Social Enterprise – what does it mean?

I’m blogging about this because I know I will be frequently using the terms ‘social enterprise’ or 'social entrepreneur' in my blogs and I wanted to be able to define what I am talking about. As someone coming out of the business/financial world I find it a bit strange that I even have to do this, but these terms have been defined and used in so many different ways in the nonprofit world they are almost in danger of losing meaning.

First, a distinction. Not all social entrepreneurs start social enterprises. It would make sense if we limited the term social entrepreneur to social enterprises, but that cat is out of the bag. The term ‘social entrepreneur ‘ has become so watered down that in common usage it pretty much means “anyone who starts a new non-profit or social enterprise’. The vast majority of folks I have heard called social entrepreneurs have gained the label by forming a new non profit. I wish the term was more limited, but its not. If I use it in future blogs I’ll probably mean the more narrow and logical definition – someone who starts a social enterprise, but I’ll probably be one of the few people out there limiting the term.

When I use the term ‘social enterprise’ I’ll be using it with a fairly narrow definition – “an entity of any legal structure (for profit/ nonprofit etc) that operates an entrepreneurial business and operates as a business, but operates primarily or exclusively for a social purpose”.

Why so narrow a definition? My bias is from my background in business where terms like this are usually well understood. Sure there are trends in business, but if a new trend like web 2.0 becomes hot that means entrepreneurs are creating web 2.0 companies. It generally does not mean that already existing companies are trying to change the meaning of the term so that it also describes them.

In the nonprofit world, new trends seem to lead to redefinition of terms more than they do real innovation. This comes from the need to attract funders. It seems to me that as social enterprise has become a trend, a lot of non profits have just watered down the meaning of the term so their fundraising team had something new to market.

That gets to the point of what it means to be entrepreneurial . The way the term is used in the business world, the key factors in defining an ‘entrepreneur’ are innovation and risk. In the business world, someone who buys a franchise and opens a new chain store is not considered an entrepreneur as there is no innovation, and less risk than other businesses. So if a nonprofit soup kitchen learns about another nonprofit soup kitchen that started a side business and then decides to copy it- well, no risk + no innovation means its not entrepreneurial (even if it is a great program) so its not a social enterprise by my definition.

I’m afraid my limited definition will have no chance of surviving as there are real incentives in the nonprofit world to define anything and everything as a social enterprise, but it’s the one ill be using here.