Social enterprise
Encyclopedia
A social enterprise is an organization
that applies business
strategies to achieving philanthropic
goals. Social enterprises can be structured as a for-profit
or non-profit
.
Many commercial enterprises would consider themselves to have social objectives, but commitment to these objectives is fundamentally motivated by the perception that such commitment will ultimately make the enterprise more financially valuable. Social enterprises differ in that, inversely, they do not aim to offer any benefit to their investors, except where they believe that doing so will ultimately further their capacity to realise their philanthropic goals.
Many entrepreneurs, whilst running a profit focussed enterprise that they own, will make charitable gestures through the enterprise, expecting to make a loss in the process. However unless the social aim is the primary purpose of the company this is not considered to be social enterprise. The term is more specific, meaning 'doing charity by doing trade', rather than 'doing charity while doing trade'. Another example is an uncorporation
, which may pursue social responsibility
goals that conflict with traditional corporate shareholder primacy
, or may donate most of its profits to charity.
Social enterprises are often - but not exclusively - a type of non-profit organisation. There are many non-profit organisations that are meant to be self-serving. Only where a non-profit enterprise has goals widely considered to be philanthropic, can it safely be considered a social enterprise. That said, defining a goal as philanthropic is, of course, subjective. For example, an organisation devoted to religious evangelism might be considered philanthropic by some and self-serving by others.
Relevant publications on the subject include the Social Enterprise Journal and the Annals of Co-operative Study. The European Social Enterprise Research network (EMES), and the Co-operative Research Unit (CRU) at the Open University
have published research into social enterprise, as well as network organizations such as Co-ops UK, Development Trusts Association
and Social Enterprise UK. An organisation called The Social Enterprise World Forum was established in 2008, aiming to provide an opportunity for people interested in social enterprise to communicate and collaborate globally.
This Finding Australia’s Social Enterprise Sector project produced its final report in June 2010. The project was led by Associate Professor Jo Barraket, Australia’s leading social enterprise academic.
One of the key features of this Australian research is its intention to define social enterprise in a way that was informed by and made sense to those working in or with social enterprises.
The research design therefore included workshops to explore and test what social enterprise managers, researchers, and relevant policy makers meant by the term ‘social enterprise’. This was the resulting definition:
Social enterprises are organisations that:
a. Are led by an economic, social, cultural, or environmental mission consistent with a public or community benefit;
b. Trade to fulfil their mission;
c. Derive a substantial portion of their income from trade; and
d. Reinvest the majority of their profit/surplus in the fulfilment of their mission.
In the U.S, two distinct characteristics differentiate social enterprises from other types of businesses, nonprofits, and government agencies:
In the United States, “social enterprise” is also distinct from “social entrepreneurship
,” which broadly encompasses such diverse players as B Corp companies, socially responsible investors, “for-benefit” ventures, Fourth Sector organizations, CSR efforts by major corporation
s, “social innovators
” and others. All these types of entities grapple with social needs in a variety of ways, but unless they directly address social needs through their products or services or the numbers of disadvantaged people they employ, they do not qualify as social enterprises.
(NGO), often registered as a Society under Indian Societies Registration Act, 1860, a Trust registered under various Indian State Trust Acts or a Section 25 Company registered under Indian Companies Act, 1956.
India has around 1-2 million NGOs, including number of religious organizations, religious trust, like Temples, Mosque and Gurudwara associations etc., who are not deemed as social enterprises.
A social enterprise in India
is primarily NGOs, who raise funds through some services (often fund raising events and community activities) and occasionally products.
Despite this, in India the term, Social Enterprise is not widely used, instead terms like NGOs and NPOs (Non-profit organizations) are used, where these kind of organizations are legally allowed to raise fund for non-business activities.
Child Rights and You
and Youth United
, are such examples of social enterprise, who raise funds through their services, fund raising activities (organizing events, donations, and grants) or sometimes products, to further their social and environmental goals.
In the agriculture sector, International Development Enterprises has helped pull millions of small farmers out of poverty in India http://www.ideorg.org/ Paul Polak http://blog.paulpolak.com/, details the story in his book, "Out of Poverty"
Another area of social enterprise in India and the developing world is bottom of the pyramid (BOP) Bottom of the pyramid
businesses which was identified and analyzed by CK Prahahalad C. K. Prahalad
in "Fortune at the Base of the Pyramid" This seminal work has been a springboard for a robust area of both innovation and academic research.
ian 'ideal type
' rather than a prescriptive definition - which relies on nine fuzzy criteria:
Economic criteria:
1. continuous activity of the production and/or sale of goods and services (rather than predominantly advisory or grant-giving functions).
2. a high level of autonomy: social enterprises are created voluntarily by groups of citizens and are managed by them, and not directly or indirectly by public authorities or private companies, even if they may benefit from grants and donations. Their shareholders have the right to participate ('voice') and to leave the organisation ('exit').
3. a significant economic risk: the financial viability of social enterprises depends on the efforts of their members, who have the responsibility of ensuring adequate financial resources, unlike most public institutions.
4. social enterprises' activities require a minimum number of paid workers, although, like traditional non-profit organisations, social enterprises may combine financial and non-financial resources, voluntary and paid work.
Social criteria:
5. an explicit aim of community benefit: one of the principal aims of social enterprises is to serve the community or a specific group of people. To the same end, they also promote a sense of social responsibility at local level.
6. citizen initiative: social enterprises are the result of collective dynamics involving people belonging to a community or to a group that shares a certain need or aim. They must maintain this dimension in one form or another.
7. decision making not based on capital ownership: this generally means the principle of 'one member, one vote', or at least a voting power not based on capital shares. Although capital owners in social enterprises play an important role, decision-making rights are shared with other shareholders.
8. participatory character, involving those affected by the activity: the users of social enterprises' services are represented and participate in their structures. In many cases one of the objectives is to strengthen democracy at local level through economic activity.
9. limited distribution of profit: social enterprises include organisations that totally prohibit profit distribution as well as organisations such as co-operatives, which may distribute their profit only to a limited degree, thus avoiding profit maximising behaviour.
Ongoing research work characterises social enterprises as often having multiple objectives, multiple stakeholders and multiple sources of funding. However their objectives tend to fall into three categories:
Despite, and sometimes in contradiction to, such academic work, the term social enterprise is being picked up and used in different ways in various European countries:
programme agreed on the following distinctions (April 2008):
Social economy
Social entrepreneurship
Social enterprise
Under Italian law a social enterprise is a private entity that provides social utility goods and services, acting for the common interest and not for profit.
The first general aspect that has to be highlighted is that a social enterprise is neither a new legal form, nor a new type of organization, but a legal category in which all eligible organizations may be included, regardless of their internal organizational structure. Therefore, the eligible organizations could in theory be cooperatives (i.e. employee-, producer-, or customer-owned firms), investor-owned firms (i.e. business corporations), or traditional nonprofit organizations (i.e. associations and foundations). This is the so-called principle of “neutrality of the legal forms” adopted by the Italian law.
Hence, social enterprise is like a legal “brand” that all eligible organizations can obtain and use in the marketplace.
The requirements are:
- being a private organization;
- performing an entrepreneurial activity of production of social utility goods and services (The Law prescribes that this must be the main activity, that is, it has to account for at least 70% of the total income of the organization);
- acting for the common interest and not for profit.
In order to be defined as a social enterprise, an organization needs to simultaneously possess all these attributes.
In an effort to develop social enterprises and measure social impact, the Italian governmental work placement agency - Italia Lavoro - has developed a method to calculate the social efficiency of their project, from an economic point of view. For example, they measure the economic value to the society of providing a job to a disabled person. Since 1997, Italia Lavoro provides work placements to people with mental, social, physical or health disadvantages. To this aim, they help people who have fallen out of the general work system to reintegrate society through the creation of small and medium non-profit enterprises.
