Social enterprises are revenue-generating businesses (operated by a non-profit organization or by a for-profit company) having two goals: to achieve social, cultural, community economic and/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.
It is essential to note that ‘social enterprise’ is not defined within Canada’s Income Tax Act. There is no certification or other program to enable a venture to be officially deemed a social enterprise.
Other definitions include:
Social enterprise applies an entrepreneurial approach to addressing social issues and creating positive community change.
- A social enterprise is a business that uses entrepreneurial methods to accomplish social goals and/or feed profits to a parent charity or non-profit to enable it to fulfill more of its own social mission.
- 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.
Are you running a Social Enterprise?
- One test for a non-profit or charity that believes it is operating a social enterprise: what are you selling? It could be that you are operating with an entrepreneurial mindset within your organization, but if you are not selling a good or service into the marketplace, you aren’t running a business: you may be running a social program, but not a social enterprise.
- A test for a traditional business that believes it is operating a social enterprise: to what degree do social / environmental goals steer your ship? If profit is paramount (and particularly if individual owners or shareholders are personally benefiting), you may be engaging in socially conscious purchasing or corporate social responsibility, rather than operating a social enterprise.
- 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.
- An equally noble goal of social enterprise (aside from generating revenues to pursue a mission) is the training and/or employment of people who are typically excluded from the mainstream economy, thus creating capacity and self-sufficiency for individuals, and impacting their communities and lessening reliance on the social safety net. This element alone can denote a social enterprise.
Examples: Habitat for Humanity & the Restore – the Restore provides training and employment for people who are typically excluded from the main stream, it generates revenue from the donated products and materials, and redirects its surplus to address poverty and housing.
Learn more about how to start a social enterprise