Understanding social Enterprise

By Jeanne Olive Iradukunda

Most of the times, people start businesses to earn money. Others want to work for themselves, and others want to be more hands on. However, there are other people whose entrepreneurial spirit of starting businesses is enthralled by their desire to make a positive change. This is called “social entrepreneurship, and it is a model which is quite new.

I recently had a chance to attend a social enterprise academy program called “Understanding Social Enterprise” where I have explored the meaning of social enterprise model and learned how it works. I have got time to connect and share experiences with other people working for social change.

I have discovered that there are various opinions about social entrepreneurship. However, all agree that social enterprises do business to generate enough revenues to sustain themselves. They, on the other hand, do businesses to achieve a core social or environmental purpose. A social enterprise is guided by triple button line, which means they measure their success by considering the impact their decisions have on people, profit, and planet.

People: a social enterprise should have a social impact on its business, change people’s lives, and develop a community in a sustainable way.

Profit: like other enterprises, social enterprises have to make profit in order to sustain themselves and achieve their social or environmental aim.

Planet: a social enterprise should have an environmental impact either by contributing to a sustainable impact or not causing any environmental negative impacts in its activities.

Key characteristics of social enterprises

According to social enterprise academy (2017), a social enterprise is characterized by the following:

  • It has a social or environmental aim to the heart: This is the main reason of being a social enterprise although it generates revenues to sustain itself.
  • It trades as a means to a social or environmental end: A social enterprise does trade with the purpose of achieving its social or environmental aim, while other organizations may do their trade to fully use the donations and grants in other activities which are not related to their aim such as creating wealth of its stakeholders or use the profit in philanthropic purposes.
  • It mainly reinvests its profits into its social or environmental aim: In other organizations or businesses, owners or stakeholders use profit for themselves or use them for philanthropic purposes. Social enterprises use their revenues to sustain themselves or reinvest them back into the enterprise for scale and growth.
  • Its activities are guided by ethical values: A social enterprise is always guided by the triple button line for it to consider its decisions so that it does not have an impact on people, profit and, planet.
  • A social enterprise can take a number of legal forms:It can go under non-profit, profit, or a combination of the two. However, it is not defined by a legal form rather its core characteristics are their reason for being.

Many successful business ideas around the world exist to solve a particular problem. Therefore, depending on your mission, you can implement your business attempting to increase positive impact. The necessity to be a social entrepreneur is doing/having/running an enterprise that reflects on people, profit, and planet. This means that it should have a social aim, earn revenues to sustain itself, and operate without harming the environment.

3 thoughts on “Understanding social Enterprise”

  1. Waou,
    This article clearly defines three geas that make a business to be successful:
    – Impact it will have on people’lives ( surroundings)
    – Profit for keeping the business moving forward
    – Environment concervation: Business that won’t harm / damage our planet.

  2. Thanks a lot Olive for sharing this about social enteprise.
    Would you help to understand the difference between social enterprise and corporate social service of full profit companies? Because may think as they have a department in charge of social as they are also part of social enterprise

    1. Great question Olivier,
      The difference between social enterprise and corporate social service of full profit companies is that a social enterprise starts with the aim of achieving a core social or environmental purpose. While a corporate social service purpose is to make profit and consider the social and environmental impact of its activities and attempt to mitigate against some of these negative effects. Of course, a social enterprise generates profit, but it is for sustaining itself in order to achieve their social aim. But, a corporate social responsibility business uses its profit to create wealth of stakeholders and owners or use their profit for philanthropic, volunteering or environmental efforts purpose.

      Hope this helps.

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