“I want to start a non-profit because I want to help people and money is not that important to a non-profit.” I hear that often from well-intentioned people; unfortunately, they are setting themselves up for complete failure. Society has conjured up a false view of the non-profit industry. Yes, industry. The non-profit world has its lingo, best practices, industry-specific jobs, and its fair share of political games and financial scandals. Moreover, non-profits are probably more concerned with money than for-profit entities because funding is unstable and competitive. What society has forgotten is that non-profits are really just a type of business entity. A non-profit IS a business. A business whose business is doing good and whose structure is to redistribute its profits back into the organization/community to continue doing good. Non-profits have become synonymous with doing good, but social enterprise argues that doing good is not limited to one business model. A social enterprise could be a not-for-profit, for-profit, co-op, or an emerging model called L3C. For some examples, check out, SCRAP, a non-profit whose mission is “to inspire creative reuse and environmentally sustainable behavior by providing educational program and affordable materials to the community;” KNO Clothing a for-profit clothing company fighting homelessness; Evergreen Cooperatives a conglomerate of four cooperatives roviding job creation, wealth building, and sustainability to Cleveland, Ohio; and MOO Milk Co. an L3C promoting farm preservation and economic development by organic dairy farming. Doing good is not limited to non-profits and does not discriminate; there are many paths to doing good.
The Wall Street Journal recently wrote an article “Tech Boom Hits New York.” The article highlights an up and coming e-commerce, fashion eyewear company, Warby Parker. The company is attracting investors left and right, in fact, they are turning away investors. What’s interesting about the article is that it does not mention once a critical component of Warby Parker’s business model – “for every pair of glasses sold, we provide one to someone in need.”
Warby Parker’s success is an excellent example of how profit and social impact aren’t mutually exclusive; but, where’s the plug for social enterprise? Is it necessary?
Social enterprise is nothing new, and over the decades, acronyms, catchy phrases, and terminology have shaped the concept of social enterprise to become a unique sector. Vocabulary has its role, but has it stifled the potential of social enterprise to impact mainstream business by segregating itself? I think WSJ’s article on Warby Parker points to an underlying sentiment in the traditional business world; it’s great if you do something good for the world but it’s still the bottom line that matters. If the goal of social enterprise is to change the way business is done, maybe it’s time to ditch the semantics and work on creating killer business models.
There are a myriad of definitions and opinions on what social enterprise is and isn’t depending on what circle you run in. I’ve heard if a non-profit uses sophisticated metrics to measure its impact, then it is a social enterprise. I’ve heard if a company has a philanthropic branch or if a non-profit has a revenue generating arm, then they are a social enterprise. I personally believe that those definitions of social enterprise are superficial and probably do more harm than good. I’ve heard social enterprise only pertains to microfinance and green companies are not social enterprises. I think those opinions are either too exclusive or not inclusive enough. The working definition I maintain is: a social enterprise is an enterprise that works to solve social, ecological, and economic problems through market solutions. Social enterprises come in many different sizes and flavors. They can be a for-profit entity or a non-profit entity. They can focus on a particular function(s) of an enterprise like human resources, supply chain, product management, etc. (more on that later). The overall goal of social enterprise is to do the most good and be financially sustainable entity while doing it.
SE Toolbelt, a free open-content community resource center for social entrepreneurs, has some good information on social enterprise if you’re interested in learning more basic background information on social enterprise.
Kristen Mozian 