Also intended to generate more social enterprises is the non-profit cooperative Make a Change. Make a Change provides financial, operational and management support to social start-ups. In 2010 they organized the first edition of a contest to elect the "Social entrepreneur of the year", as well as another contest entitled "The World's Most Beautiful Job". This year winner of the former was the social cooperative "Cauto", which manages the whole trash life-cycle in the province of Brescia. Cauto's workforce is composed by 1/3 of disabled and disadvantaged individuals.
Winner of the "World's Most Beautiful Job" prize was the project "Tavern of the Good and Bad" by the group Domus de luna from Cagliari. The tavern employs mums and children who just exited rehabilitation programs. The prize consisted of a financial aid of 30.000 euro and 12 months of professional consulting and support.
The prize-giving ceremony was included in the program of the Global Entrepreneurship Week.
The original use of the term social enterprise was first developed by Freer Spreckley in 1978, and later included in a publication called Social Audit – A Management Tool for Co-operative Working published in 1981 by Beechwood College. In the original publication the term social enterprise was developed to describe an organisation that uses Social Audit. Freer went on to describe a social enterprise as:
Later on the three areas of social, environmental and financial benefits used for measuring social enterprise became known as the Triple Bottom Line.
Twenty years later Freer Spreckley and Cliff Southcombe established the first specialist support organisation in the UK Social Enterprise Partnership Ltd. in March 1997.
In the British context, social enterprises include community enterprises, credit unions, trading arms of charities, employee-owned businesses, co-operatives, development trust
s, housing association
s, social firm
s, and leisure trusts.
Whereas conventional businesses distribute their profit among shareholder
s, in social enterprises the surplus tends to go towards one or more social aims which the business has – for example education for the poor, vocational training for disabled people, environmental issues or for animal rights.
Social enterprises are distinct from charities (although charities are also increasingly looking at ways of maximising income from trading), and from private sector companies with policies on corporate social responsibility. An emerging view, however, is that social enterprise is a particular type of trading activity that sometimes gives rise to distinct organisation forms reflecting a commitment to social cause working with stakeholders from more than one sector of the economy
The first agency in the UK - Social Enterprise London
(SEL) - was established in 1998 after collaboration between co-operative businesses (Poptel, Computercraft Ltd, Calverts Press, Artzone), a number of co-operative development agencies (CDAs), and infrastructure bodies supporting co-operative enterprise development (Co-operative Training London, Co-operative Party, London ICOM, Co-operatives UK). SEL's first chief executive, Jonathan Bland, brought experience from Valencia where a business support infrastructure for co-operative enterprise was established using learning from the Mondragon region of Spain. SEL did more than provide support to emerging businesses. It created a community of interest by working with the London Development Agency (LDA) to establish both an undergraduate degree in social enterprise at the University of East London (led by Jon Griffith) and a Social Enterprise Journal (now managed by Liverpool John Moores University and published by Emerald Publishing). Allison Ogden-Newton took over from Jonathan Bland as Chief Executive of Social Enterprise London in 2004. Under her leadership the organisation built a network of over 2,000 social enterprises and social entrepreneurs, directly brokered over 500 social enterprise jobs under the DWP's Future Jobs Fund and delivers consultancy and business support across the world in countries including Vietnam, Korea and Croatia.
Two years later, The National Council for Voluntary Organisations (NCVO) established the Sustainable Funding Project. Using funds from FutureBuilders, Centrica and Charity Bank
, this project promoted the concept of sustainability through trading to voluntary groups and charities.
In 2002, the British government launched a unified Social Enterprise Strategy, and established a Social Enterprise Unit (SEnU) to co-ordinate its implementation in England
and Wales
.
After a consultation on a new type of company (see CIC below), policy development was increasingly influenced by organisations in the conventional "non-profit" sector rather than those with their origins in employee-ownership and co-operative sectors. The 2003 DTI report on the consultation shows the disproportion influence of charitable trusts and umbrella organisations in the voluntary sector, and evidence now exists that the voice of progressive employee-owned organisations were marginalised in the course of producing the report.
The Social Enterprise Unit was initially established within the Department of Trade and Industry (DTI), and in 2006 became part of the newly created Office of the Third Sector, under the wing of the Cabinet Office.
Following broad consultation, SEnU adopted a broader definition which is independent of any legal model. This latitudinarian definition could include not only companies limited by guarantee
, and industrial and provident societies
but also companies limited by shares, unincorporated associations, partnerships and sole traders.
A survey conducted for the SEnU in 2004 found that there were 15,000 social enterprises in the UK (counting only those that are incorporated as companies limited by guarantee or industrial and provident societies). This is 1.2% of all enterprises in the UK. They employ 450,000 people, of whom two-thirds are full-time, plus a further 300,000 volunteers. Their combined annual turnover is £18 billion, and the median turnover is £285,000. Of this, 84% is from trading. In 2006, the government revised this estimate upwards to 55,000, based on a survey of a sample of owners of businesses with employees, which found that 5% of them define themselves as social enterprises. The most up to date estimates suggest that there are approximately 62,000 social enterprises in the UK, contributing £24 billion to the UK economy.
Branding
In February 2010 the new Social Enterprise Mark was launched. Like the Fair Trade brand, the Social Enterprise Mark aims to increase the visibility of socially motivated businesses. More than this, the mark represents the growing commercial identity of social enterprises and a deliberate attempt to carve out a recognisable niche for such organisations in the business community. Qualification for the mark requires that a business conform to set criteria, e.g. companies must earn at least 50% of their income from trade and spend at least 50% of their profits on socially beneficial purposes. The mark has been received with mixed responses in some corners with suggestions that the qualifying criteria is not strict enough.
, social enterprise is a devolved function and is part of the remit of the Scottish Government. Activities are co-ordinated by the Scottish Social Enterprise Coalition, and intellectual leadership is provided by the Social Enterprise Institute at Herriot-Watt University (Edinburgh), established under the directorship of Declan Jones. Senscot based in Edinburgh
supports social entrepreneurs through a variety of activities including a weekly email bulletin by co-founder Lawrence Demarco. The Social Enterprise Academy "deliver leadership, enterprise, and social impact programmes" throughout Scotland and further support is provided by Development Trusts Association Scotland
and Co-operative Development Scotland.
, Welsh Water
, Cafédirect
, The Eden Project, Divine Chocolate (Kuapa Kokoo), The Big Issue
, the Co-operative Group, HCT Group
, Duchy Originals
, and the London Symphony Orchestra
.
Three common characteristics of social enterprises as defined by Social Enterprise London are:
The UK has also developed a new legal form called the community interest company
(CIC). CICs are a new type of limited company designed specifically for those wishing to operate for the benefit of the community rather than for the benefit of the owners of the company. This means that a CIC cannot be formed or used solely for the personal gain of a particular person, or group of people. Legislation caps the level of dividends payable at 35% of profits and returns to individuals are capped at 4% above the bank base rate.
CICs can be limited by shares, or by guarantee, and will have a statutory "asset lock" to prevent the assets and profits being distributed, except as permitted by legislation. This ensures the assets and profits are retained within the CIC for community purposes, or transferred to another asset-locked organisation, such as another CIC or charity.
A CIC cannot be formed to support political activities and a company that is a charity cannot be a CIC, unless it gives up its charitable status. However, a charity may apply to register a CIC as a subsidiary company.
The national body for the social enterprise movement in Britain is the Social Enterprise Coalition (SEC) and this liaises with similar groups in each region of England, and in Northern Ireland, Scotland & Wales. The definition of social enterprise propagated by the SEC is slightly broader than the original DTI definition and acknowledged that the social purpose of an organisation can be "embedded in its structure and governance". As such, social businesses that adopt inclusive governance structures and employee-ownership are brought fully into the fold of the movement.
