The Case for Social Enterprise Alliance


What we're all about

Social Enterprise Alliance is the membership organization for the diverse and rapidly growing social enterprise sector in North America.

Our goal is nothing less than to change the world for the common good. It is no secret that the list of seemingly insurmountable social, environmental and human concerns is growing far more quickly than the ability of traditional sectors to address them. We envision a world in which these vexing concerns are overcome, and we see social enterprise as, quite possibly, the single most hopeful vehicle for doing so.

Our mission is to produce massive social value via successful social enterprises. At the core of everything we do is our understanding that the direct social impact we seek is delivered every day by social enterprise practitioners of every shape and size.

We serve our membership of more than 900 social enterprises, service providers, investors, corporations, public servants, academics and researchers by: providing information, research, best practices and building capacity; telling the stories and aggregating the impact of social enterprises; creating a fertile social enterprise ecosystem via advocacy and awareness building; and building thriving local social enterprise communities and national networks.

Ultimately, all of our work is about helping practitioners go forth and change the world through the dazzling array of business models they are inventing and perfecting.

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What’s a social enterprise?

Social enterprises are businesses whose primary purpose is the common good. They use the methods and disciplines of business and the power of the marketplace to advance their social, environmental and human justice agendas.

Three characteristics distinguish a social enterprise from other types of businesses, nonprofits and government agencies:

  • It directly addresses an intractable social need and serves the common good, either through its products and services or through the number of disadvantaged people it employs.
  • Its commercial activity is a strong revenue driver, whether a significant earned income stream within a nonprofit’s mixed revenue portfolio, or a for profit enterprise.
  • The common good is its primary purpose, literally “baked into” the organization’s DNA, and trumping all others.

In its early days, the social enterprise movement was identified mainly with nonprofits that used business models and earned income strategies to pursue their mission. Today, it also encompasses for-profits whose driving purpose is social. Mission is primary and fundamental; organizational form is a strategic question of what will best advance the social mission.

Field StudyThe social needs addressed by social enterprises are as diverse as human ingenuity. In our 2009 Field Study (download here), the top five mission foci of social enterprises were workforce development, housing, community and economic development, education, and heath.

Social enterprise business models are equally diverse, including: retail, service and manufacturing businesses; contracted providers of social and human services; fee-based consulting and research services; community development and financing operations; food service and catering operations; arts organizations; and even technology enterprises. Chances are you already do business with social enterprises without even knowing it.

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Social enterprise: the “missing middle”

As a country and global community, we stand at a unique inflection point. It appears that the world’s problems are outstripping our ability to address them, but what may be more accurate is simply that traditional institutions are no longer sufficient.

Social enterprise is emerging as the “missing middle” sector between the traditional worlds of government, nonprofits and business. It addresses social concerns,

  • more efficiently than government, which no longer has the mandate or resources to solve every social problem;
  • more sustainably and creatively than the nonprofit sector, which faces declining funding streams and increased demands for innovation, proof of what works and collaboration; and
  • more generously than business, which is mandated to place pre-eminence on shareholder returns, but is also realizing it can’t succeed in a decaying world.

As social needs continue to spike in light of shrinking government budgets, employment rolls, and social safety nets, social enterprise is emerging as a self-sustaining, market-based, business-like and highly effective method of meeting social needs.

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Social enterprise leverage

Social enterprises produce higher social returns on investment than other models.

On one hand, they produce direct, measurable public benefits. A classic employment-focused social enterprise, for example, might serve at least four public aims:

  • Fiscal responsibility — It reduces the myriad costs of public supports for people facing barriers, by providing a pathway to economic self-sufficiency for those it employs.
  • Public safety — It makes the community in which it operates safer, by disrupting cycles of poverty, crime, incarceration, chemical dependency and homelessness.
  • Economic opportunity — It improves our pool of human capital and creates jobs in communities in need of economic renewal.
  • Social justice — It gives a chance to those most in need.

Yet, almost magically, social enterprises produce these benefits while reducing the draw on public and philanthropic funds. Their earned income streams supplant or replace grants and donations to produce a dramatically higher ROI. For example, a nonprofit that earns 50% of its budget through its social enterprise is effectively matching every dollar of “public income” with a dollar of “marketplace income”, doubling the social return on investment of those public dollars.

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