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?
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Thank you for posting. We will use these definitions to educate. Go SE!
Interesting article but more confusing than clarifying, perhas even a bit self-serving. Social Enterprises are companies, L3C is a limited profit company, one whose primary goal is to benefit society with profit as a side effect. If SEs are companies, what is the difference between and SE company and an SE Service Provider (as indicaated in the article)?
Thank you for your thoughts. I am trying to think more clearly about my work with regard to social enterprise. You said that consultants are SEs only in rare cases. I have two identities–one as a diversity consultant (I help organizations become more diversity-friendly places to work). I am also the (unpaid) Executive Director of a non-profit organization whose mission is to foster inclusion in workplaces and communities. I want to be a full-time, paid Executive Director by combining my consulting work and my non-profit work. Would you consider this a SE? Are there any down-sides to organizing as a non-proft rather than a consultant?
Thank you,
Chad Beyer
Grand Rapids, MI
I asked Jim McClurg former Pres. of SEA what a social enterprise was and he said that it was a nonprofit that generated significant or all earned income. Following a triple or quadruple bottom line, in other words helping the outside community, environment, and the organizations’s own employees was not part of his definition. That is not to say that Jim was unconcerned about the community and the welfare of his employees. However, I submit that an organization that has a social mission, operates enterprises, but does not treat its own employees well i.e., is not concerned about the welfare and growth of its own workers, is not a “social enterprise”