Social enterprise

business organisations
Cooperatives, micro-finance providers & public-private
partnerships (PPPs)
 Cooperatives

• Owned by members (usually customers or

employees).

• Set up and managed in the interest of their

members.

• Aim to cover all costs. Any surpluses are distributed

to members as a dividend.
 Consumer cooperatives
• Purchase supplies in bulk, obtaining a discount.

• Sell these supplies to customers (including

members) at low prices.

• Dividends are paid to members if a surplus has

been made.

• Main purpose = Lower prices for members.

 Worker cooperatives
• Owned by the people who work in the coop.

• All workers have a say in how the coop is run.

• Any surpluses are passed on the workers as a

dividend.

• Main purpose is to look after the welfare of the

employees (eg by providing good working
conditions and fair pay).
 Microfinance providers
• Set up to lend money to people and small businesses
that are unable to obtain it from traditional sources (eg
family or a bank).

• Usually lend small amounts.

• Interest rates tend to be higher than bank loans (due to

admin charges and increased risk of non-payment).

• Main purpose is to help poorer people escape from

poverty.
Public Private Partnerships
• Established to improve the provision of services
previously provided purely by government
organisations (public sector).

• A private sector business takes over some aspects

of the service from the government. Eg by;

• providing capital.

• managing all or part of the business.

 PPP Example
• A government needs to build a new road. A private
business builds the road and is given a licence to generate
income through toll charges by the government.

• Benefits include:

• Gov’t obtains the capital investment to build the road.

• General public have a road that they can use.

• Private company can generate profits from managing

the road.
 Benefits of PPPs
• Provides governments with an additional source of
finance (reduces it’s need to borrow).

• Reduces risk for both government & private

businesses (as risk is shared).

• Private firms may bring expertise to a project that

government personnel lack.

• Profit motive encourages the private sector firm to

be highly efficient (which brings down costs).
 Problems of PPPs
• Possible conflicts of interest between the government
(seeking good service) and the business (seeking lower
costs).

• Private businesses may pull-out if they can’t make a

profit, resulting either in the loss of an important service,
or increased costs for the government.

• Some government employees may lose their jobs as

efficiency improves.

• Private firms may over-estimate costs to increase profits.