Social enterprise
A social enterprise 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.
Social enterprises have business, environmental and social goals. As a result, their social goals are embedded in their objective, which differentiates them from other organisations and companies.[1] A social enterprise's main purpose is to promote, encourage, and make social change.[2] Social enterprises are businesses created to further a social purpose in a financially sustainable way. Social enterprises can provide income generation opportunities that meet the basic needs of people who live in poverty. They are sustainable, and earned income from sales is reinvested in their mission. They do not depend on philanthropy and can sustain themselves over the long term. Attempting a comprehensive definition, social enterprises are market-oriented entities that aim to create social value while making a profit to sustain their activities. They uniquely combine financial goals with a mission for social impact.[3] Their models can be expanded or replicated to other communities to generate more impact.
A social enterprise can be more sustainable than a nonprofit organisation that may solely rely on grant money, donations or government policies alone.[4]
History[edit]
Origins[edit]
The idea of a social enterprise as a distinct concept first developed in the late 1970s in the UK as an alternative commercial organisational model to private businesses, co-operatives and public enterprise. The concept, at that time, had five main principles [6] divided into three values and two paradigm shifts. The two paradigm shifts were:
Influences[edit]
The first academic paper to propose worker co-operatives involved in health and rehabilitation work as a form social enterprise was published in 1993.[27] The scale and integration of co-operative development in the 'red belt' of Italy (some 7,000 worker, and 8,000 social co-operatives) inspired the formation of the EMES network of social economy researchers who subsequently spread the language to the UK and the rest of Europe through influential English language publications.[28]
In North America[edit]
United States[edit]
The Social Enterprise Alliance defines a "social enterprise" as "Organizations that address a basic unmet need or solve a social or environmental problem through a market-driven approach."[44]
In the U.S, two distinct characteristics differentiate social enterprises from other types of businesses, nonprofits, and government agencies:
In Asia[edit]
Middle East[edit]
There is no separate legal entity for social enterprises in the Middle East. Most social enterprises register as companies or non-profit organizations. There isn't a proper definition of social enterprises by the governments of the Middle Eastern countries.[50]
However, social enterprises in the Middle East are active and innovating in a variety of sectors and industries. A majority of the existing social enterprises are engaged in human capital development. Many are nurturing a cadre of leaders with the experiences and skills needed to enhance the region's global competitiveness while also achieving social goals. Trends in the region point to an increasingly important role and potential for such activities and for social entrepreneurship in general. These include the growing interest among youth in achieving social impact and growth in volunteerism among youth.[51]
According to the Schwab Foundation there are 35 top social entrepreneurs in the Middle East.[52]
In Africa[edit]
Kenya[edit]
In Kenya, many NGOs use business models to improve the lives of people, mainly in rural Kenya. An example of this is KOMAZA, a social enterprise that plants trees with smallholder farmers and uses economies of scale to enable them to access high value markets for processed trees. Another example of this is RISE Kenya that runs projects to mitigate climate change in the semiarid Eastern Province of Kenya. They also run weaving projects whereby women who would traditionally engage in weaving make products that are marketed in the capital city Nairobi and in overseas markets of Europe and America.
Other development-oriented social enterprises in Kenya include the One Acre Fund, Nuru International and Alive & Kicking, which has produced over 200,000 sports balls from its stitching centre in Nairobi.[91] Kenya's social enterprises include M-Pesa, which facilitated economic transactions via mobile phone.
Social enterprise in Kenya has grown to include spaces with IT infrastructure such as internet connectivity and computer hardware. Two of these, the iHub and NaiLab, are centers for technological enterprise, with ventures such as Tandaa in cooperation with the ICT Board of Kenya and Akirachix.[92]
Zambia[edit]
As in much of Africa, social enterprises in Zambia are often focused on the creation of sustainable employment. Alive & Kicking established a stitching centre in Lusaka in 2007, which employs 50 stitchers and produces 2,000 sports balls a month.[93] Zambikes produces a range of bicycles from their Lusaka factory, including 'Zambulances' and ones made from bamboo, and provide three levels of mechanic training.[94]
In Latin America[edit]
Chile[edit]
Chile is promoting social inclusion and further development of the private sector through Social Enterprises. Support to social enterprises has been included as part of the Productivity, Innovation and Growth Agenda, which has 47 measures, 10 bills and 37 administrative initiatives with an investment of US$1,500 million between 2014 and 2018.
Social enterprises in Chile adopt various forms like cooperatives, associations, private limited companies or corporations. The Ministry of Economy is developing a law project to create a new legal form through which they will establish the rights and duties for social enterprises.[95]
The Government has launched several initiatives to support social enterprises. For example, the Chilean Economic Development Agency CORFO has implemented programs like the Social Innovation Program and the Seed Subsidy for Flexible Asignation to Support Social Innovation Start-up Program. Through these programs they have provided access to seed capital to social entrepreneurs and financial support to incubators supporting social entrepreneurs. Additionally, the Ministry of Social Development also promoted matching grant funds like Mas por Chile[96] (More for Chile) and Incubia Fund in order to support the development of solutions aiming to reduce poverty and strengthen youth.