Social enterprise · Nonprofit

What's the definition of a social enterprise?

Madeline Reddington Print and Digital Content Production at Seattle Academy

June 23rd, 2014

On the heels of Tech Crunch announcing its upcoming TC Include program, a lot of people are talking about social enterprise, and I'm seeing a few different definitions around the net. What's yours? Do you think social enterprises should be non-profit? Do you think companies like Facebook and Twitter can be called a social enterprise because of social change movements that have been empowered by them? This article also presents an interesting conundrum of a social entrepreneur trying to decide whether to go for-profit with his non-profit. Thoughts?

Rob G

June 23rd, 2014

My current startup is a "Social Purpose Corporation" - a legal status in WA state akin to a "B" corp without some of the strings and costs of "B" certification.  A SPC in WA requires that our social purpose be baked into our articles of incorporation, that we file an annual report on the results of our social purpose and, among other things, requires 2/3 shareholder approval to change our social purpose.  2 years ago when we made the decision to incorporate as a SPC it was rather uncharted territory (we were the 15th in WA) and we had, and to some extent still have, some concerns about how our SPC status may effect future financing (VC) since our corporate paperwork isn't the "standard" Delaware C corp.  From a IRS/legal standpoint we are treated no differently than a "C" corp.  But our SPC designation buys us (we think as to date no one has challenged any SPC issues in court) some freedoms and protections to pursue our social mission - funding education. To answer your question, no i don't thing FB or Twitter are social enterprises - they provide tools which help social enterprises.  The philanthropic endeavors of Mark Z and other execs certainly do social good, but to call FB the company would be stretching things.  An no i don't think you need to be a non-profit to be a social enterprise or to do real social good.  In fact we specifically chose not to pursue non-profit status so we could focus our efforts on our core mission of funding education rather than fundraising to keep the lights on. 

Nick Gory

June 23rd, 2014

Making money while helping others! 

Candice Hughes, PhD, MBA

June 24th, 2014

I just published an article in Forbes on social enterprise:

I don't believe a social enterprise should be a non-profit. It should be for profit with a mission. 

In my article, I touch on the funding issue. That has been a concern for me as well. My startup isn't a B-corp now, but we are considering it. The whole concept is somewhat new, but companies like Ben and Jerries and Newman's Own or Terra Cycle have so far been successful with the concept no matter how they are structured.

Michael Libes Serial Entrepreneur, Mentor, Advisor, and Educator

August 1st, 2016

There is no agreed upon definition.  The term originates from the nonprofit sector, where it means a nonprofit that has some of its income from paying customers.  In the last decade or more, the term has been co-opted by the for-profit sector, to mean a company with a purposeful mission, i.e. a mission other than pure profits.

In general, it's an organization that balances mission and profits.