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What is a Social Enterprise?

As social justice, environmentalism, and consumer conscientiousness have gained traction and importance, an increasing number of businesses have chosen to use the social enterprise business model; choosing to prioritize people and planet above personal profit.

The term social enterprise has been around for decades, but then so has cooperative, mutualist organization, not-for-profit business and several other business types created to serve a social or environmental mission. They may all use use different terms but their core focus and reasons for existing are shared. These organizations all:

  • Prioritize: Exist to solve a social or environmental problem for a community and prioritize purpose, people, and planet over profit in operational decisions

  • Sustain: Have a self-sustaining revenue model and reinvest the majority of any surplus towards their purpose

  • Protect: Choose legal structures and financing that protect and lock-in purpose long term.

Some examples of social enterprises you may have heard of but may not have associated as a social enterprise include Who Gives a Crap, Dean’s Beans, Thistle Farms and Nepal Tea Collective. In order to truly understand what a social enterprise is, let’s take a look at some of the organizations below.

Aspire Coffee Works was set up with the mission to empower people with developmental disabilities, strengthen families, and build embracing communities. It offers craft roasted coffee and merchandise. It provides employment for people with disabilities and donates back all of its proceeds to various programs and services for children and adults with developmental disabilities and their families.

Baker Industries has a workforce development program that was designed to unlock each person’s unique potential and provide a sense of purpose to adults with barriers to employment. The organization provides assembly, kitting, packaging, fulfillment, shrink wrapping and mailing services while promoting workforce development for people with disabilities, on parole, recovering from addiction, or facing homelessness

Careplus Workforce Solutions’ mission is to create employment opportunities for the disabled and economically disadvantaged in their communities. It offers inkjet and toner cartridges, office supplies, commercial cleaning and laundry services while providing employment and training opportunities for disabled and economically disadvantaged individuals.

Divine Chocolate USA’s mission is to help end exploitation in the cocoa industry, creating a world where farmers thrive and prosper. It sells chocolates, snack bars, cocoa powder, and gift sets. It is a cooperative owned by farmers so not only are the farmers paid a premium price, they also share in the profits and support women in cocoa farming.

Emerge social enterprises were set up to provide transitional jobs to those that have significant barriers to employment and serve as a bridge to another job. They provide training and employment opportunities for those facing barriers to employment while running three different businesses including Second Chance Recycling, Nielsen Metal Manufacturing and Furnish Office and Home.

What is common in all of the above organizations is that their primary mission is to address a social or environmental issue, they are providing some kind of products and services to generate sustainable revenues and they are giving back or sharing a significant amount of their profits or revenues. For more inspiring stories, check out our impact stories page, here.

It is estimated that there are more than a million social enterprises operating in the US, however in the absence of a standard legal structure for a social enterprise, it is difficult to determine the correct number. A social enterprise can be either a nonprofit or a for-profit legal entity. Some legal structures available for social enterprises are only available in certain states (for example, Benefit Corporation or L3C’s (Low-Profit Limited Liability Company). To add to the confusion, some of these legal structures are regulated differently in different states.

One of the key ways to address the issue of trust and transparency until we have a standard legal structure for social enterprises is through verification. Social enterprise verification is a way for businesses to demonstrate their commitment to social and environmental impact through a third-party system that independently checks their credentials. This can provide a way for consumers, investors, and other stakeholders to identify and support these social enterprises that are making a positive difference in the world. If your social enterprise wants to learn more about verification, check out the Social Enterprise World Forums global SEWF Verification. Launched in 2022, it is a low cost and inclusive verification system for social enterprises anywhere in the world.


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