An argument against the identification of social enterprises as a sector separate
from other non-profits is that many charities, notably the bigger ones, have formalised
trading activities in addition to their service provision and advocacy work. These
trading activities often take the form of retail outlets that sell a range of items, many of
which are donated by the same people that shop there. However, the fact that these
organisations explicitly hive off trading into subsidiaries that invariably covenant
profits back to the centre, actually reinforces the case for identifying a separate sector.
The social enterprises that come to mind in this case are those that are explicitly
community located and that primarily sell their actual services rather than sell
something separate (often donated goods) to their services. These social enterprises
may share legal forms with the trading arms of charities, typically companies limited
by guarantee, but that is where the similarity ends. Two illustrative examples are
offered of this form of social enterprise. Whilst these cases are real and based on the
author’s consultancy experiences, in formal research terms they are essentially
anecdotal. Therefore, no claim is made for their rigour or representative status. Rather,
these examples merely highlight the tensions that can exist within social enterprises
and, it is contended, that only the governance function can adequately address.