There is not a definitive standard definition of a social enterprise. However, below are some working definitions and distinctions that I’ve used in my 20 year career in community economic development, mission lender and social entrepreneur.

Wikipedia’s definition:

A social enterprise is an organization that applies commercial strategies to maximize improvements in financial, social and environmental well-being—this may include maximizing social impact alongside profits for co-owners.

I like this definition as it is inclusive of both social impact and financial gains. It creates the expectations of sustainability in terms of profits, people and planet better known as the “triple bottom line.” This play on words is borrowed from business language where managers focus on a single bottom line of profitability to owners or shareholders. But social enterprises are holistic.

  • Profits: We all know that you have to have profits to stay in business. But in a social enterprise, profits aren’t the only goal.
  • People: Social enterprises are concerned with creating net value and returns to society. In other words, social enterprises care about what is good for people. This can include socially responsible practices that benefit workers, consumers, and other populations that the organization has a mission to serve.
  • Planet: The planet bottom line is what I like to refer to as our shared “places” regardless of ownership. Returns are measured by being stewards of our environment for future generations. This includes low carbon emissions products and other conservation practices.

Social Enterprise Alliance’s definition:

An organization that addresses a basic unmet need or solves a social problem through a market-driven approach.

This definition links the purpose of the organization to a charitable cause and requires the organization to create value in the marketplace. SEA outlines three types of their members, which helps reinforce their definition and creates some good distinctions:

  1. Opportunity Employment: organizations that employ people who have significant barriers to mainstream employment.
  2. Transformative Products or Services: organizations that create social or environmental impact through innovative products and services.
  3. Donate Back: organizations that contribute a portion of their profits to nonprofits that address basic unmet needs.

My definition:

My own definition is a hybrid.

A social enterprise is a common good corporation with a purpose to create profits that benefit people and places for future generations.

In summary, social enterprises can take on different models, legal structures and roles but all share a purpose of common good.

*Photo by Austin Distel on Unsplash

About the Author Paul Wright

Paul Wright is the founder of WVS Courses and Coaching, and is passionate about helping entrepreneurs launch and grow new enterprises. He especially enjoys working with social innovators who create a greater good in the world with their businesses.

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