What is a social enterprise?

‘Social enterprise’ has no settled definition but the term refers to a business for a social purpose: using a business strategy to achieve a social, cultural or environmental goal or another kind of community benefit, rather than for the economic benefit of shareholders or owners.  As a business they operate in commercial markets seeking to generate a profit from trade. 

Social enterprises may be ‘nonprofit’, returning all profits to the enterprise itself, or they may be ‘for profit’, returning profits to their cooperative owners, the community, or someone else. However, they differ from a for-profit ‘business’ which has adopted a ‘triple bottom line’.  The social goal is paramount for a social enterprise, with profit/nonprofit status being a secondary choice; profit status is paramount for a traditional business, with a corporate responsibility stance being a secondary choice.

In 2009 Social Traders partnered with the Australian Centre for Philanthropy and Nonprofit Studies (ACPNS) at Queensland University of Technology to define social enterprise and, for the first time in Australia, to identify and map the social enterprise sector: its scope, its variety of forms, its reasons for trading, its financial dimensions, and the individuals and communities social enterprises aim to benefit. In June 2010 the final report of Finding Social Enterprises in Australia (FASES) was released.  

In determining what is meant by the term ‘social enterprise’ the FASES Report defined social enterprises as organisations that:

  • Are led by an economic, social, cultural, or environmental mission consistent with a public or community benefit; 
  • Trade to fulfil their mission; 
  • Derive a substantial portion of their income from trade; and 
  • Reinvest the majority of their profit/surplus in the fulfilment of their mission. 

To read the full report go to: http://www.socialtraders.com.au/sites/www.socialtraders.com.au/files/FASES_9.7.10.pdf