Although not a new concept, over the last decade Social Enterprise has become increasingly popular in both developed and emerging nations. Today it is one of the key players in the global Solution Revolution generating US$2.1 in revenue in 2012, increasing by 15% annually. There are over 650,000 active Social Enterprises registered in the United States, 400,000 in Europe, 60,000 in the U.K, and 20,000 in Australia. While data for emerging countries is more difficult to quantify, in India alone there are over 3 million grassroots entities loosely operating within the principles of social enterprise.
Many question how the name of two diametrically opposing concepts – social: sharing, collaboration & support, can positively coalesce with enterprise: competitive & profit making. Let’s just say opposites attract, and the two do work together successfully to achieve the same goal.
Definitions of Social Enterprise vary from country to country, mainly because of its mixed background. In the US, for example, it had its roots in the philanthropic movement, whereas in the UK and Europe, it came up through the cooperative movement. In emerging countries, for example, South & Central America and the Caribbean, Social Enterprise has developed somewhat differently due to different socio-economic backgrounds.
There are even further distinctions that blur the lines between social enterprises – such as the various groups, such as charities, churches, benevolent societies, as well as community-based and civic groups that operate as micro-social enterprises.
Some social enterprises can be small scale, others have grown to become huge and highly successful, such as in Denmark, (a country that uses the highest proportion of renewable energy in Europe), where 50% of the onshore wind farms are owned and managed by small enterprises.
While not a new phenomenon, the Movement was reinvented on a global scale in the 1970s when the global financial downturn of the economy forced a rethinking as people started to come up with alternative business models. This, coupled with growing concern towards social responsibility in the corporate world, led to a shift in the dynamics of business.
Often referred to as ‘conscious capitalism,’ the large corporations began looking at delivering goods and services on the path to profit by contributing more to society. And, by contrast, the social enterprises began expanding into commercial activities, looking to the corporate business world for solutions to achieve sustainability through profit.
At its heart, a social enterprise is a venture borne of enthusiasm. Collective in nature, it comprises a group of enterprising like-minded individuals who are honestly passionate about creating, organizing and managing a profit-making business venture to make social change for the long-term. A social mission can be one or several, for example it can aim to provide employment, skills training, education; better infrastructure, such as buildings or equipment for schools and community centres; better health care facilities and facilities; or providing social services for the elderly, disabled or young.
Critical to the success of any social enterprise is that it must operate as a traditional business selling goods or services for profit, by adapting tried and proven business disciplines. Guided by the principle of People, Planet Profit, there are three important caveats. The social enterprise must:
1) Have a core social purpose, aimed at improving lives.
2) Engage in trading a product or service to be self-sustaining and earn a profit;
3) Be environmentally-friendly.
Unlike traditional businesses, a social enterprise is democratic in management and profits are not distributed to individuals, but reinvested towards achieving the social mission.