What is a Social Enterprise?

March 14, 2018

After decades of working away, largely below the radar of public awareness, social enterprise has become a "thing" that has captured the imagination of many people. And, because of the efforts of groups like the Social Enterprise World Forum, the Social Enterprise Alliance, Social Enterprise UK, the Social Enterprise Council of Canadale Chantier de l'économie sociale, and the Social Enterprise Network of Nova Scotia, social enterprise has grown into a full-blown movement. It's an exciting time for those who've been active for years. But if you're new to this space, it can be a little daunting: what exactly is a social enterprise? In this post, I'll try to help you sort through it. 

 

While social enterprise may have many definitions, they all have a few things in common. Check out these examples and you'll see what I mean:

 

Social enterprises are businesses that are changing the world for the better.
Like traditional businesses they aim to make a profit but it’s what they do with their profits that sets them apart – reinvesting or donating them to create positive social change. 

(Social Enterprise UK)

 

Social enterprises are community-based businesses that sell goods or services in the market place to achieve a social, cultural and/or environmental purpose; they reinvest their profits to maximize their social mission.

(Social Enterprise Council of Canada)

 

Organizations that address a basic unmet need or solve a social problem through a market-driven approach.

(Social Enterprise Alliance, USA)

 

A social enterprise seeks to achieve social, cultural or environmental aims through the sale of goods and services.
The social enterprise can be for-profit or not-for-profit but the majority of net profits must be directed to a social objective with limited distribution to shareholders and owners.

(Government of Canada)

 

Most definitions of social enterprise have these three things in common:

 

  1. Social enterprises operate as ongoing businesses that sell products and services to paying customers. The annual charity auction may be a great fundraiser, but it's not a business. 
     

  2. They have a social purpose - that is, they exist to directly address some important social, cultural, or environmental issue. Simply donating your profits toward the cause isn't enough; your enterprise must, through its daily operation, directly address the issue. 
     

  3. And they reinvest most if not all of their profits toward the enterprise's social purpose.

Most everyone agrees with these three points. And, for the most part, everyone will agree that a social enterprise can operate as a free-standing business or as part of another organization.

 

Examples of social enterprises, which embody all three of these three key attributes, drawn from the Maritime provinces of Canada (my home region) include:

 

  • Lake City Woodworkers - a maker of fine, solid wood furniture, which trains and employs people who face multiple barriers to employment.
     

  • Transport de Clare - Nova Scotia’s pioneer in community-based, accessible transit.
     

  • Marigold Theatre - Truro’s cultural hub, offering a 208-seat theatre, art gallery, workshop space for arts-in-education programming, and sports heritage hall.
     

  • Le Réseau des Cafétérias Communautaires Inc. (Community Cafeteria Network) - a social enterprise that provides nutritious, locally-sourced, healthy meals and food education to 25 schools in the Francophone South School District of New Brunswick.
     

  • WFM2Go - an online store and delivery service brings the quality and variety of the Wolfville Farmers Market several local communities.
     

  • Old School Community Gathering Place - Located in Musquodoboit Harbour, “The Old School” houses and art gallery and is open for room rentals: workshops, classes, music shows, art classes, lectures, and more.
     

  • Community Forests International - an environmental start-up, working to connect people and their communities to the forests that sustain them.
     

Every one of these enterprises are using business models--in some cases very innovative business models--to directly impact important community issues. I encourage you to learn more about them and buy from them if you can.

 

Where people often differ on matters of definition is around ownership. Many people feel quite passionately that a social enterprise must be owned and managed collectively by the community, a co-operative, or a non-profit organization, whereas others are agnostic on ownership. On most days, I fall into the second camp. While I acknowledge that collective control is certainly preferable and inherently more social, I know several amazing enterprises (my old consulting firm, Common Good Solutions being one), that so clearly hit the first three attributes and are deeply embedded in their local community that I wouldn't want to exclude them.  

 

Where I feel social enterprise as a movement is largely mute is on the issue of sustainability. Most social enterprises, even leaders in the field, have little if anything to say about the social and environmental impacts they're making outside of their stated purpose. I'm talking about the carbon emissions and waste they create, whether they have fair labour practices and pay a living wage, and other critical sustainability factors. For that, we need to look to B Corporations, The Natural Step, and other sustainability initiatives. But that's the subject of another post...

 

I hope this has been helpful. Please feel free to leave a comment or question below.

 

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