A social enterprise is defined as any business venture created for a social purpose--mitigating/reducing a social problem or a market failure--and to generate social value while operating with the financial discipline, innovation and determination of a private sector business.1
Social enterprises use entrepreneurship, innovation and market approaches to create social value and change; they usually share the following characteristics:
- Social Purpose - created to generate social impact and change by solving a social problem or market failure;
- Enterprise Approach – uses business vehicles, entrepreneurship, innovation, market approaches, strategic-orientation, discipline and determination of a for-profit business;
- Social Ownership – with a focus on public good and stewardship, although not necessarily reflected in the legal structure.
Social enterprises may be structured as a department within an organization or as a separate legal entity, either a subsidiary nonprofit or for-profit.
The purpose of the social enterprise may be:
- an additional funding mechanism for the organization’s social programs or operating costs;
- a sustainable program mechanism in support of the organization's mission; or
- a leadership development mechanism in support of social innovation.
Used for either purpose, business success and social impact are interdependent.
- 1. Definition from Virtue Ventures LLC