Social enterprise – Do definitions matter?
All social enterprise meetings and summits in our experience involve the search for an acceptable definition of social enterprise. This discussion has been ongoing in BC for years.
The widest definition: Social enterprises are revenue-generating businesses with a twist. Whether operated by a non-profit organization or by a for-profit company, a social enterprise has two goals: to achieve social, cultural, community economic or environmental outcomes; and, to earn revenue. On the surface, many social enterprises look, feel, and even operate like traditional businesses. But looking more deeply, one discovers the defining characteristics of the social enterprise: mission is at the centre of business, with income generation playing an important supporting role. 1
Another possible definition: A social economy enterprise operates like a business, produces goods and services for the market, but manages its operations and redirects its surpluses in pursuit of social and environmental goals.2
An equally noble goal of social enterprise (aside from generating revenues to pursue more of a non-profit's mission) is the involvement of the marginalized, thus creating capacity and self-sufficiency for individuals, and impacting their communities and lessening reliance on the social safety net (eg. InsideArt Cooperative, an art marketing cooperative based in a federal prison). This element alone can denote a social enterprise.
The Centre posits some complementary definitions:
- Social enterprise applies an entrepreneurial approach to addressing social issues and creating positive community change.
- A social enterprise is an enterprise, owned at least in part by a non-profit organization, that is using entrepreneurial methods to accomplish social goals and providing its profits to its owner(s) for use in continuing their core missions.
- A social enterprise is a revenue-generating business with primarily social objectives whose surpluses are reinvested for that purpose in the business or in the community, rather than being driven by the need to deliver profit to shareholders and owners.
This, from the UK:
Social enterprise has six defining characteristics:
- Having a social purpose or purposes.
- Achieving the social purpose by, at least in part, engaging in trade in the marketplace.
- Not distributing profits to individuals.
- Holding assets and wealth in trust for community benefit.
- Democratically involving members of its constituency in the governance of the organization.
- Being independent organizations accountable to a defined constituency and to the wider community. 3
1 From the Centre for Community Enterprise.
2 Defining the Social Economy, by Fiona Salkie; Senior Policy Analyst, WD Headquarters, Edmonton
3 Social Enterprise in Any Town, by John Pearce, 2003. Published by the Calouste Gulbenkian Foundation, UK; www.centralbooks.co.uk.
Click here for the BC Cooperative Association’s useful contribution to the discussion about definitions, which was completed in January 2006 as a project of the BC Social Economy.