Social Enterprise and Entrepreneurship

Written by Max | Edited by Rory Hart
Sections of this topic
    Young lady working with a laptop

    Social enterprise is, fundamentally, about using a market-driven business model to address key social and environmental issues. It is an emerging field with diverse and shifting interpretations. On this page, we’ll try to sort through all this, introduce you to the major players, and give you a launching pad for future inquiries. For guidelines to plan and establish a social enterprise, see the book Venture Forth! Essential Guide to Starting a Moneymaking Business in Your Nonprofit Organization.

    Sections of This Topic Include

    Also, consider

    Preparation for Starting an Organization

    What Social Enterprise Is (and Is Not)

    What Social Enterprise Is

    Social enterprise is, fundamentally, about using a market-driven business model to address critical social and environmental issues. See Social Enterprise. Many people believe that a fundamental element of social enterprise – indeed, the “social” in social enterprise – is collective ownership. Some go so far as to stipulate a nonprofit legal structure for a social enterprise. For example, see What Are the Legal Structures for Social Enterprises? by Social Enterprise UK.

    Until we come up with a broader term than “social enterprise”, some would advocate for a broad interpretation that does not limit it to collectively-owned businesses. If the overarching purpose of the business is to address a social and/or environmental issue, it’s a social enterprise – regardless of its ownership structure. This is a pragmatic position — the world’s problems are far too great to be creating arbitrary silos that limit participation and sharing.

    What Social Enterprise Is Not

    Social enterprise is not about balancing the “double bottom lines” of profit and social impact, as though they are equally important. The real bottom line for a social enterprise, the goal by which its success should ultimately be evaluated, is its social (or environmental) impact, and being profitable (or at least financially sustainable) is the entirely necessary means to that end. Of course, there can be no social mission without money, but the first goal is mission.

    Social enterprise is not the exclusive domain of nonprofits – See “What Social Enterprise Is” above. While nonprofits have been – and continue to be – leaders in the social enterprise movement, social enterprise need not be limited to nonprofits. Moreover, simply being owned by a nonprofit is not sufficient to make a business a social enterprise. The enterprise must have as its overarching purpose the amelioration of social and/or environmental issues.

    Social enterprise is not just another fundraising strategy for nonprofits – While it’s possible for a social enterprise that is owned by a nonprofit to generate funds to support the operation of that nonprofit, the generation of those funds is secondary to the direct impact it has on social or environmental issues. If generating funds is your biggest priority, check out the fundraising topic in this Library.

    Social enterprise is not about “saving” the nonprofit sector – While social enterprise has great potential for enhancing the vitality and sustainability of the nonprofit sector, that potential impact is secondary to its real purpose – helping (directly, through the operation of the business) to make the world a better place.

    Some Additional Perspectives on Social Enterprise

    Leading Examples of Social Enterprise

    A Few Great Individual Examples

    Social enterprise comes in all shapes and sizes and can be found all over the world. Here are a few examples:

    Social Enterprise Directories

    Organization Directory compiled by the Social Enterprise Alliance

    Why Social Enterprise Matters

    Social enterprise matters because it is focused on making positive change at a time when we desperately need it. Social enterprise is one important tool, among many, that is actively and directly making our world a better place.

    Social enterprise is more responsive. Social enterprise doesn’t rely on the shifting priorities of government and major foundations; it gets on with making the change that is needed within a community and (sometimes) grows to affect whole cities, countries, and regions.

    Social enterprise is scalable. Like all businesses, social enterprise has, with investment and sales revenue, the ability to grow to meet the needs and priorities of the communities it serves, as opposed to traditional nonprofit programs, which are often limited to the funds available from government and philanthropic funders.

    Social enterprise actively engages stakeholders. Social enterprise gives the people it helps a direct voice in the operation of the business – as owners, employees, and paying customers.

