A Social Enterprise is a typical company. It is basically a normal, typical company which is profit driven and the incorporation process is basically the same as starting a new company because a starting a Social Enterprise is starting a normal, typical company. There is no special SSIC code which companies must place on their business profile to distinguish them as a social enterprise. In fact, there is a lot of confusion as to what a Social Enterprise is. Even GrabTaxi calls themselves a social enterprise.
Let us understand the term Social Enterprise. Social refers to the benefits that society will receive from the activities of the company. Enterprise refers to sustainability and scalability.
The social aspect has to be entrenched in the company’s daily activities. The company’s existence is a benefit to society as a whole. One way to distinguish a company as a social enterprise is to have clear social goals written into the company’s constitution. If the benefits to society are not clear on a daily basis then perhaps the company may want to remain as a pure enterprise and perhaps integrate some Corporate Social Responsibility (CSR) programs into their activities. The company may choose to participate in some charitable activities from time to time or make donations periodically to benefit society.
As for the enterprise aspect, a social enterprise should be sustainable as a business while achieving clear social goals. This is distinctively different from a charity that relies on outside funding and grants to achieve its social mission. This then puts paid to many companies hoping to operate on grants. If the enterprise cannot function without outside funding or grants then it is not sustainable as a business. Furthermore, scalability should be done with an increase in social benefits over an increase in profits while still remaining self-sustaining as a business. Thus the external funding and grants which are available to Social Enterprises are for the purpose of increasing the company’s social impact, not to support the day to day cost of running the company.
When in doubt, seek legal advice or consult an experienced ACRA Filing Agent.
Yours Sincerely,
The editorial team at ACRA Filing Agent.
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