Monday, April 19, 2010

What is Social Enterprise?

"individuals with innovative solutions to society’s most pressing social problems. They are ambitious and persistent, tackling major social issues and offering new ideas for wide-scale change. Rather than leaving societal needs to the government or business sectors, social entrepreneurs find what is not working and solve the problem by changing the system, spreading the solution, and persuading entire societies to take new leaps”

Social enterprises are revenue-generating businesses with a twist. Whether operated by a non-profit organization or by a for-profit company, a social enterprise has two goals: to achieve social, cultural, community economic or environmental outcomes; and, to earn revenue. On the surface, many social enterprises look, feel, and even operate like traditional businesses.

Social Enterprises will have:-
Social Aims
Organisations that have explicit social aims such as job creation, training or the provision of local services. They have ethical values. Their profits are principally reinvested to achieve their social aims. Increasingly social enterprises measure their social impact.
Enterprise Orientation
Organisations are directly involved in business activity, supplying goods or services to a market and earning incomes as a result.

Social Ownership
Many social enterprises are also characterised by their social ownership. They are autonomous organisations whose governance and ownership structures are normally based on participation by stakeholder groups (e.g. employees, users, clients, local community groups, social investors) or by trustees or directors who control the enterprise on behalf of a wider group of stakeholders. They are accountable to their stakeholders and the wider community for their social, environmental and economic impact. Profits can be distributed as profit sharing to stakeholders or used for the benefit of the community.

Social enterprise is not about balancing the "double bottom lines" of profit and social impact, as though they are equally important. The real bottom line for a social enterprise, the goal by which its success should ultimately be evaluated, is its social (or environmental) impact, and being profitable (or at least financially sustainable) is the entirely necessary means to that end. Of course, there can be no social mission without money, but the first goal is mission.
Social enterprise is not the exclusive domain of nonprofits - See "What Social Enterprise Is" above. While many nonprofits have been - and continue to be - leaders in the social enterprise movement, social enterprise need not be limited to nonprofits. Moreover, simply being owned by a nonprofit is not sufficient to make a business a social enterprise. The enterprise must have as its overarching purpose the amelioration of social and/or environmental issues.

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