What is a Social Enterprise?

So, I often get asked the question “what is a social enterprise?”  The best definition I have seen of social enterprise is “an organization that applies commercial strategies to maximize improvements in human and environmental well-being—this may include maximizing social impact alongside profits for external shareholders.”  The concept is simple, you can do well while doing good.  With my work in SEA Change, Ohio I have been fortunate to work with many companies in our area that have started businesses to solve community problems and make a living while doing it, thus creating a company with a triple bottom line.  These companies are tackling issues such as food waste in our communities, helping refuges earn living wages, creating companies to help formerly incarcerated individuals and raising awareness of bullying in our schools. 

These companies are not creating nonprofits; they are creating for profits that utilize typical business sustainability models.  This is an important distinction.  People are under the impression that if they want to create a company to solve a social issue, they must create a nonprofit to do so.  This is FALSE.  The issue with this thinking is you are now at the mercy of funders and foundations to ensure that your company survives.  Funders are notorious for getting “funders fatigue.”  Funders do not want to support an organization indefinitely.  Typically, you can expect support for 1-3 years.  If this is your only income strategy, what are you going to do when the funder decides to move on to another cause?  Will you simply close up shop, leaving your customers and employees in the lurch?

A better model is to create a sustainable business to support your mission or cause.  One great example of this is a central Ohio company called Hot Chicken Takeover. HCT was created to help formerly incarcerated individuals and homeless individuals find employment.  The company realized the best way to do this was to create a company that employed this population; thus Hot Chicken Takeover was created.  The company sells some of the most amazing hot chicken you will ever eat!  Most people would not even know the entire staff is formerly incarcerated individuals.  HCT serves its mission by selling chicken.  Simple as that.

I believe social enterprise and the way these entities receive funding and make money is not only a growing area, but also one that will evolve significantly over the next few years.  More and more consumers want to patronize a company that aligns with their beliefs, while more donors and foundations want to invest in companies that have a sustainable business model.  The issue right now is that most foundation support will only go to nonprofits.  I believe innovative donation support will come online over the next few years to alleviate this issue, and help more social enterprises thrive.

Be well,

Eric