What is a Social Enterprise?

Here at StartSoc we like (love actually) the idea of socent and recognise that you can do good without needing to solve the (sometimes arcane) debate about what is the technical definition of a social enterprise, so we have just put italics around the key bits we like (and aspire to) below.

What does Wikipedia say?

And who cares anyway? Well, Wikipedia is often criticised for being not rigorous enough, yet for this global and non-centralised industry sector it is probably a good source of guidance purely because it hosts the debate and enables convergence on a shared (albeit non-academic) definition. We think this is practical since most research is constrained by jurisdiction and crowd sourcing information is generally more global.

The wikipedia definition of a social enterprise (extract below as at 20/8/2015).

Extract Follows –

Social Enterprise (from Wikipedia)

social enterprise is an organization that applies commercial strategies to maximize improvements in human and environmental well-being – this may include maximizing social impact rather than profits for external shareholders. Social enterprises can be structured as a for-profit or non-profit, and may take the form (depending in which country the entity exists and the legal forms available) of a co-operativemutual organization, a disregarded entity,[1] a social business, a benefit corporation, a community interest company or a charity organization.[2]

Many commercial enterprises would consider themselves to have social objectives, but commitment to these objectives is motivated by the perception that such commitment will ultimately make the enterprise more financially valuable. These are organisations that might be more properly said to be operating corporate responsibility programs. Social enterprises differ in that their commitment to impact is central to the mission of the business. Some may not aim to offer any benefit to their investors, except where they believe that doing so will ultimately further their capacity to realize their social and environmental goals, although there is a huge amount of variation in forms and activities.

The term has a mixed and contested heritage due to its philanthropic roots in the United States, and cooperative roots in the United Kingdom, European Union and Asia.[3] In the US, the term is associated with ‘doing charity by doing trade’, rather than ‘doing charity while doing trade’. In other countries, there is a much stronger emphasis on community organising and democratic control of capital and mutual principles, rather than philanthropy.[4] In recent years, there has been a rise in the concept of social purpose businesses which pursue social responsibility directly, or raise funds for charitable projects.[5]

History & Philosophy (from wikipedia)

Social enterprise has a long history around the world, though under different names and with different characteristics.[6] Whilst many social enterprises will today accept finance and other forms of support from the state, particularly those with a nonprofit form, they are essentially enterprises that seek independence from both the state and private capital through strategies that create a social economy.

Early use of the terms ‘social enterprise’ and ‘social entrepreneurship’ can be traced to Beechwood College near Leeds, England (from 1978) where Freer Spreckley used the term ‘social enterprise’ to describe worker and community co-operatives that used the ‘social accounting and audit’ system developed at Beechwood; and at ASHOKA – a US foundation – where during the 1980s Bill Drayton established a program to support the development of social entrepreneurship.[7] Other formative influences were the Italian worker co-operatives that lobbied to secure legislation for ‘social co-operatives’ in which members with mental or other health disabilities could work while fully recovering. The first academic paper to propose worker co-operatives involved in health and rehabilitation work as a form social enterprise was published in 1993.[8] The scale and integration of co-operative development in the ‘red belt’ of Italy (some 7,000 worker, and 8,000 social co-operatives) inspired the formation of the EMES network of social economy researchers who subsequently spread the language to the UK and the rest of Europe through influential English language publications.[9]

In the US, the work of Ashoka was picked up at HarvardStanford and Princeton universities, and each made contributions to the development of the field of social entrepreneurship through project initiatives and publications.[10][11][12]

Social enterprises are often regarded – erroneously – as nonprofit organisations, although many do take on a nonprofit legal form and are treated in academic literature on the subject as a branch or sub-set of nonprofit activity (especially when contrasted with Social Businesses). Social enterprise can be characterized by open membership and goals widely considered to be in the community or public interest, although some social enterprises are more tightly held and can include proprietary organizations with private membership.

Social Enterprise in Australia (From wikipedia)

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:

  • 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.

This is a movement that has been captured by many throughout all sectors of the Australian Economy. Social Enterprise activity can be found primarily in small communities and larger institutions. These institutes work for more than profit alone; they foster social and environmental innovation and are accountable for their employees, consumers and the communities. They offer a business model where people can be given direct voice in running the organisation.

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