage of them. The people that register with fair trade organisations are usually those that produce items in small-scale (Nicholls, 2006).

Fair trade organisations ensure that the people who would otherwise lose out to people who take advantage of their small size and ignorance get the full possible profit from their produce.

The changing role of social enterprises

In the recent times the government has cut its spending and additionally increased borrowing which has resulted in the failure of the governments to provide for the necessary public services. People have become accustomed to these needs and therefore the failure of the government to provide for the needs has presented a gap in the market which the social enterprises have taken up (Socialenterprise.org.uk. 2016). Previously social enterprises were set up for the sole purpose of improving the livelihood of the community. This, however, proved to be difficult because of the increasing problems they faced that forced them to shift focus onto other areas or to include other facets that were previously absent. The following are the problems that have been faced by social enterprises and how each of them has contributed to the changes exhibited.

Funding

Social enterprises are set up for the purpose of helping the community and not for maximising profit. As much as some organisations have the ability to generate income that is able to sustain them, most of the social enterprises are unable to sustain themselves. Some social enterprises receive donations from other organisations such as corporate companies. Sourcing for funds is a difficult undertaking for non-profit organisations. This is even more difficult for those social enterprises that are viewed as profit-oriented as most companies may not see this as a reasonable investment. Further, most potential investors are distrustful of social enterprises that are geared toward profit and may choose to stay away. Because of the lack in funding, most social enterprises are beginning to find ways in which they can turn a profit without sourcing from outside the organisation to complement the community based services they offer.

Value of Community Service

Social enterprises offer important services to the community. The services that are provided are, however, difficult to demonstrate to people who are not directly involved in the community. Valuing peace of mind and empowerment is not as easy as to explain to investors as it would be to explain the financial benefits of investing in the enterprise. Because of this the social enterprises are forced to focus on turning profits as a way of encouraging companies to invest in them.

Retaining the Mission

As the social enterprise is set up there is a set mission that the organisation and all its members work towards. The mission is a strategy as well as a reminder of what the enterprise stands for. When good, efficient, and realistic strategies are established at the beginning, mission creep does not occur. As problems occur in the running of the organisation, different strategies are undertaken to mitigate the problem. As this is done, the mission might change over time and the focus of the enterprise will change. This has forced some organisations to continually shift their mission and in extreme circumstances after a while it is no longer a social enterprise but a business organisation.

Recommendations

Social enterprises continue to face new challenges every day that threaten their existence. Most are unable to sustain themselves because of lack of funding from investors and from insufficient funds generated within the enterprise (Lyons, 2013). The social impact of these organisations and the values they add to the communities are immeasurable and, thus, it is important that they find ways to sustain themselves and avoid the loss of focus so as to continue to empower the community members.

Profit

Social enterprises should retain their focus on the provision of goods and services that are aimed at benefiting the community but also find ways in which the goods and services can be used to turn a profit for the enterprise. The profit that is collected as a result can be used to complement the funds collected from investors and ensure that the organisation remains afloat even when funds from outside are limited (Lyons, 2013). The increase in available funds will also offer an opportunity to the enterprise to grow in its activities and positively impact more people in the society. Thus, it is critical that social enterprises not lose focus on their mission to help the society but to include the generation of profit by the organisation for sustainability.

Extra Stakeholders

Extra stakeholders can be added into the social enterprise for the sole purpose of running the business for profit generation. The extra stakeholder runs the company separately to avoid the mission from being lost along the way (Nicholls, 2006). The stakeholder provides a sense of comfort to the organisation since the stakeholders in the social enterprise does not have to shift the mission to provide income that is required in its running or spend time sourcing for investors from outside the firm. Normal commercial transactions are carried out by a separate division of the company and, thus, the community continues to have access to the required services.