What is a social enterprise?

One of the questions I get most often is:

 
So, what is a social enterprise?
— everybody
 

Usually followed by: 

"How do you know what one is?"

"Is my organization a social enterprise?!" 

So let's talk a little about what a social enterprise is - and what it is not.

A SOCIAL ENTERPRISE IS

As defined in partnership with the Social Enterprise Alliance - Twin Cities board of directors: 

A social enterprise is an organization that sells products or services in order to achieve its social purpose.

Break it down!  Ok, let's take a couple of those terms in the definition and make sure we understand and agree on what they mean. 

Sells products or services = sells a tangible good or delivers a service for a fee. 

Social purpose = nonprofit with tax-exempt status for social purpose OR business with social purpose declared in Articles of Incorporation, in directors decision-making, and included in regular reporting.

Whoa, what? How do you know if an organization has a social purpose? 

A social enterprise can be social by:

Sharing: Organizations that exist to share some or all of their profits with charitable organizations or causes.

Selling: Organizations that make their impact through what they sell or to whom they sell it.

Sourcing: Organizations that develop their programs by how they make their products or services, typically using environmentally sustainable methods and employing the underserved.

So, what do we call these social enterprises?

In the nonprofit sector, we call it a COMMERCIAL NONPROFIT.

In the business sector, we call it a SOCIAL BUSINESS.

 

Confused? It's ok. Don't worry. We'll get through this. 

I went ahead and created a nice little one-page guide for you. Share it, talk about it with coworkers, make it into a shirt. Whatever. Click on the button below to get your free "What is Social Enterprise?" guide. 

Let me know your thoughts on this guide! 

p.s. If you think this free guide is helpful, click here to share it with your friends on Twitter! I went ahead and wrote the tweet for you, but you're welcome to give your own thoughts and feedback.

Ok, now that we know what a social enterprise IS, let's talk about what a social enterprise is not. 

A SOCIAL ENTERPRISE IS NOT

A social enterprise is not a CONTRIBUTION NONPROFIT (a nonprofit organization that exclusively relies on philanthropic contributions; a charity in the traditional sense). These organizations are not a social enterprise because they don't sell a product or service. Remember that part of the definition? Oh yeah. 

A social enterprise is not a TRADITIONAL BUSINESS (a business that exists for the sole purpose of making profit). These companies are not a social enterprise because they don't have a social purpose. There are lots of businesses that have nice things they do for the community, but they are not social enterprises because the social purpose is not part of the structure, goals, reporting and decision-making.

Make sense? Agree? Disagree? Let's discuss in the comments section below! 

 


AUTHOR: BETHANY PALM

Bethany is the Founder of Social + Good + Impact, a community of social entrepreneurs. As a jack-of-all-trades nonprofiteer and recognized social enterprise expert, Bethany brings a decade of experience launching and managing social enterprises. 

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