Our recent blog entry addressed the topic of social entrepreneurism. This week the topic is social enterprise. We talked again with C.J. Hayden the author of three books and over 300 articles on marketing, entrepreneurship, and social change. She serves as a social venture advisor to entrepreneurs, nonprofits, and activists.
Saad & Shaw: How do you define social enterprise?
CJ Hayden: A social enterprise is an organization or project dedicated to a social mission which uses business methods to generate revenue, regardless of whether the entity is for-profit or nonprofit. A nonprofit that operates a business to fund its mission is a social enterprise. A business that exists for the primary purpose of achieving a social mission, and which funnels a significant percentage of profits toward that mission, is also a social enterprise.
A business with the primary purpose of generating profits for its owners or stockholders, which also happens to donate a percentage of its profits to social causes, is not a social enterprise.
Saad & Shaw: Can you share some examples of businesses or non-profit organizations that are social enterprises?
CJ Hayden: One of the earliest and best-known examples of a social enterprise is Goodwill Industries, which since 1902 has been operating thrift stores to fund its mission of providing employment and job skills training for disadvantaged populations. Another well-known social enterprise project is Girl Scout Cookies, which provides funding for the operations of local Girl Scout councils and troops. Cookie sales also help the Scouts to achieve their mission by giving girls an opportunity to learn life skills like goal-setting, teamwork, and money management.
Both Goodwill and the Girl Scouts are nonprofits, but there are many for-profit social enterprises, for example:
- Newman’s Own – Manufactures and sells salad dressing and other food products, donating all after-tax profits to charity
- Working Assets – Provider of long distance and credit card services that donates a percentage of each call or transaction to charities selected by its customers
- Tom’s Shoes – Shoe company that gives a new pair of shoes to a child in need for every pair they sell
Saad & Shaw: What differentiates a traditional non-profit organization from a social enterprise?
CJ Hayden: Traditional nonprofits rely on grants, donations, sponsorships, or government funding, while social enterprises make substantial use of earned income strategies. Many nonprofits have small social enterprise projects, such as selling t-shirts or books. But these usually generate only a minor portion of the organization’s funding. A full-scale social enterprise aims to provide a significant percentage of funding for their mission through business activities.
Find out more about C.J. at www.cjhayden.com.
And as always, continue to have a FUNdraising Good Time!