What Is NOT a Social Enterprise

By Rolfe Larson on October 17, 2011

Steve Jobs once said: “I am as proud of what we don’t do as I am of what we do.”  So also it should be for the social enterprise sector.  There are plenty of great things that are not SEs.  To gain credibility and traction in the marketplace, the SE field cannot be all things to all people.  That’s the path to becoming nothing at all.

For this blog, we’ve used the Social Enterprise Alliance definition:

“SEs directly address social needs through their products and services or through the numbers of disadvantaged people they employ. SEs use earned revenue strategies to pursue a double or triple bottom line, either alone (as a social sector business, in either the private or the nonprofit sector) or as a significant part of a nonprofit’s mixed revenue stream that also includes charitable contributions and public sector subsidies.”

The SEA definition goes on to distinguish SEs from “socially responsible businesses,” which “create positive social change indirectly through the practice of corporate social responsibility (e.g., creating and implementing a philanthropic foundation; paying equitable wages to their employees; using environmentally friendly raw materials; providing volunteers to help with community projects).”

We’d like to add a few more examples of what is NOT an SE:

First, a nonprofit that operates an unrelated business venture, say a coffee shop that does not employ disadvantaged workers, is not an SE.  If it makes money, that’s good for mission, but does not make it an SE.

Secondly, with rare exceptions, consultants and lawyers are not SEs, since they do not directly address social needs or employ disadvantaged people, apart from providing services to organizations that do so. These organizations are an important part of the social enterprise eco-system, and often work closely with social enterprises, but they are more appropriately classified as SE service providers.

Thirdly, forprofit companies whose products or operations broadly benefit the environment are not SEs, but rather they are environmentally-sensitive companies.  Again, a good thing, but not an SE.

Finally, no matter how entrepreneurial it is in obtaining labor, funding and supplies, a nonprofit or a program is not an SE if it doesn’t charge for its products and services, such as a soup kitchen.  Important contributor and example of social entrepreneurship, but not an SE.

What do you think?