Social Enterprise: What the U.S. and European Experience Can Teach Us

////Social Enterprise: What the U.S. and European Experience Can Teach Us

Social Enterprise: What the U.S. and European Experience Can Teach Us

Use of the term social enterprise has been growing in popularity since the mid-1980s, though the activity itself has long been in existence. Generally defined as any market-based activity to address a social issue, social enterprise has by some accounts become a global movement to sustain socially beneficial activities largely by means other than traditional government and philanthropic resources.1 Though the value added from undertaking social enterprise can be emphasized differently depending on geographic context, social enterprise generally speaks to increasing the self-sufficiency, long-term sustainability, programmatic autonomy, and beneficiary empowerment of organizations involved in pursuing a social mission. Looking globally, the social enterprise movement of the last three decades has been spurred on by the need for resources or programming (or both) to fill gaps in systems attempting to serve the disadvantaged.2 Largely as an outlier, social enterprise in the United States also encompasses activities that support the improved well-being of populations beyond the disadvantaged. Thus, typical examples include organizations that provide work for the hard to employ, thrift stores that sell secondhand goods to support a social purpose, scouts that sell cookies or other items to fund their youth programming, microfinance organizations that lend money to the poor for their small business startups, and museum stores, among many others.

The exact definition of social enterprise is often contested along its commercial and social boundaries. Indeed, Trent University associate professor Raymond Dart says of social enterprises that they “blur boundaries between nonprofit and for-profit.”3 Some in the burgeoning social enterprise field, however, appear to be coalescing around parameters, albeit broad ones, for the term. Social enterprise is increasingly defined as distinct from corporate social responsibility (CSR), where profit-driven businesses donate only a fraction of their funds or employee time to social projects. Corporate philanthropy is also often seen as separate from social enterprise, due to the primacy of the profit motive in the corporate generation of revenue relative to the comparably small social cause work of the organization. Other discussions exclude charitable/nonprofit organizations that generate only a small amount of commercial revenue. Thus, while the broadest definitions may include all of these forms of commercially backed social efforts, definitions of social enterprise—either inherently or explicitly—often exclude undertakings that are relatively lacking in either the social or commercial aspect.4

Understandings of the concept of social enterprise and what it is associated with can vary across global regions as well as individual countries and even subnational spaces.Variation can be seen in the predominant activities, clients, outcome focus, funders, regulation, and legal forms for social enterprise in different contexts.6 In Europe, a number of countries provide strong national government support for social enterprise, including some welfare states that are viewed as having co-opted social enterprise for their own policy purposes (namely, the work integration of the hard to employ), often through social cooperatives that enjoy substantial government subsidies—though there are variations on this model.7 Strong government support for this particular type of social enterprise activity has led to the term’s association with the provision of employment and less so with other social purposes, though this is more the case on the continent than in the United Kingdom.8 There is also a growing list of countries with specific legislation for social enterprise legal forms on the national level, many of which are adaptations of the cooperative form. In 1991, Italy was the first to adopt the social cooperative legal form, with a number of other countries later following suit9—including France, Greece, Poland, Portugal, and Spain. Alternatively, in 2005, the United Kingdom passed a modified for-profit legal form, the Community Interest Company (CIC), to address the call to elevate social mission in a for-profit setting.10

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