What is a social enterprise – official definitions?

The term ‘social enterprise’ emerged from the recognition of organisations using business to bring about social and environmental change (SEDETT 2018).  A social enterprise has a social/societal or environmental purpose, with at least part of its surplus primarily reinvested in the social objective (Forfás 2013).  Its main aim is to have a social or environmental impact or benefit, rather than to maximise profit for owners or shareholders.

The E.U. Social Business Initiative of (2011) defines a social enterprise as an

“undertaking whose primary objective is to achieve social impact rather than generating profit for owners and shareholders; and which uses its surpluses mainly to achieve these social goals; and which is managed by social entrepreneurs in an accountable, transparent and innovative way, in particular by involving workers, customers and stakeholders of its business activity”.

The term covers businesses for which the social or societal objective of the common good is the reason for the commercial activity, often in the form of a high level of social innovation; those where profits are mainly reinvested with a view to achieving this social objective; the method of organisation or ownership system reflects their mission using democratic or participatory principles or focusing on social justice (European Commission 2016).

Social enterprises encompass a wide variety of organisations, across a variety of sectors, from large social cooperatives to small, community-run initiatives.  They can be structured as a for-profit or non-profit, and may take the form (depending in which country the entity exists and the legal forms available) of a co-operative, mutual organisation, a disregarded entity, a social business, a benefit corporation, a community interest company or a charity organization. They can also take more conventional business structures. What differentiates social enterprises is that their social mission is key to their success (SEDETT 2018).

Often social enterprises fill service gaps neglected by government or deemed financially not viable by traditional enterprises.  They benefit society raising social awareness and providing solutions (Santos 2012).