What is Social Enterprise?
Social enterprise can be challenging to define, in large part because the concept has been evolving rapidly in recent years and increasingly blurs the lines of the traditional business, government and non-profit sectors.
Social Enterprise Alliance suggests the following basic working definition:
Organizations that address a basic unmet need or solve a social or environmental problem through a market-driven approach.
Social enterprises span the spectrum of nonprofit to for-profit entities. SEA recognizes three general social enterprise models:
- Opportunity Employment: organizations that employ people who have significant barriers to mainstream employment.
- Transformative Products or Services: organizations that create social or environmental impact through innovative products and services.
- Donate Back: organizations that contribute a portion of their profits to nonprofits that address basic unmet needs.
Social enterprise is not a silver bullet, but it is a promising approach to fulfilling unmet needs and fostering genuinely “triple-bottom-line” organizations – those simultaneously seeking profits, social impact, and environmental sustainability. It’s certainly not the only solution, but it is most definitely a solution.
- For traditional non-profits, social enterprise can be a powerful complement to other activities when it advances the social mission and the financial sustainability of the organization.
- For new start-ups – non-profits and for-profits – social enterprise gives entrepreneurs the ability to bake social impact and financial sustainability into the organization’s DNA from its outset.
- For traditional businesses, social enterprise initiatives enable a company to integrate social impact into business operations and prioritize social goals alongside financial returns. To learn more about for-profit social enterprise, check out our article on B corps and public benefit corporations.
Is Social Enterprise New?
Yes and no. There are examples of social enterprise that are more than 100 years old, but social enterprise is relatively new as a growing sector of activity in the U.S. and beyond.
For example, Goodwill Industries pioneered the notion of “a hand up, not a handout” in 1902 when they began employing the poor to mend and repair used goods that could then be resold to the general public or provided for free back to the poor. Still today, Goodwill aims to provide economic self-sufficiency and in 2014 created employment and job training opportunities for more than 2 million people while generating more than $4.6 billion in revenue – 86% of its total budget – through retail sales and other earned income sources.
In recent years, social enterprise has become more prominent, with growing interest and attention from investors, consumers, universities, media and policymakers. The rise of “impact investing” and “conscious consumerism” are reflective of social enterprise’s development as a field, as are the growing number of university courses, the attention from Forbes and other mainstream media, and government support through the White House’s Office of Social Innovation and Social Innovation Fund.
What Are Some Examples of the Problems Social Enterprises Are Tackling?
One of the most interesting and exciting aspects of social enterprise’s evolution is the growing variety of issues being addressed by social enterprises. Today, social businesses are correcting market failures across every industry and tackling social challenges throughout every corner of the world. A few representative examples include:
- Grameen Bank, which makes small loans to the poor for small business development and other uses. Since its inception in the 1970s, Grameen has provided $10 billion in loans to more than 10 million people, and has proven the need and viability for financial services to the poor. Grameen received the Nobel Peace Prize in 2006 as a reflection of its efforts and success.
- Greyston provides the homeless employment in a bakery that makes brownies for Ben & Jerry’s ice cream. As Greyston says, “we don’t hire people to bake brownies, we bake brownies to hire people.”
- D.Light designs affordable solar-powered devices that provide an option to people that lack access to reliable energy sources. In its eight-year history, D.Light has sold more than 10 million solar lamps, improving the lives of 50 million people.
- Dispensary of Hope aggregates prescription medications that are nearing their expiration date and redistributes these drugs to free clinics in low-income communities. Clinics pay Dispensary of Hope a monthly subscription fee that covers basic expenses, and drug manufacturers save money by avoiding costs associated with destroying expired products.
- TerraCycle upcycles packaging and other non-recyclable consumer waste, keeping it out of landfills and turning it into new products. Today, Terracycle has established a recycling network of more than 31 million consumers and 100 major corporate brand partnerships, resulting in more than 3 billion units of garbage averted from landfills and transformed into new, 100% recycled products.
- Benetech develops and uses technology to create positive social change. One of Benetech’s signature programs is Bookshare, the largest literacy resource for people with disabilities. Before Bookshare, only 5% of printed materials were accessible to people with disabilities. Today, Bookshare’s more than 330,000 subscribers have access to more than 300,000 titles in a variety of accessible formats.
- Warby Parker partners with VisionSpring to enable access to affordable prescription glasses to people in developing countries who are otherwise functionally blind. They do this by selling fashionable eyewear to customers in developed markets, and making a contribution for each pair sold. So far, this partnership has distributed nearly 2.5 million pairs of glasses to those in need.
These are just a few of the tens of thousands of social enterprises that are addressing important social needs with an approach that has the potential to be efficient, effective and financially sustainable.
What is a Social Entrepreneur?
Social entrepreneurs work to solve critical social problems and address basic unmet needs through innovation. Their entrepreneurial endeavors create system change, improving the lives of underserved or marginalized groups.
Despite the increased attention that social entrepreneurship has received in recent years, there is no precise definition. Various organizations describe social entrepreneurship differently:
- Ashoka defines social entrepreneurs as “individuals with innovative solutions to society’s most pressing social problems” who “find what is not working and solve the problem by changing the system, spreading the solution, and persuading entire societies to move in different directions.”
- The Skoll Foundation calls social entrepreneurs “society’s change agents, creators of innovations that disrupt the status quo and transform our world.”
- In the Stanford Social Innovation Review, Roger L. Martin and Sally Osberg offer a more rigorous definition. A social entrepreneur is “someone who targets an unfortunate but stable equilibrium that causes the neglect, marginalization, or suffering of a segment of humanity; who brings to bear on this situation his or her inspiration, direct action, creativity, courage, and fortitude; and who aims for and ultimately affects the establishment of a new stable equilibrium that secures permanent benefit for the targeted group and society at large.”
Who are Some Examples of Social Entrepreneurs?
There are social entrepreneurs all across the world, creating impact in areas as diverse as education, health, technology and more. Examples of social entrepreneurs include:
- Muhammad Yunus, who founded Grameen Bank in 1983 to provide micro-loans to the poor in his native Bangladesh and beyond.
- Jim Fruchterman, CEO of Benetech, who uses technology to address unmet social needs frequently overlooked by Silicon Valley.
How Can I Learn More About Social Enterprise and Social Entrepreneurship?
Social Enterprise Alliance is the national membership organization for social enterprise in the U.S., serving as the voice and key catalyst for the social enterprise movement. To learn more about our organization, click here. Get involved in our efforts to support and advance social enterprise by accessing:
- Hundreds of articles and studies about social enterprise in our online knowledge center.
- Monthly updates on social enterprise sector news, stories, events and more by subscribing to our newsletter.
- A growing network of local, grassroots chapters.
- A national platform highlighting social enterprise products and services in our online marketplace.
To learn more about becoming part of our national social enterprise community, review our membership page. Social enterprise is an idea whose time has come. Are you interested in staying on the forefront of our growing field? Join the movement!