Key Takeaways
- A social enterprise intertwines its business operations with social goals.
- Profit making is secondary to its social mission.
- Social enterprises generate revenue like traditional businesses but focus on reinvesting profits in social goals.
- They often provide opportunities for employment to individuals from vulnerable groups.
Understanding Social Enterprises
Social enterprises bridge the world of commerce and charity. Originating from the U.K. in the late 1970s as an antithesis to purely profit-driven companies, these entities focus on dual objectives—economic sustainability and social welfare. They are crafted not to enrich shareholders but to further societal and environmental goals through business means.
Unlike charities that depend heavily on donations, social enterprises craft their revenues through market-oriented activities. Whether they are selling artisanal goods or providing tech solutions, the earned income is primarily pumped back into their causes—be it reducing homelessness, increasing employment in underserved areas, or enhancing environmental sustainability.
Social Enterprise vs. Social Entrepreneurship
While they both wear the robe of social good, social enterprises and social entrepreneurs are not identical twins. Social enterprises are actual business entities focused on a social mission through product or service sales. In contrast, social entrepreneurs are individuals or groups pioneering innovative solutions to social problems, which may or may not involve the creation of a tradeable entity.
Examples of Social Enterprise
- Warby Parker: This eyeglass company operates on a “Buy One Give One” model, ensuring that for every pair of glasses sold, a pair is donated to someone in need.
- TOMS Shoes: Known for its footwear, TOMS donates a pair of shoes for every purchase made, expanding its model to eyewear and clean water initiatives.
- Radicle: An initiative that provides tools for businesses to monitor and reduce their carbon footprint.
Special Considerations
When hiring, social enterprises often prioritize individuals from marginalized communities, offering more than just employment—often a chance at a dignified livelihood through fair wages and career opportunities.
Starting Your Own Social Enterprise
Budding entrepreneurs interested in starting a social enterprise must align their business model with a clear social mission, ensuring that their venture can be financially sustainable and socially impactful. Partnerships with nonprofits can amplify effects and resources, creating a robust framework for tackling specific social challenges.
Related Terms
- Corporate Social Responsibility (CSR): Companies’ efforts to improve societal welfare, typically through philanthropy, sustainability, and ethical labor practices.
- Impact Investing: Investments made with the intention of generating positive, measurable social and environmental impact alongside a financial return.
- Social Impact Bonds: Financial securities that pay returns based on achieving desired social outcomes, promoting accountability in social services programs.
Suggested Books
- “Building Social Business” by Muhammad Yunus
- “Social Startup Success” by Kathleen Kelly Janus
- “The Social Entrepreneur’s Playbook” by Ian C. MacMillan and James D. Thompson
Social enterprises represent the harmonious blend of commercial strategies and social innovations, proving that businesses can do well by doing good.
