Community Business and Community Enterprise
In my review of third sector organisations, I’m moving on to where the third sector intersects with the private. In this and future posts I shall consider social enterprises, mutuals and then various other projects that don’t fit under either heading.
The term social enterprise has come into vogue in recent years and I’d cheerful send it back out of vogue. What has happened is the statutory sector and the grant making industry have discovered community businesses and enterprises. The whole currency of the movement is debased as a result.
Back in the early 1990s, Community Business Scotland (CBS) was doing the best work in this area. I toured Scotland for 2 or 3 days in what must have been about 1993. CBS was very clear about the distinction between a community business and a community enterprise.
On the surface they are similar. They were both set up by community groups. Their profit could be invested into the community in various ways:
- The business can donate its surplus to the community group. The community group is a charitable trust and so can reclaim tax. The surplus would be used to support community projects.
- The business can support local residents by offering services at no or reduced charges, eg photocopying, use of meeting rooms, etc. Businesses count these services as part of their profit, especially as these services further social and not business aims.
- The turnover employs local people and is often the main advantage of running the business.
A community business measures its success by the amount of surplus generated or better, the number of jobs created. The community enterprise measures its success by meeting objectives agreed with its funding bodies, it would have to account for every penny and so would not normally have any surplus.
Enterprises funded through grants or contracts do not have to follow strict business guidelines. I remember we visited an enterprise that included a training café, used by local people. The manager commented they ought to pay more attention to portion control when we remarked on the generous portions. A business would have to do that.
In early 90s Scotland, community enterprise continued the usual grant-aided path, whilst the businesses were trying to create physical and economic assets in the community. Whilst they can appear similar, they are completely different. Do you think this debate is still relevant today?