The United Kingdom’s Guardian newspaper has a section covering news explicitly about social enterprises. Foundations, from Rockefeller Foundation and Omidyar Network to small family foundations, are funding them. A growing group of “impact investors” are also investing in them. So what are they, these social enterprises?
In October, members of the Feed the Future Partnering for Innovation team attended the Social Capital Markets (SOCAP) conference where thousands of social enterprises and entrepreneurs met, alongside impact investors, government donors, and accelerators. At SOCAP, participants discussed the state of the impact investment sector and the role and definition of social enterprises and “accelerator” support organizations, which provide capacity building to social enterprises. There were numerous sessions to further define and codify concepts of social enterprises and the investment landscape, all looking at varying definitions and ideas.
I kept my ears open for the most common themes about “what a social enterprise is”, and here is what I found:
- A social enterprise is a company or any organization that has profit as its bottom line, as well as a social impact bottom line putting people, planet, and profit on equal footing.
- A social enterprise is any organization that provides solutions to societal problems through a commercial or money-making approach.
- A social enterprise is any organization that, as its mission, couples financial sustainability and social impact into their core business model/operations.
What these three themes have in common is that a social enterprise does not need to be a business; it just needs to have both a commercial and a social focus. For more conventional businesses, integrating a social enterprise model into their work can enable them to integrate social impact into their ongoing commercial operations. For traditional non-profits, developing a social enterprise spin-off can complement the social mission while making it a more financially independent nonprofit (rather than depending on donations). For newer start-ups – both non-profits and for-profits – being a social enterprise provides a pathway for making social impact and financial sustainability central to operations from the outset.
So, what is the bottom line for what a social enterprise is? First, a social enterprise is not a new phenomenon or type of organization. The sector is formalizing itself as one where business is done by making both money and social impact a priority in strategies and operations. Second, a social enterprise makes money while making positive social impact.
SOCAP acts as a hub for bringing the sector together not only to further define itself, but to grow and do better. Organizations such as the Global Impact Investor Network (GIIN) and Toniic are educating investors to make better investment choices in social enterprises, and standards such as IRIS educate social enterprises on how to measure their social and financial impact. Entrepreneur networks and awardees, such as the Ashoka Fellows and the Skoll Awards, showcase what successful social enterprises and entrepreneurs look like.
Below are some articles and resources helping to define social enterprises. Before you check them out, I’m curious: Do you define your organization or business as a social enterprise? If yes, what makes your business/organization a social enterprise? If not, how do you define your business/organization’s social values? Please share in the comments section below!
A few helpful resources:
- The Institute for Social Entrepreneurs
- Social Enterprise Alliance
- ImpactAlpha: Investment News for a Sustainable Edge
One of goals of the Partnering for Innovation team at SOCAP was to bring back what they learned to you, members of the AgTechXChange! The last Learn! article featured advice on what type funding to look for, while this one focuses on looking at what makes a “social enterprise” or “social entrepreneur.” You can find the first article here.