What is a Social Enterprise? You Tell Us.
Sure, you know what a social enterprise is. You founded one. You work for one. You volunteer with one. You’re a passionate social impact worker. But do you really know what a social enterprise is? Your certainty might come to a screeching halt when you realise that there’s actually no single globally agreed-upon definition for social enterprise (in Australia at least).
So, in order for us to more effectively deliver widespread and transformative social change, we thought it was important to capture what the sector thinks by asking one simple (not so simple) question: “How do YOU define Social Enterprise?” We hope that this long-debated yet evolving discussion provides a platform to better understand the many nuanced ways of interpreting social entrepreneurship and, in time, helps galvanise and unite the movement of social enterprise.
What We Asked
In the world of impact, there are a lot of social change buzzwords that commonly get thrown into the mix – between deciphering venture philanthropy, unpacking corporate social responsibility, and correcting any greenwashing it can be easy to lose one’s understanding of social enterprise.
We take the definition to generally mean an organisation that applies commercial strategies to maximise social impact rather than profits. Still following? Good.
While this is a good combination of words to make some general sense of a social enterprise, its definition varies depending on who you ask – be it academics, practitioners, or the organisations themselves. This is why we wanted to do a deeper dive to see if we could provide meaning to all of the different definitions of social enterprise.
So, we set out to do just that in a recent survey where we asked “How do YOU define Social Enterprise?”. To get the ball rolling, we included several definitions:
- A business that trades for a social and/or environmental purpose
- A business that trades to achieve a social outcome and generate enough income to cover its running costs
- A business created to further a social purpose in a financially sustainable way
- An organisation that applies commercial strategies to maximise social impact rather than profits
- A business that uses the majority (at least 50%) of their profits to work towards their social mission
- A business owned by a not-for-profit organisation that is directly involved in the production and/or selling of goods and services for the blended purpose of generating income and achieving social, cultural, and/or environmental aims
- A business with a purpose of generating social impact
- A not-for-profit business that trades for a social purpose
- A business that directly addresses a social need either through its products and services or through the people it employs
- A business with social objectives
- An organisation that makes intentional positive social or environmental impacts using a sustainable business model
- A business that, rather than focused on making money, tries to address a social problem
What We Found
Whew – there’s certainly a lot there. From almost 300 respondents, the majority reported that a social enterprise is an organisation that makes intentional positive social or environmental impacts using a sustainable business model. While 2% of respondents reported that they don’t define it, many (18.2%, to be exact) reported that they consider all of the above to define what a social enterprise is.
Some respondents added a few of their own definitions to the mix. A handful used very specific definitions to differentiate between not-for-profits and for-profit businesses. Others suggested that the business doesn’t need to be entirely non-profit. Several posited that it simply meant applying a commercial model to a social issue, while others were of the view that a business structure wasn’t necessary at all.
As one respondent put it, “it’s a crowded field with overlapping definitions.” And it is. Many of the responses said roughly the same thing while incorporating slight tweaks so that their personal and organisational values fit in.
What This Means
So then, this begs the question: are we all saying the same thing when it comes to social enterprise? While we can draw some common features of all of the definitions, we have yet to fully unify social entrepreneurship – and should we even attempt to do so at all?
No doubt it would be nice to have one, neat solid definition of social enterprise because, at the very least, it would support policy-making decisions and alleviate stakeholder confusion. But on the other hand, would it be wise to cage in the meaning when there are thousands of social enterprises that benefit from a variety of definitions?
To a degree, social enterprise can be thought of as a spectrum – some actors and organisations teeter on the edge of the not for profit world and are still heavily reliant on the same sources of funding as charities. Others behave like private sector enterprises and label themselves as more than profit enterprises – impact businesses, for-purpose, profit-for-purpose, social startups, impact ventures… and social enterprises. If social impact is the main focus, regardless of the social enterprise model or definition that fits best, isn’t that all that matters? And if that is the case, then maybe a diversity of meanings helps support a more holistic and effective social impact world?
The concern (and it’s a real one) is that while the lack of a concrete classification allows for diversity and inclusivity, it also presents an opportunity for the term to be co-opted – much like ‘sustainability’ or ‘corporate social responsibility.’ As social enterprise enters the mainstream, there is a risk it will lose its true meaning and legitimacy as others jump on the bandwagon, opting to disingenuously leverage the term purely as a marketing play (“We’re a social enterprise because we give 10% of profits to charity, sound familiar?). Not only will this undermine the original purpose of social enterprise, but it may also threaten to sabotage the current momentum, suppress the overall goal of promoting social enterprises generally, and diminish any chance of social entrepreneurship becoming a catalyst for changing economic power structures.
Our initial question ended up producing more questions than it did answers, but that’s the beauty of the social impact world. We’re all living and operating from within our own bubbles of entrepreneurship and impact and occasionally peeking our heads out to see what others are doing helps to create a more connected and thriving ecosystem. Chances are, we’ll never come to just one definition of social enterprise, but that doesn’t mean that we shouldn’t continue these conversations about what it means to each of us. Consider a Social Change Central membership – and let’s continue to debate and share the ideas that help support our missions for creating positive social change.