Social Enterprise – Definition

Cite this article as:"Social Enterprise – Definition," in The Business Professor, updated September 12, 2019, last accessed December 4, 2020,


Social Enterprise Definition

A social enterprise refers to a business or a commercial organization whose main objectives are social and environmental impacts. A social enterprise generates income by maximising all potentials that will have positive social and environmental impacts on the community. Social enterprises seek to address social needs and environmental issues, they employ certain strategies that help achieve social improvements. The income that social enterprises generate are used to fund social programs for the benefit of all.

A Little More on What is a Social Enterprise

Before the social enterprises emerged, there were traditional commercial enterprises that were not really concerned about social impact but rather on how to make profits. In the late 1970s, the concept of social enterprise was developed in the UK, the private sector and volunteer businesses predominantly took over social enterprise. The goal of a social enterprise is to render services that are tailored towards social development such as provision of free job training, low-cost housing schemes for low-income families, and many others.

Making profits is not the sole focus of social enterprises. Many social enterprises sell goods and render services at a cost and the money generated is used in funding social projects. This means that despite the fact that their focus is not generating profit, making money is still crucial for funding of social projects. Oftentimes, social enterprises have social mission, there are varieties of social programs that these enterprises can choose to focus on.

According to OECD, social enterprises are participatory and often have engaging stakeholders. There is a minimum number of employees in these organizations because they were not established to make profit.

Special Considerations

It is important that employees of social enterprises have the notion of giving back to the society. This will help them function maximally without little or no hurdle. There are no restrictions to the formation of the workforce of a social enterprise, they can have different backgrounds.

A social enterprise that seeks to provide a living wage for some of its employees select specific people such as individuals from marginalized groups or high-risk communities. The living wage provide is often beyond the minimum wage of the state in which they operate. But not all workers of a social enterprise are paid.

Examples of Social Enterprise

Social enterprises generally contribute to social and environmental wellness. A social entrepreneurship is not the same at a social enterprise.

For instance, a company that focuses on donating for the needs of the less privileged, paying attention to marginalized groups, helping people with disabilities and others is an example of a social enterprise.

Here are some important takeaways:

  • A social enterprise is an organization, often commercial organization that has social missions and objectives as its primary focus.
  • A social enterprise aims to maximize profit and maximize social advantages.
  • The goal of a social enterprise is not to make profit but it generates revenue from sales and services to fund social projects and programs.

References for “Social Enterprise › Investing › Financial Analysis

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