, a business set up specifically to create employment for people otherwise severely disadvantaged in the labour market.
Schwartz described social entrepreneurs as extraordinarily innovative, deploying models that seem to derive results out of thin air.
was launched in 2007 in order to increase public awareness of Ghana's solid plastic waste problem and clean up sachets from the streets of Accra
. This company buys waste from collectors. After washing and drying the sachets, it sews them into fashionable bags and other products which are then sold in Accra
and exported to eight other countries around the world. The Trashy Bags
Company has collected 20 million plastic sachets since its founding, and employs 60 machinists.
a non-profit social enterprise that plants trees with small holder farmers and uses economies of scale to enable them to access high value markets for processed trees. Another example of this is RISE Kenya http://www.risekenya.org/ that runs projects to mitigate climate change in the semi arid Eastern Province of Kenya. They also run weaving projects where by women who would traditionally engage in weaving make products that are marketed in the capital city Nairobi and in overseas markets of Europe and America.
Other development oriented social enterprises in Kenya include the One Acre Fund http://www.oneacrefund.org/, Nuru International http://www.nuruinternational.org/ and Alive & Kicking
, that operates a sport ball factory in Nairobi. Kenya's social enterprises include M-Pesa, which facilitated economic transactions via mobile phone.
Social enterprise in Kenya has grown to include spaces with IT infrastructure such as internet connectivity and computer hardware. Two of these, the iHub and NaiLab, are centers for technological enterprise, with ventures such as Tandaa in coopperation with the ICT Board of Kenya and Akirachix. http://kopokopo.tumblr.com/post/2583234700/starting-a-social-enterprise-in-kenya
The Enterprising Solutions Award is the UK's national award for social enterprise. Run by the Social Enterprise Coalition in partnership with the Office of the Third Sector in the Cabinet office and the Community Banking branch of the RBS Group, the awards recognize the work undertaken by many organizations within the social enterprise movement.
The Edge Upstarts Awards are run annually by the New Statesman
in the UK.
The Hong Kong Social Enterprise Challenge is the first and the only inter-collegiate social ventures business competition in Hong Kong.
Fast Company has a yearly ranking of top 15 to 25 noteworthy social enterprises called the Social Capitalist Awards which highlights noteworthy organizations in social innovation (2004 to 2010).
There are several business schools which offer social entrepreneurship business plants.
In addition, several organizations offer fellowships like Ashoka http://www.ashoka.org/, Acumen Fund http://www.acumenfund.org/, and Echoing Green http://www.echoinggreen.org/ all three of which are quite competitive. Still other organizations offer accelerator and mentorship programs like the Unreasonable Institute http://unreasonableinstitute.org/.
Organization
An organization is a social group which distributes tasks for a collective goal. The word itself is derived from the Greek word organon, itself derived from the better-known word ergon - as we know `organ` - and it means a compartment for a particular job.There are a variety of legal types of...
that applies business
Business
A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...
strategies to achieving philanthropic
Philanthropy
Philanthropy etymologically means "the love of humanity"—love in the sense of caring for, nourishing, developing, or enhancing; humanity in the sense of "what it is to be human," or "human potential." In modern practical terms, it is "private initiatives for public good, focusing on quality of...
goals. Social enterprises can be structured as a for-profit
Profit (accounting)
In accounting, profit can be considered to be the difference between the purchase price and the costs of bringing to market whatever it is that is accounted as an enterprise in terms of the component costs of delivered goods and/or services and any operating or other expenses.-Definition:There are...
or non-profit
Nonprofit organization
Nonprofit organization is neither a legal nor technical definition but generally refers to an organization that uses surplus revenues to achieve its goals, rather than distributing them as profit or dividends...
.
Many commercial enterprises would consider themselves to have social objectives, but commitment to these objectives is fundamentally motivated by the perception that such commitment will ultimately make the enterprise more financially valuable. Social enterprises differ in that, inversely, they do not aim to offer any benefit to their investors, except where they believe that doing so will ultimately further their capacity to realise their philanthropic goals.
Many entrepreneurs, whilst running a profit focussed enterprise that they own, will make charitable gestures through the enterprise, expecting to make a loss in the process. However unless the social aim is the primary purpose of the company this is not considered to be social enterprise. The term is more specific, meaning 'doing charity by doing trade', rather than 'doing charity while doing trade'. Another example is an uncorporation
Uncorporation
An uncorporation is an unorthodox form of large business organization. The term appears to embrace any unincorporated business. An uncorporation may be formed in an effort to align managers' and owners' interests more closely than in a typical corporation, or may donate most of its profits to...
, which may pursue social responsibility
Social responsibility
Social responsibility is an ethical ideology or theory that an entity, be it an organization or individual, has an obligation to act to benefit society at large. Social responsibility is a duty every individual or organization has to perform so as to maintain a balance between the economy and the...
goals that conflict with traditional corporate shareholder primacy
Shareholder primacy
Shareholder primacy is a theory in corporate governance holding that shareholder interests should be assigned first priority. A shareholder primacy approach often gives shareholders power to intercede directly and frequently in corporate decisionmaking, through such means as unilateral shareholder...
, or may donate most of its profits to charity.
History and Philosophy
The idea of social enterprise has a long history around the world, though under different names and with different tendencies. Whilst many social enterprises will today accept finance and other forms of support from the state, they are essentially private sector operations with a goal that is philanthropic.Social enterprises are often - but not exclusively - a type of non-profit organisation. There are many non-profit organisations that are meant to be self-serving. Only where a non-profit enterprise has goals widely considered to be philanthropic, can it safely be considered a social enterprise. That said, defining a goal as philanthropic is, of course, subjective. For example, an organisation devoted to religious evangelism might be considered philanthropic by some and self-serving by others.
Relevant publications on the subject include the Social Enterprise Journal and the Annals of Co-operative Study. The European Social Enterprise Research network (EMES), and the Co-operative Research Unit (CRU) at the Open University
Open University
The Open University is a distance learning and research university founded by Royal Charter in the United Kingdom...
have published research into social enterprise, as well as network organizations such as Co-ops UK, Development Trusts Association
Development trust
Development Trusts are organisations which operate in the United Kingdom that are:*community based, owned and led*engaged in the economic, environmental and social regeneration of a defined area or community...
and Social Enterprise UK. An organisation called The Social Enterprise World Forum was established in 2008, aiming to provide an opportunity for people interested in social enterprise to communicate and collaborate globally.
In Australia
The forms social enterprises can take and the industries they operate in are so many and various that it has always been a challenge to define, find and count social enterprises. 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.This Finding Australia’s Social Enterprise Sector project produced its final report in June 2010. The project was led by Associate Professor Jo Barraket, Australia’s leading social enterprise academic.
One of the key features of this Australian research is its intention to define social enterprise in a way that was informed by and made sense to those working in or with social enterprises.
The research design therefore included workshops to explore and test what social enterprise managers, researchers, and relevant policy makers meant by the term ‘social enterprise’. This was the resulting definition:
Social enterprises are organisations that:
a. Are led by an economic, social, cultural, or environmental mission consistent with a public or community benefit;
b. Trade to fulfil their mission;
c. Derive a substantial portion of their income from trade; and
d. Reinvest the majority of their profit/surplus in the fulfilment of their mission.
In North America
The Social Enterprise Alliance (SEA) of the United States defines a “social enterprise” as “an organization or venture that advances its primary social or environmental mission using business methods.”In the U.S, two distinct characteristics differentiate social enterprises from other types of businesses, nonprofits, and government agencies:
- Social enterprises directly address social needs through their products and services or through the numbers of disadvantaged people they employ. This distinguishes them from “socially responsible businesses,” which create positive social changeSocial changeSocial change refers to an alteration in the social order of a society. It may refer to the notion of social progress or sociocultural evolution, the philosophical idea that society moves forward by dialectical or evolutionary means. It may refer to a paradigmatic change in the socio-economic...
indirectly through the practice of corporate social responsibilityCorporate social responsibilityCorporate social responsibility is a form of corporate self-regulation integrated into a business model...
