Defining the lingo: What is a social enterprise?

A social enterprise is defined by Wikipedia as “any for-profit or non-profit organization that applies capitalistic strategies to achieving philanthropic goals.” I tend to think about a social enterprise as an entity with a social and/or environmental mission coupled with a focus on financial sustainability. While traditional enterprises typically measure performance in profit and financial return, social enterprises focus on creating social good (perhaps via performance in profit and social return.)

Social enterprises fit into a larger umbrella of businesses with social responsibility (as most commercial businesses have social objectives), but social enterprises are distinct in that their social and/or environmental mission is central to what they do. So whether they are structured as mission-oriented for-profits or business-oriented not-for-profits, it is their mission and financial sustainability (and not their tax code) that distinguish them from non-profits with some earned income and businesses with social responsibility.

It is important to understand this distinction, in a world of confusing vocabulary, misaligned incentives and “spin” marketing, where the terms green and organic are tossed around like buy and sell on trading floors.