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What is a social enterprise?

What is a social enterprise?

Article · By Jarkko Oksanen on September 25, 2016

Defining a Social Enterprise is hard. Definition depends and varies on the person.

Lets start with our simple answer.

Social enterprise is a business that does good for the local, or global community.

A social enterprise is practically a cause, with a business model to sustain it. Instead of relying on donations, the social enterprise can survive and grow on its own.

Now then, lets dig deep into what that means, and how we can define that.

There are two types of social enterprises. There are not-for-profit social enterprises and for-profit social enterprises. The difference is as the name says, can it pay dividends to its stockholders or not.

Not for profit social enterprises are non-profits with a sustainable business plan.

They of course pay salaries to their staff and management, and in some cases these salaries can be very high. High salaries is not necessarily a bad thing, as long as its kept transparent and explained.

For profit social enterprises are companies that run a business with two goals, social good, and profit.

This allows the business to use our current system of capitalism to its greatest extent possible. A for-profit social enteprise can find funding as any other for-profit company, they can grow fast if needed to and innovate within their business structure. There is less legality and formality involved. The issue with for-profit social enterprises is that the ideals can be misused. All companies that are in competition are trying to get their legs over their competition.

Calling a company social and branding it so without actually having any clear goals or plans for donation is quite common. This is why a global movement was started for certifying businesses as B-corps. This movement is growing, but it has had its fair share of critics.

Defining a Social Enteprise is hard.

Some for-profit social enteprises give 5% of their revenue to charities, and some 100% of their profit. Which is better?

The revenue share sounds low from a branding perspective, but in a lot of businesses that would end up being more than the profits. Lets remember that profit is an accounting term and can be minimalism by accounting actions if wanted to.

We define a social enterprise as follows:

A social enteprise is a business with a clear core cause in its mission, and a plan to help this cause. Helping the cause is a part of the core business.

Whats your definition of social enterprise?

Article by:

Jarkko Oksanen
on September 25, 2016

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