(e.g., creating and implementing a philanthropic foundation; paying equitable wages to their employees; using environmentally friendly raw materialRaw materialA raw material or feedstock is the basic material from which a product is manufactured or made, frequently used with an extended meaning. For example, the term is used to denote material that came from nature and is in an unprocessed or minimally processed state. Latex, iron ore, logs, and crude...
s; providing volunteers to help with community projects). - Social enterprises use earned revenue strategies to pursue a double or triple bottom lineBottom LineThe Bottom Line was a music venue at 15 West Fourth Street between Mercer Street and Greene Street in the Greenwich Village neighborhood of Manhattan, New York City...
, either alone (as a social sector business, in either the privatePrivate sectorIn economics, the private sector is that part of the economy, sometimes referred to as the citizen sector, which is run by private individuals or groups, usually as a means of enterprise for profit, and is not controlled by the state...
or the nonprofit sector) or as a significant part of a nonprofit’s mixed revenue stream that also includes charitable contributions and public sectorPublic sectorThe public sector, sometimes referred to as the state sector, is a part of the state that deals with either the production, delivery and allocation of goods and services by and for the government or its citizens, whether national, regional or local/municipal.Examples of public sector activity range...
subsidies. This distinguishes them from traditional nonprofits, which rely primarily on philanthropic and government support.
In the United States, “social enterprise” is also distinct from “social entrepreneurship
Social entrepreneurship
Social entrepreneurship is the work of social entrepreneurs. A social entrepreneur recognizes a social problem and uses entrepreneurial principles to organize, create and manage a venture to achieve social change . While a business entrepreneur typically measures performance in profit and return, a...
,” which broadly encompasses such diverse players as B Corp companies, socially responsible investors, “for-benefit” ventures, Fourth Sector organizations, CSR efforts by major corporation
Corporation
A corporation is created under the laws of a state as a separate legal entity that has privileges and liabilities that are distinct from those of its members. There are many different forms of corporations, most of which are used to conduct business. Early corporations were established by charter...
s, “social innovators
Social innovation
Social innovation refers to new strategies, concepts, ideas and organizations that meet social needs of all kinds - from working conditions and education to community development and health - and that extend and strengthen civil society....
” and others. All these types of entities grapple with social needs in a variety of ways, but unless they directly address social needs through their products or services or the numbers of disadvantaged people they employ, they do not qualify as social enterprises.
In India
In India, a social enterprise may be a non-profit Non-governmental organizationNon-governmental organization
A non-governmental organization is a legally constituted organization created by natural or legal persons that operates independently from any government. The term originated from the United Nations , and is normally used to refer to organizations that do not form part of the government and are...
(NGO), often registered as a Society under Indian Societies Registration Act, 1860, a Trust registered under various Indian State Trust Acts or a Section 25 Company registered under Indian Companies Act, 1956.
India has around 1-2 million NGOs, including number of religious organizations, religious trust, like Temples, Mosque and Gurudwara associations etc., who are not deemed as social enterprises.
A social enterprise in India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
is primarily NGOs, who raise funds through some services (often fund raising events and community activities) and occasionally products.
Despite this, in India the term, Social Enterprise is not widely used, instead terms like NGOs and NPOs (Non-profit organizations) are used, where these kind of organizations are legally allowed to raise fund for non-business activities.
Child Rights and You
Child Rights and You
Child Rights and You commonly abbreviated as CRY is a non-profit organization in India that aims to restore children's rights in India. The organisation was established in 1979. The organization partners with grass-roots Non governmental organisations to uplift thousands of Indian children denied...
and Youth United
Youth United
Youth United is an Indian Social Enterprise, Non-profit and Non Governmental Organization working for the betterment of society through the continuing efforts of the youth of the Nation, with the operational chapters in Delhi, Patiala, Pune, Bengaluru and headquarter in Chandigarh.Youth United ...
, are such examples of social enterprise, who raise funds through their services, fund raising activities (organizing events, donations, and grants) or sometimes products, to further their social and environmental goals.
In the agriculture sector, International Development Enterprises has helped pull millions of small farmers out of poverty in India http://www.ideorg.org/ Paul Polak http://blog.paulpolak.com/, details the story in his book, "Out of Poverty"
Another area of social enterprise in India and the developing world is bottom of the pyramid (BOP) Bottom of the pyramid
Bottom of the pyramid
In economics, the bottom of the pyramid is the largest, but poorest socio-economic group. In global terms, this is the 2.5 billion people who live on less than $2.50 per day. The phrase “bottom of the pyramid” is used in particular by people developing new models of doing business that deliberately...
businesses which was identified and analyzed by CK Prahahalad C. K. Prahalad
C. K. Prahalad
Coimbatore Krishnarao Prahalad was the Paul and Ruth McCracken Distinguished University Professor of Corporate Strategy at the Stephen M...
in "Fortune at the Base of the Pyramid" This seminal work has been a springboard for a robust area of both innovation and academic research.
Malaysia
The Malaysian Social Enterprise Alliance (SEA) defines social enterprises as "organizations created to address social problems that use business models to sustain themselves financially. Social enterprises seek to create not only financial returns but also social returns to their beneficiaries." http://sea.dosomething.gd/featured-articles/content-area-1/ The Alliance regards social enterprises as businesses with a social focus, distinct from non-profit organisations. http://sea.dosomething.gd/featured-articles/content-area-1/In Europe
The best established European research network in the field, EMES, works with a more articulated definition - a WeberMax Weber
Karl Emil Maximilian "Max" Weber was a German sociologist and political economist who profoundly influenced social theory, social research, and the discipline of sociology itself...
ian 'ideal type
Ideal type
Ideal type , also known as pure type, is a typological term most closely associated with antipositivist sociologist Max Weber . For Weber, the conduct of social science depends upon the construction of hypothetical concepts in the abstract...
' rather than a prescriptive definition - which relies on nine fuzzy criteria:
Economic criteria:
1. continuous activity of the production and/or sale of goods and services (rather than predominantly advisory or grant-giving functions).
2. a high level of autonomy: social enterprises are created voluntarily by groups of citizens and are managed by them, and not directly or indirectly by public authorities or private companies, even if they may benefit from grants and donations. Their shareholders have the right to participate ('voice') and to leave the organisation ('exit').
3. a significant economic risk: the financial viability of social enterprises depends on the efforts of their members, who have the responsibility of ensuring adequate financial resources, unlike most public institutions.
4. social enterprises' activities require a minimum number of paid workers, although, like traditional non-profit organisations, social enterprises may combine financial and non-financial resources, voluntary and paid work.
Social criteria:
5. an explicit aim of community benefit: one of the principal aims of social enterprises is to serve the community or a specific group of people. To the same end, they also promote a sense of social responsibility at local level.
6. citizen initiative: social enterprises are the result of collective dynamics involving people belonging to a community or to a group that shares a certain need or aim. They must maintain this dimension in one form or another.
7. decision making not based on capital ownership: this generally means the principle of 'one member, one vote', or at least a voting power not based on capital shares. Although capital owners in social enterprises play an important role, decision-making rights are shared with other shareholders.
8. participatory character, involving those affected by the activity: the users of social enterprises' services are represented and participate in their structures. In many cases one of the objectives is to strengthen democracy at local level through economic activity.
9. limited distribution of profit: social enterprises include organisations that totally prohibit profit distribution as well as organisations such as co-operatives, which may distribute their profit only to a limited degree, thus avoiding profit maximising behaviour.
