A social enterprise, or social business, is a unique business model aimed at addressing specific social objectives at its core. These ventures strive to maximize profits while concurrently maximizing societal and environmental benefits. Notably, the generated profits are predominantly channeled to fund social programs.
Key Insights
- A social enterprise merges business strategies with social objectives.
- Unlike traditional businesses, profit maximization takes a backseat to societal impact in social enterprises.
- Unlike charities, social enterprises generate revenue through commercial activities to sustain their social missions.
- They often prioritize hiring individuals from at-risk communities to promote social equity.
- The funding model typically revolves around sales of goods and services, supplemented by grants.
Understanding Social Enterprises
First conceptualized in the U.K. in the late 1970s, social enterprises emerged to bridge the gap between the private and volunteer sectors. These entities balance the financial benefits gained from their activities with the achievement of social goals, such as providing housing for low-income families or offering job training.
While they earn revenue from consumer sales, their primary goal is not profit maximization but creating a sustainable income to support their social missions. Unlike traditional charities dependent on external funding, social enterprises reinvest their profits to further their goals, rather than distributing them as shareholder dividends.
The Organisation for Economic Co-operation and Development (OECD) highlights the participatory nature of social enterprises, noting their focus on engaging various stakeholders and ensuring a minimum number of paid employees.
Social Enterprise vs. Social Entrepreneurship
Social enterprises should not be confused with social entrepreneurship. Social entrepreneurship revolves around individuals identifying creative solutions for social and environmental challenges using established business techniques and strategies. Social entrepreneurs seek novel ways to drive societal change, while social enterprises are structured entities aiming to address societal needs through their business operations.
Examples of Social Enterprises
Numerous social enterprises successfully enhance social well-being. For example:
- Warby Parker: An American eyeglass retailer that donates a pair of glasses to someone in need for every pair sold.
- TOMS: A California-based retailer that pledges to donate a pair of shoes or sunglasses for each pair sold.
- Radicle: Trains businesses and provides them with tools to track and reduce greenhouse gas emissions.
Special Considerations
Employees in social enterprises often come from diverse backgrounds, with a preference for hiring individuals from at-risk communities. These employees might include long-term underemployed workers with a history of informal jobs.
Opportunities within social enterprises often offer a living wage, which surpasses the minimum wage in many places. Some social enterprises may specifically seek out employees from vulnerable groups as part of their hiring criteria.
What Are Examples of Social Enterprises?
Examples typically involve a blend of private and volunteer sectors, such as credit unions, coffee shops selling fair-trade beans while hiring individuals from at-risk communities, or neighborhood food cooperatives.
How Can I Start a Social Enterprise?
Beginning a social enterprise involves:
- Partnering with a nonprofit or charity, such as a food pantry, if you already own a business, and donating resources (time, money, or products).
- Identifying a problem and formulating a unique solution if starting from scratch.
- Clearly articulating your action plan to potential funders with support from experts in your field.
How Can I Get Hired by a Social Enterprise?
To work at a social enterprise, it’s crucial to understand both the for-profit aspect of the business and the social benefits it delivers. Employees often hail from diverse backgrounds and may include individuals from at-risk communities. Like any job, qualifications will typically depend on relevant experience and education.
Related Terms: social entrepreneurship, sustainable revenue, stakeholder involvement, community employment.
References
- Social Enterprise UK. “FAQs”.
- Organisation for Economic Co-operation and Development. “The Social Enterprise Sector: A Conceptual Framework”, Page 1.
- Warby Parker. “Buy a Pair, Give a Pair.”
- TOMS. “Our Story”.
- PR Newswire. “TOMS Introduces TOMS Eyewear, The Next One for One™ Product”.
- Radicle. “About Radicle”.
