What the Eff Is a Social Enterprise?
When I start to explain our business model to interested friends and colleagues, a lot of questions and comments come up, such as:
- “Oh you could apply for grants for something like that, right?”
- “So it’s kind of like child labor…”
- “Oh that’s cool. Yeah my organization makes sure to give 1% of their profits to charity.”
- “So you’re a nonprofit.”
- “Wait, so you actually make money?”
…and the list goes on…
Because of my degree from USC Marshall in social entrepreneurship, I could academically define for you what a social enterprise is – a business or organization that measures both a financial and social/environmental return.
Right. But what the eff does that mean?
The difference in the financial side between a traditional nonprofit model and a social enterprise is simply that to be considered a social enterprise, you must make money by selling a product or service. Raising money through grants, donations, and charity fundraisers is perfectly fine and a great method for some organizations, however this would not qualify as a social enterprise.
The social impact piece means that somewhere in your organization there is a premeditated (as in not just for publicity) plan to take care of the world around you. Tom’s Shoes usually comes up as a heated example. On one foot, (get it?) Tom’s created the model for social enterprise to be cool. You buy an expensive pair of simple shoes, and a poor kid in a far-away country gets a pair for free. The company makes money and someone else benefits. However, on the other foot, kids grow, they need more shoes, shoes get holes in them, and the market price of a pair (well 2 pairs) of Toms at $50-$60 clearly surpasses the manufacturing cost. It’s an endless debate for social entrepreneurship students, because the company set out to do good in the world, but are they doing good?
And what does doing good even mean? This is the part about social enterprises that can lead to a bit of controversy. I honestly get a little judgy when I hear that people think giving 1% of their profits to charity is a good cause, but the truth is they’re giving money that they weren’t giving before, and for some companies 1% of their profits could potentially feed a country.
Even at Knit Marketing, where we aim to provide job opportunities for young people who might not otherwise have access to a digital marketing internship, one could poke holes in our mission. (Like the people who tease us for benefiting from child labor.). I’ve even wondered if I’m doing more harm than good, because my team is now spoiled; working in fancy coworking spaces, making their own schedules, and eating an endless supply of Pop Tarts. But technically we are a social enterprise. We make money by providing marketing services to our clients and we create jobs in our community. Our team benefits from job training and experience that will help them in their future career pursuits and they get to witness and contribute to our clients’ projects, and learn all about how to run and grow a business. Not a bad mission right?
At the end of the day, we’re all just trying to do our own bit of good and make a little money doing it, and that is the point of a social enterprise.
Interested in learning more about our mission or contracting us for digital marketing services? Email us!