Ongoing research work characterises social enterprises as often having multiple objectives, multiple stakeholders and multiple sources of funding. However their objectives tend to fall into three categories:
- integration of disadvantaged people through work (work integration social enterprises or WISEs)
- provision of social, community and environmental services
- ethical trading such as fair tradeFair tradeFair trade is an organized social movement and market-based approach that aims to help producers in developing countries make better trading conditions and promote sustainability. The movement advocates the payment of a higher price to producers as well as higher social and environmental standards...
Despite, and sometimes in contradiction to, such academic work, the term social enterprise is being picked up and used in different ways in various European countries:
Czech Republic
In the Czech Republic a working party stemming from the development partnerships in the EQUALEQUAL Community Initiative
EQUAL was the ‘Community Initiative’ within the European Social Fund of the European Union. It concerned “transnational co-operation to promote new means of combating all forms of discrimination and inequalities in connection with the labour market”...
programme agreed on the following distinctions (April 2008):
Social economy
- It is a complex of autonomous private activities realized by different types of organizations that have the aim to serve their members or local community first of all by doing business. The social economy is oriented on solving issues of unemployment, social coherence and local development. It is created and developed on the base of concept of triple bottom line – economic, social and environmental benefits. Social economy enables citizens to get involved actively in the regional development. Making profit/surplus is desirable, however is not a primary goal. Contingent profit is used in preference for development of activities of organization and for the needs of local community. Internal relations in the social enterprises are headed to the maximum involvement of members/employees in decision-making and self-management while external relations strengthen social capitalSocial capitalSocial capital is a sociological concept, which refers to connections within and between social networks. The concept of social capital highlights the value of social relations and the role of cooperation and confidence to get collective or economic results. The term social capital is frequently...
. Legal form of social economy entities is not decisive – what is crucial is observing public benefit aims as listed in the articles. Subjects of the social economy are social enterprises and organizations supporting their work in the areas of education, consulting and financing.
Social entrepreneurship
- Social entrepreneurship develops independent business activities and is active on the market in order to solve issues of employment, social coherence and local development. Its activities support solidarity, social inclusion and growth of social capital mainly on local level with the maximum respect of sustainable development.
Social enterprise
- Social enterprise means "a subject of social entrepreneurship", i.e. legal entity or its part or a natural person which fulfils principles of the social enterprise; social enterprise must have appropriate trade license.
- The above mentioned definitions stem from the four basic principles which should be followed by all social enterprises. Standards with a commentary were settled for each principle. These standards were settled as the minimum so that they should be observed by all legal entities and all types of social enterprises. Specific types of enterprises, that are undergoing pilot verification within CIP EQUAL projects and that are already functioning in the Czech Republic, are social firms employing seriously disadvantaged target groups, and municipal social cooperatives as a suitable form of entrepreneurship with the view of development of local communities and microregions.
- The legal form a social enterprise takes is not important, however they must be subject of private law. According to the existing legal system, they can function in a form of cooperatives, civic associations, public benefit associations, church legal entities, Ltd., stock companies and sole traders. Budgetary organizations and municipalities should not be social enterprises as they are not autonomous - they are parts of public administration.
- Social entrepreneurship is defined very broadly. Beside employment of the people disadvantaged at the labour market it also includes organizations providing public benefit services in the area of social inclusion and local development including environmental activities, individuals from the disadvantaged groups active in business and also complementary activities of NGOs destined to reinvest profit into the main public benefit activity of an organization. Social entrepreneurship defined in such a wide way should not be directly bound to legal benefits and financial support because the concept of social entrepreneurship might be then threatened by misuse and disintegration. Conditions of eventual legal and financial support should be discussed by experts.
Finland
In Finland a law was passed in 2004 that defines a social enterprise as being any sort of enterprise that is entered on the relevant register and at least 30% of whose employees are disabled or long-term unemployed. As of March 2007, 91 such enterprises had been registered, the largest with 50 employees. In the UK the more specific term "social firm" is used to distinguish such "integration enterprises";Italy
Italy passed a law in 2005 on imprese sociali, to which the government has given form and definition by Legislative Decree, 24 March 2006, no. 155Under Italian law a social enterprise is a private entity that provides social utility goods and services, acting for the common interest and not for profit.
The first general aspect that has to be highlighted is that a social enterprise is neither a new legal form, nor a new type of organization, but a legal category in which all eligible organizations may be included, regardless of their internal organizational structure. Therefore, the eligible organizations could in theory be cooperatives (i.e. employee-, producer-, or customer-owned firms), investor-owned firms (i.e. business corporations), or traditional nonprofit organizations (i.e. associations and foundations). This is the so-called principle of “neutrality of the legal forms” adopted by the Italian law.
Hence, social enterprise is like a legal “brand” that all eligible organizations can obtain and use in the marketplace.
The requirements are:
- being a private organization;
- performing an entrepreneurial activity of production of social utility goods and services (The Law prescribes that this must be the main activity, that is, it has to account for at least 70% of the total income of the organization);
- acting for the common interest and not for profit.
In order to be defined as a social enterprise, an organization needs to simultaneously possess all these attributes.
In an effort to develop social enterprises and measure social impact, the Italian governmental work placement agency - Italia Lavoro - has developed a method to calculate the social efficiency of their project, from an economic point of view. For example, they measure the economic value to the society of providing a job to a disabled person. Since 1997, Italia Lavoro provides work placements to people with mental, social, physical or health disadvantages. To this aim, they help people who have fallen out of the general work system to reintegrate society through the creation of small and medium non-profit enterprises.
Also intended to generate more social enterprises is the non-profit cooperative Make a Change. Make a Change provides financial, operational and management support to social start-ups. In 2010 they organized the first edition of a contest to elect the "Social entrepreneur of the year", as well as another contest entitled "The World's Most Beautiful Job". This year winner of the former was the social cooperative "Cauto", which manages the whole trash life-cycle in the province of Brescia. Cauto's workforce is composed by 1/3 of disabled and disadvantaged individuals.
Winner of the "World's Most Beautiful Job" prize was the project "Tavern of the Good and Bad" by the group Domus de luna from Cagliari. The tavern employs mums and children who just exited rehabilitation programs. The prize consisted of a financial aid of 30.000 euro and 12 months of professional consulting and support.
The prize-giving ceremony was included in the program of the Global Entrepreneurship Week.
United Kingdom
In the UK the accepted Government-backed definition of social enterprise used by the UK social enterprise sector bodies such as Social Enterprise UK comes from the 2002 Department for Trade and Industry's 'Social Enterprise: a strategy for success' report as:The original use of the term social enterprise was first developed by Freer Spreckley in 1978, and later included in a publication called Social Audit – A Management Tool for Co-operative Working published in 1981 by Beechwood College. In the original publication the term social enterprise was developed to describe an organisation that uses Social Audit. Freer went on to describe a social enterprise as:
Later on the three areas of social, environmental and financial benefits used for measuring social enterprise became known as the Triple Bottom Line.
Twenty years later Freer Spreckley and Cliff Southcombe established the first specialist support organisation in the UK Social Enterprise Partnership Ltd. in March 1997.
In the British context, social enterprises include community enterprises, credit unions, trading arms of charities, employee-owned businesses, co-operatives, development trust
Development trust
Development Trusts are organisations which operate in the United Kingdom that are:*community based, owned and led*engaged in the economic, environmental and social regeneration of a defined area or community...
s, housing association
Housing association
Housing associations in the United Kingdom are independent not-for-profit bodies that provide low-cost "social housing" for people in housing need. Any trading surplus is used to maintain existing homes and to help finance new ones...
s, social firm
Social firm
Social Firm is the British term for a work integration social enterprise , a business created to employ people who have a disability or are otherwise disadvantaged in the labour market. Its commercial and production activities are undertaken in the context of a social mission, with profits going...
s, and leisure trusts.
