Definition of Social Enterprises

Ed Yourdon: flickr

Social enterprises are nonprofit businesses that create jobs as way of addressing social or environmental problems. They focus on improving the quality of life in neighborhoods underserved by government agencies or for-profit businesses. Many social enterprises operate on shoestring budgets, working out of dilapidated buildings and relying on used equipment so as to pour more resources and funding into various projects. Some, like Newman's Own, are nationally recognized businesses that contribute profits to charity.

Social Purposes

There are many types of social enterprises, the most common being those that take on a specific issue or strive to meet the needs of a specific client. This might include providing free or low-cost items like food, clothing, furniture, appliances or home repairs. These businesses target individuals and families who are physically, culturally or financially disadvantaged.

Earned Income

Some social enterprises generate additional revenue for their causes or clients by utilizing extra space or equipment. They operate gift shops, convenience stores, parking lots and other businesses. Any resulting profits are donated to to charity or organizations supporting the social enterprise's particular issue.


A non-profit social enterprise occasionally forms a partnership with a for-profit business. These partnerships take on a variety of forms, but often include financial support from the for-profit business in exchange for advertising in the social enterprise's literature, or display and distribution of the company's products. Some businesses pay social enterprises to recruit local area workers for them.

Private-Public Partnerships

Government agencies sometimes hire social enterprises to perform certain tasks, such as food distribution or neighborhood beautification projects.

For-Benefit Enterprises

For-benefit enterprises operate much like traditional social enterprises, existing as non-profit organizations focused on a specific purpose, but with a greater economic impact on the community. They create jobs, direct consumers to neighborhood businesses, and attempt to bring other businesses and government funding to the area.


Many social enterprises form alliances or coalitions, either among themselves or with community and religious organizations to help offset costs and bring additional attention to various problems. They often coordinate efforts to avoid competing for the same charitable donations and grants. One common technique is to approach businesses for a percentage of profits tied to the sale of a particular item, or for a set period of time, such as during the Christmas season. The social enterprise offers the business good press for their donation, while allowing them access to funds not previously set aside by the company for charity.