Is a company limited by guarantee a social enterprise? a non profit organization?

Jessica9_2

Hi all,

I would like to know if a company limited by guarantee is a social enterprise (I believe according to http://www.socialenterprise.org.uk/about/about-social-enterprise/faqs ) and the most important, if it is by definition a non profit organization.

Thanks in advance for your help,

Jessica

Savvy_Sue

Jessica9 wrote: »

I would like to know if a company limited by guarantee is a social enterprise (I believe according to http://www.socialenterprise.org.uk/about/about-social-enterprise/faqs ) and the most important, if it is by definition a non profit organization.

A company limited by guarantee may, or may not be, a social enterprise as well. It most definitely is NOT by definition a non profit organisation. There is no legal 'not for profit' status in the UK (I believe there is in the USA.)

Did you read this paragraph:

Companies limited by guarantee or shares The most common legal structure for standard businesses. Many social enterprises also choose these legal forms because they are very flexible when it comes to governance, and when it comes to getting investment. To ensure a standard company is a true social enterprise it will need to ensure it has a social mission written into its Memorandum and Articles of Association and is clear about reinvesting its profits.

So, a Ltd Co MAY be a social enterprise, and a social enterprise MAY be a Ltd Co, but Ltd Co does not equal social enterprise.



I'm going to say it again: no organisation can operate at a loss. Doesn't matter if it is a charity, a company, a social enterprise or a not for profit: income from all sources must exceed expenditure sooner rather than later, or the organisation will fail.



If you are setting up a Ltd Co, you must have a plan for how you will ensure that your income exceeds your expenditure. What you do with the excess of income over expenditure can be written into the company's memorandum of articles and association, and that may make you a social enterprise. What is your plan? (You don't have to answer that, but you do have to have one.)

Jessica9_2

Savvy_Sue wrote: »

What is your plan? (You don't have to answer that, but you do have to have one.)

Originally, fundraising and later event management but since I cannot even have an HMRC number because I am alone at the moment I have to reconsider my plan....:(

Wywth

Savvy_Sue wrote: »

A company limited by guarantee may, or may not be, a social enterprise as well. It most definitely is NOT by definition a non profit organisation. There is no legal 'not for profit' status in the UK (I believe there is in the USA.)...

Whilst, as you say, a company limited by guarantee may or may not be a social enterprise, it could also be (and equally may not be) a not for profit organisation.

There is a very good example of a not for profit company, an energy supplier called Ebico. (https://www.ebico.org.uk/)
They are registered as a private, limited by guarantee, no share capital company and are a certified social enterprise

A not for profit comnpany is not a loss making company. As you correctly say, no loss making company will survive for long unless they turn things around.
Not for profit companies may record a surplus in their accounts. It is how this surplus is then used/distributed that defines whether or not it genuinely is a not for profit company.

As you also imply, the Mems & Arts are the place to look to see the purpose of the company,

Savvy_Sue

Wywth wrote: »

Whilst, as you say, a company limited by guarantee may or may not be a social enterprise, it could also be (and equally may not be) a not for profit organisation.

There is a very good example of a not for profit company, an energy supplier called Ebico. (https://www.ebico.org.uk/)
They are registered as a private, limited by guarantee, no share capital company and are a certified social enterprise

A not for profit comnpany is not a loss making company. As you correctly say, no loss making company will survive for long unless they turn things around.
Not for profit companies may record a surplus in their accounts. It is how this surplus is then used/distributed that defines whether or not it genuinely is a not for profit company.

As you also imply, the Mems & Arts are the place to look to see the purpose of the company,

Agreed, I was responding specifically to

Jessica9 wrote: »

I would like to know if a company limited by guarantee is a social enterprise <snip> and the most important, if it is by definition a non profit organization.

(my emphasis). However I wonder if we are misunderstanding what the OP is asking (and I don't know if further clarification would help): I read it as "is a company limited by guarantee by definition a non profit organisation?" but it may have been "is a company limited by guarantee as a social enterprise by definition a non profit organisation?"

The answer is still 'it depends on the Mems & Arts."

OP, surely if being 'alone' is a barrier to your plans, the first thing to do is to identify those who would be willing to work with you in support of this community you wish to support? You can't use a social enterprise 'just' to raise funds (see the link YOU posted), and event management isn't an easy way to make a profit, as I understand it.

One person can NEVER 'go it alone' in fundraising and charitable work, at least not for very long.

Jessica9_2

Savvy_Sue wrote: »

One person can NEVER 'go it alone' in fundraising and charitable work, at least not for very long.

But what about the start?Can I start a fund raising successfullly just under a company limited by guarantee status?