When I tell people our consulting firm has a passion for helping social enterprises, I’m sometimes met with the question, “what do you mean by social enterprise?”
Or I might get a knowing look, yet the response is, “oh, so you do social media!” or “oh, so it’s about social networking!” Hmm…
I suppose that’s not totally unexpected. After all, not many people know about “social enterprise.” And today, the word “social” is frequently associated with “social media / social networking.”
At a recent event hosted by a social media firm, they said things like: “today we are all things social” or “everything is social now!” When substituting “social” for “social media,” everyone understood what they meant. The confusion is further exacerbated by articles such as this one. You’ll see it has “creating a social enterprise” in its title… and yet the article is all about social media!
So what is social enterprise?
Let’s see if we can’t clear this up. According to the Social Venture Network, a Social Enterprise is “a business whose purpose is to change the world for the common good.” So, “social” in “social enterprise” refers to “social and environmental problems” or “social and environmental impact.” While social media is certainly a great medium for promoting the causes of social enterprises, it’s important to know the two are not the same thing. Social Enterprise is not social media.
Now, there are certainly businesses that are not strictly social enterprises but are also doing good in the world. Examples include certified B Corps, Benefit Corporations, L3Cs, and companies engaging in Corporate Social Responsibility (CSR) initiatives. We at CiTTA Partnership are happy to see a diversity of businesses that contribute to positive social impact. However, I often hear confusion as to how social enterprise is different than these other types of businesses, or wait… is it different?
Let’s unpack that a little bit.
How are social enterprises different from most businesses?
To me, the key differentiator is that social enterprises exist for the purpose of doing good. It’s written into their “DNA,” so to speak. Another way to think of it is, if ever the social problem that they’re trying to fix has been completely solved, then they would no longer have a reason to exist.
The difference between social enterprises and a traditional nonprofit that uses philanthropic or grant funding to do good is that social enterprises use commercial means to fuel their mission; that is, they sell products or services for a price, and that money (and sometimes also the business process itself) is used to solve the social problem.
Social enterprises are agnostic to the actual legal form or certification of an organization. A nonprofit can run a social enterprise. A certified B Corp or Benefit Corporation or L3C can be a social enterprise. A company with CSR initiatives can be a social enterprise. But these are not automatically a social enterprise unless their explicit purpose is to solve a social problem.
What are some examples of social enterprise?
To give an example, let’s compare Starbucks with a social enterprise coffee company.
Second Chance Coffee Company is a social enterprise that sells high-quality coffee beans. Their reason for existing? To give ex-prisoners a second chance. As their packaging states, they are “elevating coffee” by “redreaming lives.” The company employs and rehabilitates people leaving prison. And they sustain that mission by sourcing, roasting, and selling coffee beans under their aptly-named brand: “I Have a Bean.”
In comparison, Starbucks offers employment to refugees, youth, and veterans as part of their CSR initiative. But ultimately, Starbucks exists to offer high-quality coffee and a great café experience. This CSR program, while wonderful, is still just a part of what they do, not the whole reason for Starbucks’ existence.
“Social” means more in Social Enterprise
So, when it comes to social enterprise, the word “social” really does mean more. Here at CiTTA Partnership, we’re all about empowering the impact of social enterprises. And we’re honored to have been a part of helping nonprofits and others venture into the social enterprise space.
If you’re interested in exploring how to become a social enterprise, we’d love to hear from you.