A social enterprise is a business that applies commercial strategies to maximise improvements in human and environmental wellbeing, rather than maximising profits for external shareholders. They may use a commercial model which pursues social responsibility directly, or aim to raise funds for charitable purposes through their business activities.
In recent years there has been a rise in the number and diversity of social enterprises in Australia and around the world.
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 not-for-profit, 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 or not-for-profit status being a secondary choice; profit status is paramount for a traditional business, with a corporate responsibility stance being a secondary choice.
Visit the Social Traders website to find out more about social enterprise research, history, motivations and case studies.
Why set up a social enterprise?
Reasons for setting up a social enterprise include:
- Meeting a community need: finance, housing, fuel, education, economic opportunity for marginalised groups
- Reducing reliance on grants and donations
- Creating a business model to be both the ends and means for your social goal e.g. an employment program
- ‘Being the change’ by demonstrating better way of doing business – democratic, environmentally sustainable, socially responsible
- Generating income for another charitable/community purpose
You can watch a short video on starting a social enterprise by Social Traders.