Whereas conventional businesses distribute their profit among shareholder
Shareholder
A shareholder or stockholder is an individual or institution that legally owns one or more shares of stock in a public or private corporation. Shareholders own the stock, but not the corporation itself ....
s, in social enterprises the surplus tends to go towards one or more social aims which the business has – for example education for the poor, vocational training for disabled people, environmental issues or for animal rights.
Social enterprises are distinct from charities (although charities are also increasingly looking at ways of maximising income from trading), and from private sector companies with policies on corporate social responsibility. An emerging view, however, is that social enterprise is a particular type of trading activity that sometimes gives rise to distinct organisation forms reflecting a commitment to social cause working with stakeholders from more than one sector of the economy
The first agency in the UK - Social Enterprise London
Social Enterprise London
Established in 1998, Social Enterprise London is the strategic agency for the development of social enterprise in London. SEL works with individuals, enterprises, organisations, government and other statutory bodies to provide enterprising solutions to social and environmental challenges and to...
(SEL) - was established in 1998 after collaboration between co-operative businesses (Poptel, Computercraft Ltd, Calverts Press, Artzone), a number of co-operative development agencies (CDAs), and infrastructure bodies supporting co-operative enterprise development (Co-operative Training London, Co-operative Party, London ICOM, Co-operatives UK). SEL's first chief executive, Jonathan Bland, brought experience from Valencia where a business support infrastructure for co-operative enterprise was established using learning from the Mondragon region of Spain. SEL did more than provide support to emerging businesses. It created a community of interest by working with the London Development Agency (LDA) to establish both an undergraduate degree in social enterprise at the University of East London (led by Jon Griffith) and a Social Enterprise Journal (now managed by Liverpool John Moores University and published by Emerald Publishing). Allison Ogden-Newton took over from Jonathan Bland as Chief Executive of Social Enterprise London in 2004. Under her leadership the organisation built a network of over 2,000 social enterprises and social entrepreneurs, directly brokered over 500 social enterprise jobs under the DWP's Future Jobs Fund and delivers consultancy and business support across the world in countries including Vietnam, Korea and Croatia.
Two years later, The National Council for Voluntary Organisations (NCVO) established the Sustainable Funding Project. Using funds from FutureBuilders, Centrica and Charity Bank
Charity Bank
Charity Bank is bank and a charity based in the United Kingdom, with offices in Tonbridge, London and York.Charity Bank is a not-for-profit bank that only makes loans to charities and social enterprises....
, this project promoted the concept of sustainability through trading to voluntary groups and charities.
In 2002, the British government launched a unified Social Enterprise Strategy, and established a Social Enterprise Unit (SEnU) to co-ordinate its implementation in England
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
and Wales
Wales
Wales is a country that is part of the United Kingdom and the island of Great Britain, bordered by England to its east and the Atlantic Ocean and Irish Sea to its west. It has a population of three million, and a total area of 20,779 km²...
.
After a consultation on a new type of company (see CIC below), policy development was increasingly influenced by organisations in the conventional "non-profit" sector rather than those with their origins in employee-ownership and co-operative sectors. The 2003 DTI report on the consultation shows the disproportion influence of charitable trusts and umbrella organisations in the voluntary sector, and evidence now exists that the voice of progressive employee-owned organisations were marginalised in the course of producing the report.
The Social Enterprise Unit was initially established within the Department of Trade and Industry (DTI), and in 2006 became part of the newly created Office of the Third Sector, under the wing of the Cabinet Office.
Following broad consultation, SEnU adopted a broader definition which is independent of any legal model. This latitudinarian definition could include not only companies limited by guarantee
Company limited by guarantee
In British and Irish company law, a private company limited by guarantee is an alternative type of corporation used primarily for non-profit organisations that require legal personality. A guarantee company does not usually have a share capital or shareholders, but instead has members who act as...
, and industrial and provident societies
Industrial and Provident Society
An industrial and provident society is a legal entity for a trading business or voluntary organisation in the United Kingdom, the Republic of Ireland, and New Zealand...
but also companies limited by shares, unincorporated associations, partnerships and sole traders.
A survey conducted for the SEnU in 2004 found that there were 15,000 social enterprises in the UK (counting only those that are incorporated as companies limited by guarantee or industrial and provident societies). This is 1.2% of all enterprises in the UK. They employ 450,000 people, of whom two-thirds are full-time, plus a further 300,000 volunteers. Their combined annual turnover is £18 billion, and the median turnover is £285,000. Of this, 84% is from trading. In 2006, the government revised this estimate upwards to 55,000, based on a survey of a sample of owners of businesses with employees, which found that 5% of them define themselves as social enterprises. The most up to date estimates suggest that there are approximately 62,000 social enterprises in the UK, contributing £24 billion to the UK economy.
Branding
In February 2010 the new Social Enterprise Mark was launched. Like the Fair Trade brand, the Social Enterprise Mark aims to increase the visibility of socially motivated businesses. More than this, the mark represents the growing commercial identity of social enterprises and a deliberate attempt to carve out a recognisable niche for such organisations in the business community. Qualification for the mark requires that a business conform to set criteria, e.g. companies must earn at least 50% of their income from trade and spend at least 50% of their profits on socially beneficial purposes. The mark has been received with mixed responses in some corners with suggestions that the qualifying criteria is not strict enough.
Scotland
In ScotlandScotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...
, social enterprise is a devolved function and is part of the remit of the Scottish Government. Activities are co-ordinated by the Scottish Social Enterprise Coalition, and intellectual leadership is provided by the Social Enterprise Institute at Herriot-Watt University (Edinburgh), established under the directorship of Declan Jones. Senscot based in Edinburgh
Edinburgh
Edinburgh is the capital city of Scotland, the second largest city in Scotland, and the eighth most populous in the United Kingdom. The City of Edinburgh Council governs one of Scotland's 32 local government council areas. The council area includes urban Edinburgh and a rural area...
supports social entrepreneurs through a variety of activities including a weekly email bulletin by co-founder Lawrence Demarco. The Social Enterprise Academy "deliver leadership, enterprise, and social impact programmes" throughout Scotland and further support is provided by Development Trusts Association Scotland
Development trust
Development Trusts are organisations which operate in the United Kingdom that are:*community based, owned and led*engaged in the economic, environmental and social regeneration of a defined area or community...
and Co-operative Development Scotland.
Examples
Some well known social enterprises in the UK include John LewisJohn Lewis Partnership
The John Lewis Partnership is an employee-owned UK partnership which operates John Lewis department stores, Waitrose supermarkets and a number of other services...
, Welsh Water
Welsh Water
Dŵr Cymru Welsh Water is a company which supplies drinking water and wastewater services to most of Wales and parts of western England.It is regulated under the Water Industry Act 1991.-History:...
, Cafédirect
Cafédirect
Cafédirect is a UK-based alternative trading organization. It is currently one of the largest Fairtrade hot drinks companies in the world. As well as coffee, Cafédirect has a hot beverage range that includes 100% Fairtrade tea and hot chocolate...
, The Eden Project, Divine Chocolate (Kuapa Kokoo), The Big Issue
The Big Issue
The Big Issue is a street newspaper published in eight countries; it is written by professional journalists and sold by homeless individuals. It was founded by John Bird and Gordon Roddick in September 1991...
, the Co-operative Group, HCT Group
HCT Group
HCT Group, owner of bus operator CT Plus, is a social enterprise providing transport services and community services in London and Yorkshire. It was founded in 1982 as Hackney Community Transport in the London Borough of Hackney to provide transport services for local voluntary organisations,...
, Duchy Originals
Duchy Originals
Duchy Originals from Waitrose is a brand of organic food sold mainly in Waitrose stores in the United Kingdom, but also in Booths supermarkets and small independent stores. The Duchy Originals company was originally set up by Charles, Prince of Wales, in 1990 and named after the Duchy of Cornwall...
