You may have heard the term “social enterprise” being discussed in the business world — but what does it really mean? A social enterprise is the joining of a social cause with a business activity. It is easier to understand the concept of a social enterprise if you think of a business continuum with non-profit organizations on one end and for profit organizations on the other end. Between the two profit extremes lie the social enterprises. They can take the form of anything from a non-profit organization engaged in mission-supporting commercial activities, a dual-purpose businesses that mediates profit goals with social objectives, to a profit-oriented businesses engaged in social commitments such as corporate philanthropies. Together, the variety of social enterprises represent a paradigm shift in business motives. Purely economical decision making and economic Darwinism have given way to a focus on the value of creating a positive impact on society sustainably through ethical and social capital.
In a social enterprise, there is a necessary tension between the dual motives of mission and margin, and this tension drives the whole business. A social enterprise differs from social entrepreneurship in that the enterprise is the vehicle through which profits can be reinvested for growth, and entrepreneurship is the socially innovative action that serves as the tipping point for change.
An advantage of a social enterprise is that it has a more entrepreneurial spirit than a traditional non-profit, but remains socially proactive by seeking to influence and change environments rather than respond reactively. A social enterprise can attract and retain a staff that desires pursuit of a social mission while still having the opportunity to make a profit. In business lingo, the social enterprise pursues the “triple bottom line” of people, profit and planet.
Socially and environmentally-focused business models seek to solve a community problem in the “people” or “planet” categories through a variety of methods. The products or services of a social enterprise are designed to address issues such as economic inequality, improving health, promoting the arts/sciences/media, conserving the environment, rebuilding the local community, alleviating poverty through the supply chain, employing workers from a chronically under-employed population or driving capital to other purpose-driven enterprises.