Recently Hildy Gottleib on her ‘Creating the Future’ blog was struggling with what social entrepreneurship is and also stated ‘I am struggling to find what the difference is between a social entrepreneur venture and every other organization working to create a better world.’ The responses she received were varied and a good read. I thought I’d add an Australian flavour to the responses.
In 2009 the Australian Centre for Nonprofit Studies and Social Traders had a stab at defining social enterprise, and the answer works well for STREAT, and partially captures why as the organisation’s founder I call myself a social entrepreneur.
Here’s their definition of a social enterprise, along with my response…
a. Are led by an economic, social, cultural, or environmental mission for public or community benefit (STREAT’s mission is to provide homeless youth with independence and a future by providing social support and training and employment in the hospitality industry)
b. Trade to fulfill their mission (our street cafes have the dual purpose of generating income by competing in the open market and also providing the site for training and employment of our youth)
c. Derive a substantial portion of their income from trade (we’re aiming for full financial sustainability through our own earned income by the end of our third year of operating - we’re in year 1 and tracking pretty well against this goal. Our second site opened last week so wish us luck!)
d. Reinvest the majority of their profit/surplus in the fulfilment of their mission (we reinvest 100% of profit).
My guess is that most non-profits could easily tick off point a, though many couldn’t tick off b, c, or d. Now of course there’s a bunch of non-profits who are earning some income, but this isn’t their main or only source of income and they will continue to rely heavily on other income sources to fulfil their missions (eg like government grants, philanthropic money, fundraising activities).
On the other hand, most for-profits could easily tick off point b and c. Some would tick off a, and of course most would reinvest a percentage of their profit back into their business (point d), but most would distributing their profits back to the owners or shareholders of the business.
But of course things aren’t quite this simplistic.