What is a ‘Social Enterprise’?
The following excerpts are summaries from the excellent book ‘Creating a World Without Poverty’ by Muhammad Yunus. Yunus is regarded by many as the father of social enterprise.
Essentially, a social enterprise is a business that exists for a benefit to the community. It operates as a business in order that it will become self-sufficient and sustainable over time, but its whole reason for being is its social purpose – and any money that it makes goes back into itself to continue its social objective.
Aren’t charities examples of organisations that do good work?
Yes, there are many, many charities playing a terrific role in the community. But the biggest weakness of charities is that they rely on receiving donations – either from government, individuals or other organisations. A very common situation is that when this money stops, too often the work that charities do will start to slow down, or unfortunately stop. Essentially they are not self-sufficient over time.
Why can’t business do this?
If businesses want to, then businesses can. There is nothing stopping businesses from starting to address some of the social issues we face like poverty, crime and environmental issues. However, a business’ core purpose for being is to make money, and it is usual to see that when the social objective conflicts with making money the social objective will miss out. Lots of businesses have a portion of their work that benefits the community, but it is not their core reason for being.
But lots of businesses give money away, or sponsor charities…
Yes, they do – and that’s terrific! A lot of charities rely on this. But it doesn’t get to the root of the problem. Cynics would say that businesses give money away in order to boost their profile and get some good publicity. But even those business leaders who genuinely try to be responsible will come up against a problem: Corporate managers are responsible to either private owners or shareholders who invest in the company. In either case, those owners have only one objective: to see the monetary value of their investment grow. In fact, maximising profit is a business’ legal obligation to their shareholders unless the shareholders mandate otherwise.
So how is Shake Up a social enterprise?
Shake Up will operate as a business by selling smoothies, soups and coffee – and the money made from that will keep the business sustainable over time. But its main reason for being is hiring young people who can’t get work, and training them to find full-time employment. The whole purpose for existing is the number of youth it can hire and get into full time work, and any money that it makes will go back into the organisation to continue its purpose. As long as it is breaking even while hiring young people who can’t get work, Shake Up will be a social enterprise.