What is Social Enterprise?
A social enterprise is any organization or business, providing goods and/or services, but managing its operations and redirecting its surpluses in pursuit of community, social and/or environmental goals.
Within the social enterprise model:
- Commercial activity is a strong revenue driver, whether a significant earned income stream within a non-profit’s mixed revenue portfolio, or as a for-profit enterprise.
- Surpluses and profits(at least 51%) are to be principally reinvested into its social-economic, cultural and/or environmental mandate.
Social purpose entrepreneurs are individuals who create innovative solutions to address social and environmental challenges, while social enterprises generate revenue through their products or services to create positive social impact. These two entities often collaborate and support each other in order to achieve their shared mission of creating positive change in society.
Social enterprises take many different forms, and exchange a multitude of different types of goods and/or services. They are often place-based, providing local solutions to local problems.
FOR PROFIT: these ventures share an intent to create social or environmental value for the community (local, regional or global) with profits being reinvested in the operations and services of the business, rather than flowing back to an owner or investor.
NOT‐FOR‐PROFIT ORGANIZATION: these businesses sell goods or provide services for the purpose of creating a blended return on investment, both financial and social. Their profits are returned to the enterprise or to a social purpose.
CO‐OPERATIVE ORGANIZATION: an organization owned by the members who use its services or are employed there. Co‐operatives can provide virtually any product or service. Examples include housing co‐operatives, investment co‐operatives, and food cooperatives.
CHARITABLE ORGANIZATION: All charities are not‐for‐profit organizations, but not all not‐for‐profit organizations are charities. Being a registered charity means that the organization can issue official receipts for income tax purposes, to donors. Being a registered charity also means that the organization can accept grants from other registered charities and other ‘qualified donees’.
Are You Running a Social Enterprise?
One test for a non-profit or charity that believes it is operating a social enterprise: what are you selling? It could be that you are operating with an entrepreneurial mindset within your organization, but if you are not selling a good or service into the marketplace, you aren’t running a business; you may be running a social program, but not a social enterprise.
A test for a traditional for-profit business that believes it is operating a social enterprise: to what degree do social/environmental goals steer your ship? If profit is paramount (and particularly if individual owners or shareholders are personally benefitting), you may be engaging in socially conscious purchasing or corporate social responsibility, rather than operating a social enterprise.(Source: BC Centre for Social Enterprise)
Buy Social Canada certifies social enterprises based on a minimum of 51% of profits being reinvested back into the social, environmental or cultural mission.