    Additional Perspectives on Why Social Enterprise Matters

    Benefits of Social Enterprise: Earned-Income Generation

    Nonprofits Can Generate an Earned Income

    Related (But Different) Fields and Topics

    Social Innovation

    In “Rediscovering Social Innovation” (Fall 2008 issue of the Stanford Social Innovation Review), social innovation is defined as “a novel solution to a social problem that is more effective, efficient, sustainable, or just than existing solutions and for which the value created accrues primarily to society as a whole rather than private individuals.” So defined, social innovation is a bigger concept than social enterprise, which is not limited to enterprise-based approaches to addressing critical issues. Put another way, social enterprise can be a vehicle for social innovation.

    Also, see Dimensions of Social Innovation.

    Social Entrepreneurship

    Ashoka defines social entrepreneurship as “individuals with innovative solutions to society’s most pressing social problems. They are ambitious and persistent, tackling major social issues and offering new ideas for wide-scale change. Rather than leaving societal needs to the government or business sectors, social entrepreneurs find what is not working and solve the problem by changing the system, spreading the solution, and persuading entire societies to take new leaps.” So defined, social entrepreneurship is concerned with the entrepreneurs who undertake large-scale social innovation – which may or may not involve a social enterprise. See “What is a Social Entrepreneur” for a list of people who meet Ashoka’s definition.

    The Grameen Bank is a great example of a social enterprise, led by social entrepreneur Muhammad
    Yunus     popularized the social innovation of microcredit. Also, see Promise (and Problems) with Microcredit.

    Corporate Social Responsibility

    CSR is, for many, about maximizing shareholder value in a way that minimizes negative social or environmental impacts. To the extent that this is the case, profit is the first goal, and minimizing harm (not making things better) is the secondary goal. CSR is way better than business as usual, but it’s not a social enterprise. See the Business Ethics topic for more information.

    Resources for Doing Social Enterprise





    Social enterprises face unique challenges, on top of all the other challenges that any business must contend with. In this section, we focus on presenting resources that address the unique challenges. In later versions of this page, we may add the general resources – keep an eye out for that.

    Becoming a Social Entrepreneur

    Starting an Enterprise

    Market Research — Inbound Marketing

    Human Resources Planning

    Financial Analysis and Management

    Feasibility Analysis

    Financing and Taxes

    Evaluation

    Guiding Principles

    Commitment to Integrity

    Get Connected: Social Enterprise Organizations, Networks, and Publications

    Organizations and Networks

    Publications

    Websites

    Social Enterprise Alliance. North American membership association offers many resources, some available to all, others members only.

    REDF. San Francisco-based funder that’s probably started and supported more successful social enterprises than anyone else. Web site chock full of practical advice.

    Community Wealth Ventures. Washington DC consulting firm founded by Bill Shore; resources include SE database, franchising report, L3C report, and more.

    Social Enterprise World Forum. Free, global, 7000+ subscriber listserv focused exclusively on social enterprise. Post a question and you’ll likely get five answers in days.

    Rolfe Larson Associates*. Denver consulting firm with a Free Resources section with practical worksheets and templates on starting an SE.

    Free Management Library. The section on Social Enterprise and Business Planning is packed with resources and links about the field. Weekly blogs also.

    Wikipedia. Nowadays every research project has to include Wikipedia, although in this case, it is a bit sparse on practicality.

    Aperio in Toronto offers some good articles and case studies.

    Continue to Learn in the Library’s Social Enterprise Blog

    The blog is hosted by an expert in social enterprise who writes two posts per week, including from guest writers. Learn from those posts — even consider writing an article yourself!
    Social Enterprise Blog

    Learn More in the Library’s Blogs Related to Social Enterprise

    In addition to the articles on this current page, also see the following blogs that have posts related to Social Enterprise. Scan down the blog’s page to see various posts. Also, see the section “Recent Blog Posts” in the sidebar of the blog or click on “Next” near the bottom of a post in the blog. The blog also links to numerous free related resources.

    Vast, Additional Resources in the Category of Social Entrepreneurship


    Max