Social enterprises or social businesses have emerged as important institutions of change over the last decade. Large corporations, governments, international government organizations, entrepreneurs, universities have all recognized the utility of social entrepreneurship to solve some of the world’s most pressing problems.
This article highlights some important features of a social enterprise and how it is different from other forms of organizations.
Not Just an Enterprise
A typical enterprise has profit as the main priority. Lately, there is increasing talk of consumer-centric, human-centric, and planet-centric models of profit-making organizations. Still, the businesses are set up in a way to maximize profit. Needless to say, such organizations have achieved a tremendous feat since their existence by creating employment, wealth, and innovations for society. Although operating as a business, a social enterprise has a key difference. It puts impact as the priority rather than profit.
A social enterprise devises ways to create a sustainable business model which is not geared to maximize profit but to maximze impact. Therefore, a social enterprise is able to achieve twin objectives – the philanthropic objective of creating a social impact and the business objective of financial sustainability.
Social Enterprise vs Charity Organization
One key difference between a social enterprise and a non-profit charity is that in most cases, the beneficiary of a social enterprise is also the funder for the organization. On the other hand, in a typical non-profit organization, funds are raised through donations and used for another set of beneficiaries. This makes a social enterprise directly accountable to the people it serves.
Legal Structure of Social Enterprise
A social enterprise can be set up as a for-profit as well as a non-profit company. It can generate profits for its shareholders or decide not to provide any returns to the investors. More than the legal framework, it is the financial operations of the entity which make it a social enterprise.
Muhammad Yunus, the celebrated social innovator, author, noble laureate and founder of Grameen Bank, is among the early people to propose and scale the concept of social enterprise. In his book ‘A World of Three Zeros’, he explains the power of social businesses in bringing change to reach a world of zero poverty, zero unemployment, and zero carbon emissions. Through his work, he has instituted numerous platforms to support social enterprises.
The Rishihood School of Entrepreneurship intends to create a social impact aligning with the larger purpose of the university. Our bootcamp on social entrepreneurship is a step in that direction. In the coming years, we plan to nurture and network a community of social entrepreneurs who can develop innovative business models for products and services which solve important social problems. If social entrepreneurship gives you a kick, we are all ears. Please reach out!