This typology breaks down the traditional boundaries between the nonprofit and private sectors and draws definition to this new institutional animal--part business-part social--the social enterprise. In doing so, the typology explores how institutions have combined a mix of social values and goals with commercial business practices and how they have come up with ownership models, income and capitalization strategies, and unique management and service systems designed to maximize social value.

The purpose of this typology is to elaborate the rich mosaic of highly differentiated and creative examples of social enterprise, and by doing so, to inspire innovative approaches to create greater value for people and the planet. The typology is also intended to advance the field of social enterprise by organizing these diverse approaches and strategies into a common framework.

Shifting stakeholder expectations of nonprofit organizations to achieve larger scale social impact while also diversifying their funding has been credited as a major factor in the appearance of the “nonprofit hybrid” part for-profit and part nonprofit.

At this intersection of business and traditional nonprofit is where the social enterprise lies.

Social enterprises can be classified either based on their mission orientation or based on the level of integration between social programs and business activities.

The following section elaborates possible operational models of social enterprises.

The operational models should not be confused with depictions of organizational or legal structures. Rather, they illustrate configurations used to create social value (measurable impact) and economic value (income), and can be applied equally to institutions, programs, or service delivery.

Operational models are designed in accordance with the social enterprise's financial and social objectives, mission, marketplace dynamics, client needs or capabilities, and legal environment.

Fundamental models can be combined and enhanced to achieve maximum value creation.

Organizational Structure -- A social enterprise may be structured as a department, program or profit center within a nonprofit and lack legal definition from its parent organization. It may also be a subsidiary of its nonprofit parent, registered either as a for-profit or nonprofit. Many organizations use a mix of different structures simultaneously.

Legal Structure -- A social enterprise may be incorporated either as a for-profit or a nonprofit. It is however important to recognize that social enterprises are not defined by their legal status: legal status may be arbitrary. A social enterprise’s structure or model is not a definitive determinate of its legal status.

Ownership Structures -- Three different types of social enterprise ownership structures exist: private, public and collective. Ownership can be either a driver for a social enterprise's legal structure or a determinate of it. In most counties nonprofits are considered "public good" or property of the public, thus calling into question the legal ownership of their assets, goodwill, brand, etc.