Social enterprise is a term that has gained significant attention and popularity in recent years. It refers to a business model that aims to achieve social or environmental objectives while generating profits. It is a relatively new concept, but the ideas and principles behind it have existed for centuries.
Definition of Social Enterprise
A social enterprise can be defined as an organization that applies commercial strategies to achieve its primary social or environmental objectives. The profits earned by the enterprise are reinvested into the business or used to support specific social or environmental projects. This model differs from traditional businesses that primarily focus on generating profits for their owners or shareholders.
The main goal of a social enterprise is not to maximize profits, but to create a positive impact on society or the environment. This impact can be measured in various ways, such as reducing poverty, promoting education, or protecting the environment. Social enterprises operate in a wide range of industries, including healthcare, education, energy, and agriculture.
History of Social Enterprise
The concept of social enterprise can be traced back to the 19th century, with the emergence of cooperatives, mutual societies, and philanthropic organizations. These organizations aimed to address social problems and improve the lives of vulnerable communities through business activities. For example, the Rochdale Society of Equitable Pioneers, formed in 1844, is considered the first modern cooperative.
In the early 20th century, the social enterprise movement gained momentum with the establishment of organizations such as the Salvation Army and Goodwill Industries. These organizations provided employment and training opportunities to disadvantaged individuals while generating revenue through their thrift stores.
However, it wasn’t until the 1970s and 1980s that the term “social enterprise” was coined. The concept gained widespread attention in the 1990s with the rise of socially responsible investing and the growth of the nonprofit sector. Today, social enterprise has become a global movement, with organizations like Ashoka and the Schwab Foundation for Social Entrepreneurship promoting its development and growth.
Examples of Successful Social Enterprises
One of the most well-known examples of a social enterprise is TOMS, a shoe company that follows the “One for One” business model. For every pair of shoes purchased, the company donates a pair to a child in need. Since its inception, TOMS has donated over 100 million pairs of shoes and has expanded its impact to include eyewear, clean water, and safe childbirth initiatives.
Another notable social enterprise is BRAC, a development organization based in Bangladesh. It operates several social enterprises, including a dairy and a chain of retail stores. The profits from these enterprises fund BRAC’s various programs, which aim to alleviate poverty and promote women’s empowerment.
In the healthcare industry, Aravind Eye Care System is a prime example of a social enterprise that has made a significant impact. It provides high-quality eye care services to underserved communities in India, using a cross-subsidization model where profits from paying patients subsidize the cost of treatment for low-income patients.
The Future of Social Enterprise
Social enterprises continue to grow and evolve, driven by the increasing demand for business models that address social and environmental issues. This growth is supported by the rise of impact investing and the growing interest of consumers in ethically and sustainably produced goods and services.
Governments and policymakers are also recognizing the potential of social enterprise in addressing societal challenges. Many countries have implemented policies and programs to support the growth of social enterprises, such as tax incentives and funding opportunities.
In conclusion, social enterprise is a business model that combines commercial strategies with social and environmental objectives. It has a long history, dating back to the 19th century, and has gained significant momentum in recent years. With its potential to create positive change, social enterprise is poised to play a significant role in shaping the future of business and society.