, and the London Symphony Orchestra
London Symphony Orchestra
The London Symphony Orchestra is a major orchestra of the United Kingdom, as well as one of the best-known orchestras in the world. Since 1982, the LSO has been based in London's Barbican Centre.-History:...
.
Three common characteristics of social enterprises as defined by Social Enterprise London are:
- Enterprise orientation: They are directly involved in producing goods or providing services to a market. They seek to be viable trading organisations, with an operating surplus.
- Social Aims: They have explicit social aims such as job creation, training or the provision of local services. They have ethical values including a commitment to local capacity building, and they are accountable to their members and the wider community for their social environmental and economic impact.
- Social ownership: They are autonomous organisations with governance and ownership structures based on participation by stakeholder groups (users or clients, local community groups etc.) or by trustees. Profits are distributed as profit sharing to stakeholders or used for the benefit of the community.
The UK has also developed a new legal form called the community interest company
Community interest company
A community interest company is a new type of company introduced by the United Kingdom government in 2005 under the Companies Act 2004, designed for social enterprises that want to use their profits and assets for the public good...
(CIC). CICs are a new type of limited company designed specifically for those wishing to operate for the benefit of the community rather than for the benefit of the owners of the company. This means that a CIC cannot be formed or used solely for the personal gain of a particular person, or group of people. Legislation caps the level of dividends payable at 35% of profits and returns to individuals are capped at 4% above the bank base rate.
CICs can be limited by shares, or by guarantee, and will have a statutory "asset lock" to prevent the assets and profits being distributed, except as permitted by legislation. This ensures the assets and profits are retained within the CIC for community purposes, or transferred to another asset-locked organisation, such as another CIC or charity.
A CIC cannot be formed to support political activities and a company that is a charity cannot be a CIC, unless it gives up its charitable status. However, a charity may apply to register a CIC as a subsidiary company.
The national body for the social enterprise movement in Britain is the Social Enterprise Coalition (SEC) and this liaises with similar groups in each region of England, and in Northern Ireland, Scotland & Wales. The definition of social enterprise propagated by the SEC is slightly broader than the original DTI definition and acknowledged that the social purpose of an organisation can be "embedded in its structure and governance". As such, social businesses that adopt inclusive governance structures and employee-ownership are brought fully into the fold of the movement.
Social firms
Another example of a type of social enterprise is the social firmSocial firm
Social Firm is the British term for a work integration social enterprise , a business created to employ people who have a disability or are otherwise disadvantaged in the labour market. Its commercial and production activities are undertaken in the context of a social mission, with profits going...
, a business set up specifically to create employment for people otherwise severely disadvantaged in the labour market.
Advantages of social enterprise
Rodney Schwartz of ClearlySo listed a number of advantages of the social enterprise as a business:- ability to raise capital at below market ratesCost of capitalThe cost of capital is a term used in the field of financial investment to refer to the cost of a company's funds , or, from an investor's point of view "the shareholder's required return on a portfolio of all the company's existing securities"...
due to the ethical investment industry - easier access to publicityPublicityPublicity is the deliberate attempt to manage the public's perception of a subject. The subjects of publicity include people , goods and services, organizations of all kinds, and works of art or entertainment.From a marketing perspective, publicity is one component of promotion which is one...
- labour costsWageA wage is a compensation, usually financial, received by workers in exchange for their labor.Compensation in terms of wages is given to workers and compensation in terms of salary is given to employees...
below average, "as staff seems willing to work for below market rates in support of the values of social enterprises."
Schwartz described social entrepreneurs as extraordinarily innovative, deploying models that seem to derive results out of thin air.
Ghana
The registered non-profit Trashy BagsTrashy Bags
Trashy Bags is a registered non-governmental organization that recycles solid plastic waste into fashionable bags and gifts. The factory and showroom are located in Accra, the capital of the Republic of Ghana in West Africa. A British architect, Stuart Gold, established the organization in 2007...
was launched in 2007 in order to increase public awareness of Ghana's solid plastic waste problem and clean up sachets from the streets of Accra
Accra
Accra is the capital and largest city of Ghana, with an urban population of 1,658,937 according to the 2000 census. Accra is also the capital of the Greater Accra Region and of the Accra Metropolitan District, with which it is coterminous...
. This company buys waste from collectors. After washing and drying the sachets, it sews them into fashionable bags and other products which are then sold in Accra
Accra
Accra is the capital and largest city of Ghana, with an urban population of 1,658,937 according to the 2000 census. Accra is also the capital of the Greater Accra Region and of the Accra Metropolitan District, with which it is coterminous...
and exported to eight other countries around the world. The Trashy Bags
Trashy Bags
Trashy Bags is a registered non-governmental organization that recycles solid plastic waste into fashionable bags and gifts. The factory and showroom are located in Accra, the capital of the Republic of Ghana in West Africa. A British architect, Stuart Gold, established the organization in 2007...
Company has collected 20 million plastic sachets since its founding, and employs 60 machinists.
Kenya
In Kenya many NGOs, use business models to improve lives of people mainly in rural Kenya. An example of this is KOMAZAKOMAZA
KOMAZA is a social enterprise that develops economic opportunities for smallholder farmers living in East Africa’s unfertile and drought-prone regions...
a non-profit social enterprise that plants trees with small holder farmers and uses economies of scale to enable them to access high value markets for processed trees. Another example of this is RISE Kenya http://www.risekenya.org/ that runs projects to mitigate climate change in the semi arid Eastern Province of Kenya. They also run weaving projects where by women who would traditionally engage in weaving make products that are marketed in the capital city Nairobi and in overseas markets of Europe and America.
Other development oriented social enterprises in Kenya include the One Acre Fund http://www.oneacrefund.org/, Nuru International http://www.nuruinternational.org/ and Alive & Kicking
Alive & Kicking (social enterprise)
Alive & Kicking is an African social enterprise that manufactures sports balls to provide balls for children, create jobs for adults and promote health education through sport. In 2009, it was featured in Bloomberg BusinessWeek as one of the top 3 products that 'might change the world'...
, that operates a sport ball factory in Nairobi. Kenya's social enterprises include M-Pesa, which facilitated economic transactions via mobile phone.
Social enterprise in Kenya has grown to include spaces with IT infrastructure such as internet connectivity and computer hardware. Two of these, the iHub and NaiLab, are centers for technological enterprise, with ventures such as Tandaa in coopperation with the ICT Board of Kenya and Akirachix. http://kopokopo.tumblr.com/post/2583234700/starting-a-social-enterprise-in-kenya
Awards
There are several awards that recognize and reward social enterprises.The Enterprising Solutions Award is the UK's national award for social enterprise. Run by the Social Enterprise Coalition in partnership with the Office of the Third Sector in the Cabinet office and the Community Banking branch of the RBS Group, the awards recognize the work undertaken by many organizations within the social enterprise movement.
The Edge Upstarts Awards are run annually by the New Statesman
New Statesman
New Statesman is a British centre-left political and cultural magazine published weekly in London. Founded in 1913, and connected with leading members of the Fabian Society, the magazine reached a circulation peak in the late 1960s....
in the UK.
The Hong Kong Social Enterprise Challenge is the first and the only inter-collegiate social ventures business competition in Hong Kong.
Fast Company has a yearly ranking of top 15 to 25 noteworthy social enterprises called the Social Capitalist Awards which highlights noteworthy organizations in social innovation (2004 to 2010).
There are several business schools which offer social entrepreneurship business plants.
In addition, several organizations offer fellowships like Ashoka http://www.ashoka.org/, Acumen Fund http://www.acumenfund.org/, and Echoing Green http://www.echoinggreen.org/ all three of which are quite competitive. Still other organizations offer accelerator and mentorship programs like the Unreasonable Institute http://unreasonableinstitute.org/.
