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What is Social Enterprise?

Social Enterprise is a VERB

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What do we really mean when we discuss social enterprise? We know for a fact that there is no legal business form that is called social enterprise. We also know, from scanning the major social enterprise sites, that there is no common international definition:

»  “Social enterprises are businesses owned by nonprofit organizations, that are directly involved in the production and/or selling of goods and services for the blended purpose of generating income and achieving social, cultural, and/or environmental aims. Social enterprises are one more tool for non-profits to use to meet their mission to contribute to healthy communities.” -Social Enterprise Council of Canada

»  “Social enterprises are businesses whose primary purpose is the common good. They use the methods and disciplines of business and the power of the marketplace to advance their social, environmental and human justice agendas.” -Social Enterprise Alliance, USA

» “A social enterprise is a business that trades for a social and/or environmental purpose. It will have a clear sense of its ‘social mission’: which means it will know what difference it is trying to make, who it aims to help, and how it plans to do it. It will bring in most or all of its income through selling goods or services. And it will also have clear rules about what it does with its profits, reinvesting these to further the ‘social mission.’” -Social Enterprise, UK

»  “A social enterprise is an organization that applies commercial strategies to maximize improvements in human and environmental well-being, rather than maximizing profits for external shareholders. Social enterprises can be structured as a for-profit or non-profit, and may take the form of a co-operative, mutual organization, a social business, or a charity organization.” – Wikipedia

Despite the differences however, there are common themes across all definitions: they are businesses; they create community impacts and social values; and they limit or don’t have distribution of profits and assets to individual share holders. So rather than a defined thing, social enterprises are much more a means to achieve value, they are a verb, not a noun.

 

In Canada we see a prevalence for defining social enterprise as a business operated by a non-profit entity. As a business they have to have a product or service they sell to customers, they also have to have a defined social, cultural or environmental value. In the Canadian legal context, mission “related” businesses are allowed for non-profits and charities. (The specifics of the legal context are beyond the scope of this paper.)

Traditionally the private sector has used a financial return on investment measurement for success: “How much profit was generated for our shareholders?”. The non-profit sector traditionally reports on a social return on investment: “How many people did we provide services for this year?”. Social Enterprise, however, measures success with what Jed Emerson stated more than 10 years ago, a ‘blended value bottom line’ (www.blendedvalue.org). It is not financial or social, it is financial and social. It is the simultaneous achievement of both economic and social values.

 

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