Social Enterprise Definitions Restore the Honor of Profit
Is it possible that the attempt to define social enterprise has restored the honor of profit today?
It appears to be a trend from my perspective.
Establishing a definition of social enterprise has been both exciting and frustrating. Just ask anyone who has been participating in any of these conversations for the last 5 years.
The Recent Past
Only 3 years ago I found myself defending for-profit entities with respect to social enterprise. I tend to bristle at extremes of any kind. So, when I would hear well-intended persons use words such as ‘greedy’ and ‘money hungry’ with respect to for-profit entities, it would be difficult to be in agreement. I would especially have a reaction when words such as ‘monster’ or ‘evil’ were used as adjectives to describe for-profit entities.
I would gently attempt to remind that blanket statements in any direction can be dangerous. I would attempt to remind that while the media splashes headlines of the ones who are not doing it right that many for-profits ARE doing it right. That, as a matter of fact, many of the for-profits were creating an income tax base for the local and larger economies. They were creating employment, making donations with their cash/in-kind services to the non-profits, governments, and faith communities.
Just as I would address the issue someone from the for-profit camp would jump in with a comment such as “Yeah, and by the way, you non-profits don’t know how to run your organizations anyway! You are inefficient and wasteful!” Oh my. Thanks for the comment. Not helpful.
The Definition I Observe
Risking all here I am going to make a statement of definition of social enterprise. I would define social enterprise as an organization that is attempting to solve a social issue and create a positive cash flow for all or part of their organization. It is a dually focused entity driving toward social impact and cash flow generation. One or the other is not an afterthought. The duality is part of the overall identity of the organization.
Some social enterprises are for-profit structures attempting to use part of the profit from products and services to fund social impact by giving their resources or hiring staffing that may not have access to traditional employment.
Non-profit structures can also be social enterprises. In this case the non-profit has created some type of business or ‘enterprise’ within their organization to bring in some cash flow in an attempt to reduce donor fatigue. Think of the Girl Scouts or Salvation Army as examples. They are selling products to help fund their work.
This is the theme of social enterprise: selling products or services to fund social impact.
The very nature of adding an enterprise element to a non-profit entity is acknowledging the potential assistance positive cash flow can make from sales of products and services.
My, oh my, have conversations changed!!!!!
The tableside conversations now look more like “Romy, doesn’t EVERY for-profit business create social good?” and “I believe that just by creating one job this business is solving social issues!” and, my favorite this week “If we don’t begin to understand that ALL for-profit business is creating social good then we have a lot of work to do. This nation is misled!” Oh my. Here we go again. I can’t help but smile.
I love the passion. I love people. I love that we are attempting to define and solve. I love that while everyone has been debating the definition of social enterprise the value and honor of profit has been restored. It has been restored by the average person on the ground making something work out of their garage giving us an example of strength and perseverance. I love it that the entrepreneur could care less what the definition declares. They just want to make a difference in their neighborhood. And, they are.
Let’s keep talking and observing what is working on the street and what is not.
Therein lies the truth of the moment.