See also
- Social business enterprise
- Social firmSocial firmSocial Firm is the British term for a work integration social enterprise , a business created to employ people who have a disability or are otherwise disadvantaged in the labour market. Its commercial and production activities are undertaken in the context of a social mission, with profits going...
- Impact investingImpact investingImpact investing refers to investments made based on the practice of assessing not only the financial return on investment, but also the social and environmental impacts of the investment that happen in the course of the operations of the business and the consumption of the product or service which...
- Social entrepreneurshipSocial entrepreneurshipSocial entrepreneurship is the work of social entrepreneurs. A social entrepreneur recognizes a social problem and uses entrepreneurial principles to organize, create and manage a venture to achieve social change . While a business entrepreneur typically measures performance in profit and return, a...
- Social businessSocial businessSocial business, as the term is commonly used, was first defined by Nobel Peace Prize laureate Prof. Muhammad Yunus and is described in his books Creating a world without poverty—Social Business and the future of capitalism and Building Social Business—The new kind of capitalism that serves...
- Social responsibilitySocial responsibilitySocial responsibility is an ethical ideology or theory that an entity, be it an organization or individual, has an obligation to act to benefit society at large. Social responsibility is a duty every individual or organization has to perform so as to maintain a balance between the economy and the...
- Public/social/private partnershipPublic/social/private partnershipPublic/social/private partnerships are methods of co-operation between private and government bodies.-Models of cooperation between the market and the state: examples from Austria:...
- Social venture capitalSocial Venture CapitalSocial venture capital is a form of venture capital investing that provides capital to businesses deemed socially and environmentally responsible. These investments are intended to both provide attractive returns to investors and to provide market-based solutions to social and environmental issues...
- Corporate social responsibilityCorporate social responsibilityCorporate social responsibility is a form of corporate self-regulation integrated into a business model...
- Corporate Social EntrepreneurshipCorporate Social EntrepreneurshipA corporate social entrepreneur is defined as "an employee of the firm who operates in a socially entrepreneurial manner; identifying opportunities for and/ or championing socially responsible activity; in addition to helping the firm achieve its business targets. The CSE operates regardless of...
- Citizen enterpriseCitizen enterpriseThe term citizen enterprise started to be used in the USA in 2008 to describe businesses that practice corporate social responsibility ....
- Grassroots Business FundGrassroots Business FundThe Grassroots Business Fund is a non-profit based in Washington, DC. It has field offices in Ghana, Kenya, and India. Their mission is to build and support high-impact enterprises that provide sustainable economic opportunities to thousands of people at the base of the economic pyramid...
- List of social enterprises
- Microenterprise
- MicroConsignmentMicroConsignmentThe MicroConsignment Model establishes profitable income generating opportunities for primarily women that to date are selling products such as wood-burning stoves, reading glasses, water filters, seeds and gardening techniques and energy efficient lightbulbs to villagers...
- B Corporation (or "Benefit CorporationBenefit corporationA Benefit Corporation, is a class of corporation required by law to create general benefit for society as well as for shareholders. Benefit Corporations must create a material positive impact on society, and consider how their decisions affect their employees, community, and the environment...
").
Sources
- Aiken, M. (2010) Taking the Long View: Conceptualising the challenges facing UK third sector organisations in the social and welfare field in Evers, A. and Zimmer, A. (eds) Turbulent environments: The impact of commercialisation on organisational legitimacy and the quality of services. Baden-Baden: Nomos Publishing.
- Billis, D. (2010). Hybrid Organizations in the Third Sector. Basingstoke: Palgrave MacMillan.
- Borzaga, C. and Defourney, J. (2001). The Emergence of Social Enterprise. London: Routledge).
- Gergen, Christopher, Gregg Vanourek, (2008), Life Entrepreneurs: Ordinary People Creating Extraordinary Lives
- Kevin Lynch, Julius Walls, (2009) Mission, Inc.: The Practitioners Guide to Social Enterprise
- Nyssens, M. ed. (2006). Social Enterprises in Europe: Between Market, Public Policies and Communities. London: Routledge.
- Pearce, J. (1993). At the Heart of the Community Economy. London: Calouste Gulbenkian Foundation.
- Prahalad, CK (2009) Fortune at the Base of the Pyramid: Eradicating Poverty Through Profits
- Spear, R. (2001). United Kingdom: Labour Market Integration and Employment Creation, in Tackling Social Exclusion in Europe, eds. Spear, R., Defourney, J., Favreau, L. & Laville, J-L. Aldershot: Ashgate.
- Spreckley, Freer (2011) Social Enterprise Planning Toolkit
- Woodin, T., Crook, D., and Carpentier, V. (2010). Community and Mutual Ownership: A historical review. York: Joseph Rowntree Foundation.
- Wyler, S. (2009). A History of Community Asset Ownership. London: Development Trusts Association.
Further reading
- A Developed World: An online social publication featuring the stories of social entrepreneurs from around the world.
- the World Change? Perspectives on Social Entrepreneurship and Social Innovation
- Fostering Social Enterprise: An examination of the development of social enterprise in the US and Europe.
- How to Change the World: Social Entrepreneurs and the Power of New Ideas: David Bornstein profiles nine leading social entrepreneurs.
- Social Enterprise: A Financial Perspective: An alternative view on social enterprise which incorporate the agency theory and other analysis.
- The Meaning of Social Entrepreneurship This 1998 article by J. Gregory Dees, Professor of the Practice of Social Entrepreneurship and Nonprofit Management at Duke University's Fuqua School of BusinessFuqua School of BusinessThe Fuqua School of Business is the business school of Duke University in Durham, North Carolina, United States. It currently enrolls 1,340 students in degree-seeking programs...
, attempts to define what makes a social entrepreneur. - The Power of Unreasonable People: How Social Entrepreneurs Create Markets that Change the World: John ElkingtonJohn ElkingtonJohn Elkington is a world authority on corporate responsibility and sustainable development. He is currently the Founding Partner & Executive Chairman of , a future-focused business working at the intersection of the sustainability, entrepreneurship and innovation movements...
and Pamela HartiganPamela HartiganPamela Hartigan is the founding partner of Volans Ventures and the founding managing director of the Schwab Foundation.She spent over a decade supporting community-based organizations and working with youth in Washington, D.C...
describe how innovations by social entrepreneurs are addressing a variety of social, economic and environmental problems. - The Social Audit Toolkit This is the latest in a series of publications on social enterprise and social audit by Freer Spreckley who pioneered social enterprise in the late 1970s.
- Gergen, Christopher, Gregg Vanourek, (2008), Life Entrepreneurs: Ordinary People Creating Extraordinary Lives http://www.lifeentrepreneurs.com/
- Kevin Lynch, Julius Walls, (2009) Mission, Inc.: The Practitioners Guide to Social Enterprise http://www.amazon.com/dp/1576754790
- Prahalad, CK (2009) Fortune at the Base of the Pyramid: Eradicating Poverty Through Profits http://www.amazon.com/dp/0137009275
- Ted London and Stuart Hart (2010) Next Generation Business Strategies for the Base of the Pyramid: New Approaches for Building Mutual Value http://www.amazon.com/dp/0137047894
- Urs P. Jäger (2010) Managing Social Businesses. Mission, Governance, Strategy and Accountability. Palgrave McMillan.
- Social Enterprise Planning Toolkit 2011 Freer Spreckley provides a well rounded definition and history of social enterprise and introduces the processes required for establishing social enterprises.
External links
- Social Enterprise Alliance and 10th Anniversary Social Enterprise Summit
- The Canadian Social Entrepreneurship Foundation
- The Canadian Community Economic Development Network
- The Laurel Centre for Social Entrepreneurship
- Skoll Foundation
- Schwab Foundation for Social Entrepreneurship
- Scottish Social Enterprise Coalition
- Inter-cultural Education
- Global Social Venture Competition