What is a Social Enterprise?

The fact that “things aren’t the way they used to be” is one of those things that never change. This is the case whether in the context of the way kids behave, how cars are made, or the successes of family businesses. In particular, charities and non-for-profits are finding it increasingly difficult to fund their activities and services. There are several contributing factors to this phenomenon, including a higher demand for services, declines in donations, and the greater complexity of charities.

This situation leads many charities and non-for-profits to pursue various forms of commercial activity as an additional revenue. There are various forms of such commercial activity, including investing, professional fundraising, or opening a social enterprise. In Australia, there is no legal definition of a social enterprise, but it is often described as a trading enterprise that uses its profits exclusively to fund a social or public mission. For example, a charity might open a business to supplement its income and provide financial security for the future.

A social enterprise need not be operated by or be an extension of another charity or non-for-profit. Social enterprises are usually self-contained, using its profits to support and grow the enterprise itself. For-example, a café can be established for the purpose of hiring disadvantaged people, using the profits to further its activities. Thus, social enterprises can either be as part of an existing charity or non-for-profit, or a separate entity.