How Social Enterprises might change the (business) world

Social enterprises suggest a new way of doing business which provides lessons for private sector organisations and charities alike, operating efficiently whilst putting the beneficiary, the ‘social’, in a prime position.

What’s social?

Here at On Purpose we’re regularly asking “What puts the ‘social’ in social enterprise?” Is it social ownership (like Co-op), social impact, profit distribution for community goals and an involvement of beneficiaries in the spending decisions of the organisation (like HCT), or is it the general spirit of the enterprise? With no strict rules for defining social enterprises, any of these criteria could potentially fit the bill. But to be a social enterprise, no organisation can neglect the ‘enterprise’ either. Social enterprises try to take the best of business practices, operating efficiently and professionally to further their stated aims; aims which combine profit-making and social concerns.

Why bother?

But why not just have a regular business enterprise (as the BBC recently wondered)? The financial crisis reminds us that in spite of the public origins of various businesses, and of banks in particular, some have become strongly divorced from their most important resource, their customer base. Social enterprises tend to be much more locally entrenched, and prioritise social concerns too, which promises an ongoing emphasis on customers, who are inherently identified as key beneficiaries (looking beyond shareholders).

What’s next?

The social enterprise market is young but growing rapidly - various developments are expected in 2011 - from better financing, to better measurement of social impact, use of scale and engagement of marginalised populations. More broadly, I for one hope to see larger businesses learning from social enterprise’s practices (especially via social ‘intrapreneurs’), mainstreaming their Corporate Social Responsibility initiatives to cover all business practices, and, dare I suggest it, even considering becoming social enterprises!