Social enterprise seems to be the buzz word of the moment but there are many examples of organisations which have been working at the intersection of commercial revenue and social impact for a long time without calling themselves social enterprises. So why bother using this buzz word at all? Why not just get on with doing good stuff in a business-like manner?
For Jake Hayman, CEO of The Social Investment Consultancy (TSIC), a strategy consultancy working across the for- and non-profit sectors, it's the human aspect that drives many organisations towards wanting to discover their inner social enterprise.
"The idea of social enterprise appeals to people – they want to trade with, buy from and work for those organisations, making it easier to attract employees and consumers", says Hayman, who is also a founder of Future First, a social enterprise using the alumni networks of state schools to increase social mobility.
Organisations with a social purpose and good reputation are likely to find it easier to attract people in the current market, in comparison to those in the financial sector who are facing frequent criticism. "The impact [of today's climate] has been that there are conscientious people wanting to move away from [the financial] industry. People are asking questions about their employers, especially as they see the growth of social purpose businesses.
"There is an entire swathe of the labour market that would work for a social enterprise that wouldn't work for a purely charitable organisation with the same objectives, " Hayman says.
Customers on the other hand, can be a little harder to cultivate. Hayman's belief is that consumers "won't change purchasing patterns to prioritise social enterprise goods unless the products are seen as otherwise identical". The good news is that even if they don't become consumers directly, "they often become advocates of such organisations". This means that social enterprises "will ultimately be at an advantage or even be more successful on a dollar for dollar basis in the long run than traditionally commercial organisations".
The combination of social and commercial aims can be a powerful force for change. Celebrating the success of the social enterprise movement raises awareness of the approach.
Hayman says: "If the market can push even 1% [more] of traditionally commercial businesses to think smartly about their giving and transfer that into their mainstream activity that could have a far greater impact than creating a whole new sector of social enterprise. In a recent study, TSIC found that 90% of senior business leaders believe that for-profit enterprises can have greater social impact than purely charitable models – and a few innovative examples have already emerged."
For example, Reuters Market Light is a commercial product leveraging the core strengths of Thomson Reuters but widely recognised for the contribution it makes towards the UN's millennium development goals.
"If charities could start trading for 1% [more] of their income, and engage those who benefit from their services for 1% of their financial contribution, they could develop a much more sustainable model," Hayman says.
FARM-Africa, an NGO which has traditionally relied upon donations and grants to support its programmes, has tapped into that model by establishing Sidai [], a social enterprise which offers livestock and veterinary services to farmers across Kenya on a commercial basis.
Just as organisations may be accused of "green-washing" if their CSR initiatives look more like a marketing ploy than an environmental movement, finding your inner social enterprise can be a moral tightrope. The problem is usually down to motivation; an organisation addressing a social failure also needs to be sustainable, so how do we know when the right balance is found between financial stability and profiting from people in difficult circumstances?
"Social purpose businesses can be the best thing in the world, but their motives cannot always be seen with the naked eye - you can't always protect against social purpose businesses being exploitative to some extent," Hayman says.
Incorporating a social enterprise approach could have benefits for your organisation as well as the potential to influence others. Hayman is confident that "purely commercial businesses will learn from consumers and staff that there is money to be made by doing good."
Meera Chadha and Daniel Bhugon are 2012 On Purpose Associates placed at TSIC and FARM-Africa respectively. Meera joined On Purpose from Ernst and Young Advisory Services working with public, private and third sector clients. Daniel was a structurer in equity derivatives at BNP Paribas.
On Purpose is a leadership programme for professionals who want to transition into social enterprise early in their career; it is recruiting its next cohort of Associates here. Applications are open until 29 April 2012.
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