Son of Five Rivers Blog

For the advancement of Entrepreneurship, Sustainability & the Ecology of Everyday Life

What is a Social Enterprise?

This is a topic that I’m starting to have a lot of passion for, although I haven’t blogged about it I will hope to do so more often.   I’ll start with the basic!  A simple definition from Wikipedia:  (Thank you)

Social enterprises are social mission driven organizations which trade in goods or services for a social purpose. Their aim to accomplish targets that are social and environmental as well as financial is often referred to as having a triple bottom line. Social enterprises are profit-making businesses set up to tackle a social or environmental need. They often use blended value business models that combine a revenue-generating business with a social-value-generating structure or component. Many commercial businesses would consider themselves to have social objectives, but social enterprises are distinctive because their social or environmental purpose is central to what they do.

Rather than maximising shareholder value, their main aim is to generate profit to further their social and environmental goals. Therefore some commentators describe them as ‘not-for-profit’ as their profits are not (at least primarily) distributed to financial investors. Others dislike the term as it suggests they have an unbusinesslike attitude.

It could be that the profit (or surplus) from the business is used to support social aims (whether or not related to the activity of the business, as in a charity shop), or that the business itself accomplishes the social aim through its operation, for instance by employing disadvantaged people (social firms) or lending to businesses that have difficulty in securing investment from mainstream lenders.

In Britain and North America, there is less emphasis on generating a surplus and more on the double bottom line nature of the enterprise. European usage tends to add the criterion of social rather than individual ownership.

Social enterprises are generally held to comprise the more businesslike end of the spectrum of organisations that make up the third sector or social economy. A commonly-cited rule of thumb is that their income is derived from the business trading rather than from subsidy or donations.

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July 19, 2009 - Posted by | Business Model, Definitions, Not for Profit, Social Enterprise | , ,

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