What is a social enterprise?
A social enterprise is an organization or venture that achieves its primary social or environmental mission using business methods. The social needs addressed by social enterprises and the business models they use are as diverse as human ingenuity. Social enterprises build a more just, sustainable world by applying market-based strategies to today’s social problems.
How are social enterprises different from other types of businesses?
Two distinct characteristics differentiate social enterprises from other types of businesses, nonprofits and government agencies:
- Social enterprises directly address social needs through their products and services or through the numbers of disadvantaged people they employ. This distinguishes them from “socially responsible businesses,” which create positive social change indirectly through the practice of corporate social responsibility (e.g., creating and implementing a philanthropic foundation; paying equitable wages to their employees; using environmentally friendly raw materials; providing volunteers to help with community projects). They are powerful vehicles for job creation, economic growth and increased opportunity for people facing barriers including those in low-to-moderate families and communities.
- Social enterprises use earned revenue strategies to pursue a double or triple bottom line, either alone (as a social sector business, in either the private or the nonprofit sector) or as a significant part of a nonprofit’s mixed revenue stream that also includes charitable contributions and public sector subsidies. This distinguishes them from traditional nonprofits, which rely primarily on philanthropic and government support.
Are all social enterprises nonprofits?
The social enterprise movement includes both nonprofits that use business models to pursue their mission and for-profits whose primary purposes are social. Social mission is primary and fundamental; the organizational form depends on what will best advance the social mission.
Where do “social entrepreneurs” fit in?
Social entrepreneurs are individuals who pursue opportunities to create pattern-breaking change in inequitable systems, whether through social enterprises or other means. “Social enterprise” is different from “social entrepreneurship”, which broadly encompasses such diverse players as B Corp companies, socially responsible investors, “for-benefit” ventures, Fourth Sector organizations, CSR efforts by major corporations, “social innovators” and others. All these types of entities grapple with social needs in a variety of ways, but unless they directly address social needs through their products or services or the numbers of disadvantaged people they employ, they do not qualify as social enterprises.
What about corporate social responsibility?
Many companies whose primary purpose is to create value for ownership are also committed to adopting a wide range of socially and environmentally responsible practices in their operations. Because their social missions are not primary, they are not considered social enterprises.
What kinds of business models do social enterprises use?
Social enterprises use an endless array of business models for the common good. Samples include: retail, service and manufacturing businesses that help people overcome employment barriers; contracted providers of social and human services; fee-based consulting and research services; community development and financing operations; and even technology enterprises. Chances are you already do business with social enterprises without even knowing it.
Why do people launch social enterprises?
Many nonprofit organizations see social enterprise as a way to reduce their dependence on charitable donations and grants while others view the business itself as the vehicle for social change. Whether structured as nonprofits or for-profits, social enterprises are simply launched by social entrepreneurs who want to improve the common good and solve a social problem in a new, more lasting and effective way than traditional approaches. They are conceived and operated by visionary entrepreneurs who recognize potential where others may not see it and who apply discipline, pragmatism, courage and creativity to pursue their solution in spite of all obstacles, toward a world that is more abundant, secure and inclusive for all.