Social Enterprise In Context

By Author: Henry Ford
Total Articles: 189
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The term social enterprise has been given a number of definitions. However, it can be taken to generally mean organizations that are mission driven with the aim of achieving a certain social purpose. These organizations normally use market based strategies to achieve their set missions. These organizations can be either for-profit or non-profit. However, not every for profit organization can be considered a social enterprise. It is important to note that only those for-profit organizations that are primarily established for social purposes can be considered social enterprises. It is also worth noting, for purposes of clarity, that almost all commercial enterprises have social objectives, what they call corporate social responsibility, but this does not qualify them into social enterprises, because as such, the operation of social enterprises is entirely motivated by social and environmental purposes. Thus, these enterprises generate profit with the view of achieving their environmental and social goals, rather than maximizing shareholder value in their activities. In order to do this, there are a number of social enterprise ...
... structures currently in place across the world. It is common to find for-profit businesses using their profits to fund social activities, for instance the funding of programs run by non-profit organizations. Others predominantly employ individuals from underprivileged backgrounds.
Majority of non-profit organizations consider social enterprise as the most appropriate way of reducing the over-dependence on donor funding as well as grants. For other yet, business is considered the vehicle capable of bringing about social change. Regardless of whether a social enterprise is a for-profit or non-profit, the fundamental ideal underlying the entrepreneurial establishment of these enterprises is the improvement of the common good, as well as the provision of solutions to the social problems in ways that can be considered effective and long lasting in comparison to the traditional approaches. Therefore, the most effective way of identifying social enterprises is to look for organizations that apply market-based strategies for the purposes of attaining social change. It seems justifiable to say that social enterprises are motivated by an increased awareness that contemporary existential problems can never be adequately addressed by the traditional philanthropic and non-profit approach. In order sufficiently explain this concept, four strategic frameworks, which operate in unity, will be discussed. At the same time, a few examples of social enterprise models will be provided. However, it is important, for purposes of clarity, to offer brief historical definitions of the term social enterprise.
Definitions of Social Enterprise
According to The Robert’s Foundation Homeless Economic Development Fund, this term was defined as a venture whose sole intent is the generation of economic opportunities for individuals with low income, while at the same time operating in respect of the financial bottom-line. This definition stresses on social enterprise as a program approach (The Four Lenses Strategic Framework, 2010).
On the other hand, the Nonprofit Enterprise and Self-sustainability Team (NESsT) considers this term to refer to methods of self financing that are employed by non-profit organizations with the aim of generating their own income in order to support their mission. This definition seems to place an emphasis on social enterprise as a funding approach.
According to the Social Enterprise Coalition based in the UK, the term has a simple definition. They consider it as a kind of trading that is done with a social purpose in mind. However, this definition has been given quite a number of interpretations. However, attention should be drawn to three important characteristics evident from this definition. First, there is the aspect of enterprise orientation, which simply means that there is a direct involvement in the production of goods and provision of services to a particular market. Secondly, there is the social aim, which is central to social enterprise in that it has explicit social aim such as training, job creation, or provision of local services. Tied to this characteristic is the ethical demand for a commitment for skill and capacity building in local communities. Finally, there is the aspect of social ownership. A great number of social enterprises are largely owned by a large number of people. In this case, the proceeds from the enterprise’s activities end up benefitting the community.
As evidenced by the above definitions, this term has not found a universal definition. However, a hybrid definition of the term can be coined as follows: a social enterprise refers to any business organization established for social purposes. These should necessarily include the reduction of social problems, and the generation of social values.
Characteristics of Social Enterprise
Social Enterprise can be considered as having three major characteristics: multi-sector, adaptive design, and global application.
Multi sectored Characteristics
Social enterprise functions over and above the traditional non-profit sector. It applies to virtually every aspect of human existence. More specifically, it applies to health, education, environment, and social welfare. However, unlike the traditional non-profit sectors, it also equally applies to job creation programs as well as economic development. Having said this, it is important to note that motivations (mission or money) can differ from sector to sector. Organizations that are involved in economic and employment development as social enterprises mostly integrate themselves as a program strategy. However, other social sectors often employ financing mechanism in their incorporation as social enterprises.
Adaptive Design Characteristics
As explained in the definition, a social enterprise has a dual-purpose, so to speak. It has in mind both the accomplishment of a non-profit mission, and the generation of funds for financing the social programs. This means therefore, that social enterprises as such stand in need of a design that provides the possibility of meeting social needs as well as the attainment of commercial viability. This design therefore needs to employ certain research tools in order to effectively analyze both internal factors and external forces. Social enterprise, therefore, is a customized operational model, which accommodates organizational capabilities, market realities, and social needs.
Global Application Characteristics
While modern day methodology gives credit to the Western world, especially the United Kingdom and the United States, it is a well known fact that self-financing schemes, non-profit businesses, and earned income activities have over the years been practiced within the non-profit organizational world. Social enterprises have especially been increasing rapidly in the developing nations, largely due to a decline in donor support, leading them to seek alternatives to their funding sources.
Having said this, it is important to look at the four main strategic frameworks in the establishment of social enterprises. These include: Hybrid Spectrum, Dual Value Creation, Financial Strategy, and Program Strategy.

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