As we all continue our analysis and search for a definition of social enterprise that captures the movement’s spirit while also being accurate, I thought that I’d share CrowdImpact’s definition of a “social enterprise business” below (note, this definition only covers for-profit businesses and not non-profits). I like this business definition so much so that I may adopt it for my Social Enterprise & Nonprofit Law Clinic at Georgetown. The definition below (1) acknowledges that a social enterprise is more than it’s choice of legal entity and (2) prioritizes the commitment to make both an internal and external impact.
There is one aspect of this definition that I take issue with, and this is an issue that I have been trying to reconcile whenever I describe social enterprise as well. Most descriptions of social enterprise include a statement like “the primary purpose is not to make money.” I think that people knowledgeable about social enterprise understand this to mean the following: “the primary purpose is not to fatten the pockets of already wealthy owners and investors.” Because for many social enterprises, the purpose precisely is to make money or redistribute wealth – e.g., to make money to reinvest in the social enterprise’s impact efforts, or to facilitate wealth creation opportunities for low-income people or people at the bottom of the pyramid.
With that caveat, here is CrowdImpact’s Definition of a Social Enterprise Business:
A Social Enterprise business has:
1. Internal Impact in the way they treat employees, engage in production, select materials, and other factors.
2. External Impact in what they contribute to the environment, their community, and/or humanity.
3. Legal Accountability in their incorporation documents, mission statements or stated values.
Other things that help you define if your company is a for-profit social enterprise:
• It generates revenue through the sale of products and/or services.
• It applies entrepreneurial approaches to addressing social, environmental and human justice issues.
• Its purpose is beyond making money. It incorporates higher goals for the improvement of the environment, humanity and/or community.