The social enterprise business model ( 1)

Non-profit Organizations (NPOs) and Non-Governmental Organizations (NGOs) aim to meet societal needs. These needs can be social, environmental, economic, cultural, or psychological.

NPOs and NGOs do not seek profit. Any income they earn is reinvested to achieve their goals. They do not distribute profits to members or founders. Their main purpose is to benefit society and address social challenges.

In contrast, profit-making businesses focus on generating profit. They may engage in corporate social responsibility (CSR) initiatives, but these are secondary to profit-making. Despite a growing emphasis on Environmental, Social, and Governance (ESG) issues, businesses remain primarily profit-driven.

Social enterprises offer a middle ground. They combine solving social challenges with making money.

The Social Enterprise Business Model

Social enterprises use commercial principles to tackle social and environmental issues. They have both social objectives and traditional business goals.

Three key attributes define a social enterprise: business objectives, entrepreneurial model, and governance structure. Their primary goal is addressing specific community issues like healthcare or waste management.

A strong social objective drives these ventures toward economic independence and sustainability. They must generate enough revenue to cover operations without relying heavily on grants or donations.

For an organization to be a social enterprise, it must have inclusive governance. This means considering the interests of all stakeholders rather than just owners or shareholders.

There are about eleven million social enterprises worldwide in various legal forms. These organizations impact communities globally and locally across many sectors like agriculture, education, healthcare, and arts.

According to the Global Entrepreneurship Monitor (GEM), around 3.5% of the global population runs social enterprises—approximately 35 million people. Notably, 38% of these enterprises have created over five jobs each; 57% of those positions are filled by volunteers.