What is a Social Enterprise ?- By Neev Gurbaxani, Grade XI

 

A social enterprise or a social business is defined as a business with specific social objectives that serve its primary purpose. It is an organization that applies commercial strategies to maximize improvements in financial, social and environmental well-being. This may include maximizing social impact alongside profits for co-owners. Maximizing profits is not the primary goal of a social enterprise. They seek to maximize benefits to society and environment as well.

A social enterprise has business, environmental and social goals. Their main purpose is to promote, encourage, and make social change. They are created to further a social purpose in a financially sustainable way.

Features of a Social Enterprise

Social Enterprises have many characteristics. These include: -

·       Social Enterprises help in improving peoples’ lives by the creation of decent, quality jobs. Thus, helping in generating wealth in the society.

·       They focus on innovation and seek to find creative and disruptive solutions to social and environmental challenges. Thus, fostering change and generating positive impact.

·       Social Enterprises seek active participations of stakeholders like NGOs, local governments, and community members. This helps to maximize their impact and ensure the sustainability of their initiatives.

·       Corporate social responsibility also tends to drive these types of organizations to reinvest part of their profits towards achieving their social objectives.

·       Social enterprises, like the rest of the business network, comply with all transparency regulations in their operations and communications. They can adopt various legal forms, such as cooperatives, foundations, limited liability companies.

·       Their objective is to generate a triple impact.

Ø  Social Impact: They focus on generating a positive impact on the society and communities where they operate. They can promote educational programs, foster equal opportunities, provide employment to people in vulnerable situations, or support community development projects.

Ø  Environmental Impact: They can implement sustainable practices, reduce their carbon footprint, promote circular economy or develop clean technologies

Ø  Economic Impact: They sell products and reinvest in fulfilling social and environmental missions. They are able to balance the well being of people, the planet and economic profitability.

How do they generate revenue?

While earning profits is not the primary motivation behind a social enterprise, revenue still plays an essential role in the venture’s sustainability. They generate revenue in the following ways: -

·       Selling products or services directly to individuals

·       Crowdfunding

·       Selling products or services to organizations or businesses

·       Introduce Memberships or Subscriptions

·       Leasing (if property is available)

·       Hosting events / knowledge sharing events

·       Sponsorships

·       Partnership Sales

·       Unlike charity, they pursue endeavours that generate revenue which fund their social causes.

Social Enterprise’s Business Model

1)    The Entrepreneur Support Model: This involves selling support services directly to entrepreneurs.

2)    The Market Intermediary Model: This type helps their clients by marketing or selling their clients’ products or services for them.

3)    The Employment Model: This type provides their clients with job opportunities and job training.

4)    The Fee-for-Service Model: This type charges the customer directly for the socially beneficial services it provides.

5)    The Low-income Client Model: This type of social enterprise offers social services directly while focusing on low-income clients.

6)    The Cooperative Model: This is generally a fee-based membership organization that provides member services to a group that shares a common need or goal.

7)    The Market Linkage Model: This model focuses on building relationships and otherwise connecting their clients with markets for their clients’ products and services.

8)    The Service Subsidization Mode: This type of social enterprise funds social programs by selling products or services in the marketplace.

9)    The Organizational Support Model: This type of social enterprise, like a service subsidization organization, sells products or services to fund social programs. However, the social programs they fund are part of a separate, parent organization. In other words, an organizational support social enterprise raises funds for a parent non-profit that, in turn, runs the social programs the social enterprise wishes to support.

Some Examples of Social Enterprises

1)   SEKEM

With a name that essentially means “vitality from the sun,” this Egyptian company has certainly lived up to its promise by continuously encouraging social, personal and environmental development. Since SEKEM was founded in 1977 by Dr. Ibrahim Abouleish, a pharmacologist, it has:

·       Produced medicinal, herbal, gastronomical and aesthetically focused products that serve the needs of its customers

·       Improved the environment through biodynamic farms

·       Built an educational establishment for children to emphasize creativity and analytical thought

·       Instituted a healthcare center devoted to holistic medicine

2)   Amul

Founded in 1946, Amul was established initially as a reaction to unfair milk trade practices in India, inspiring local and marginalized farmers to form cooperatives independent from trade cartels. With the notable help of Tribhuvandas Patel and Verghese Kurien, the Amul cooperative model became so successful that it was eventually replicated all over India in 1965. Amul has since:

·       Produced excellent value for money food products for customers

·       Created a lucrative source of income for local dairy farmers in India

 

3)   Textbooks for Change

Textbooks for Change, partners with community or student clubs to collect university and college textbooks and donate them to students in need at underserved universities in developing countries. It donates 50% of textbooks to campus libraries in Africa. In addition to textbooks, it also receives various important materials in helping the learning process, including study guides, course packages, foreign language textbooks.

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