What is a Social Enterprise? The Complete UK Guide (2026)

A social enterprise is a business that trades for a social or environmental purpose. It's not a charity (though some are). It's not a regular business (though it operates like one). This guide explains everything.

Definition

A social enterprise is an organisation that:

1. Has a social or environmental mission as its primary purpose
2. Generates most of its income through trading (selling goods or services), not grants or donations
3. Reinvests the majority of its profits back into the social mission

Social Enterprise UK defines it as: "A business that trades for people and planet."

Social Enterprise vs Charity vs Business

Legal Structures for Social Enterprises

Community Interest Company (CIC)

The most popular legal form specifically designed for social enterprises. Key features:

• Asset lock — assets must be used for the community purpose (can't be distributed to founders)
• Dividend cap — limited return to investors (currently 35% of distributable profits)
• Community Interest Statement — public declaration of social purpose
• CIC Regulator — light-touch oversight separate from the Charity Commission
• Two types: CIC Limited by Shares (can issue shares) or CIC Limited by Guarantee (no shares)

Company Limited by Guarantee (CLG)

A standard company structure without share capital. Often used by social enterprises and some are also registered charities.

Co-operative Society

Member-owned and democratically controlled. Each member has one vote regardless of their investment. Popular for credit unions, housing co-ops, and worker co-ops.

Charitable Incorporated Organisation (CIO)

If your social enterprise has exclusively charitable purposes, a CIO might be appropriate. You get charity tax benefits but can't distribute profits.

UK Social Enterprise Sector

• Over 100,000 social enterprises in the UK
• Combined turnover of £60 billion
• Employing approximately 2 million people
• 41% are led by women (vs 20% of SMEs)
• 13% are led by people from Black, Asian or minority ethnic backgrounds (vs 5% of SMEs)

Examples of UK Social Enterprises

• The Big Issue — magazine sold by homeless people, profits reinvested into support services
• Divine Chocolate — farmer-owned chocolate company, fair trade
• Jamie Oliver's Fifteen — restaurant training programme for disadvantaged young people
• Belu Water — bottled water company, all profits to WaterAid
• Elvis & Kresse — luxury goods made from decommissioned fire hoses, profits to Fire Fighters Charity
• GoodGym — runners combine exercise with community missions
• Timewise — matching people to quality flexible jobs
• Toast Ale — beer brewed from surplus bread, profits to food waste charities

Funding for Social Enterprises

• Revenue from trading — the primary source for most
• Social investment — loans and equity from social investors (Big Society Capital, Resonance, Social Investment Business)
• Grants — from trusts, foundations, and government programmes (especially for early-stage)
• Crowdfunding — community shares, Kickstarter, or equity crowdfunding
• Government contracts — the Social Value Act 2012 requires public bodies to consider social value in procurement

Starting a Social Enterprise

1. Define your social mission — what problem are you solving?
2. Choose your structure — CIC is the most common for new social enterprises
3. Write a business plan — social enterprises need to be commercially viable
4. Register your company — Companies House (+ CIC Regulator if CIC)
5. Build your team — attract people who share your mission
6. Start trading — revenue is what makes you a social enterprise, not just good intentions