7 Types of Social Enterprise You Should Know About
Social enterprises are businesses that use commercial strategies to achieve social or environmental goals. They are different from traditional businesses that focus only on profit, or non-profit organizations that rely on donations or grants. Social enterprises aim to create both financial and social value, and often reinvest their surplus to further their mission.
In this article, we will explore seven types of social enterprise that you should know about, and how they operate in different sectors and contexts.
1. Trading enterprises
These are businesses that sell goods or services to generate income and achieve social or environmental goals. For example, Divine Chocolate is a trading enterprise that produces and sells fair trade chocolate, and shares its profits with cocoa farmers in Ghana. Another example is The Big Issue, a magazine that is sold by homeless people who earn a commission for each copy they sell.
2. Financial institutions
These are organizations that provide financial services to low-income or marginalized groups, such as microfinance, credit unions, or ethical banks. For example, Grameen Bank is a financial institution that offers microloans to poor women in Bangladesh, enabling them to start or expand their own businesses. Another example is Triodos Bank, an ethical bank that only lends to organizations that have a positive social or environmental impact.
3. Community organizations
These are groups that are owned and controlled by a community of members, such as cooperatives, social housing, or community land trusts. For example, The Co-operative Group is a community organization that operates various businesses, such as retail, banking, insurance, and energy, and distributes its profits among its members and local causes. Another example is Habitat for Humanity, a social housing organization that builds affordable homes for low-income families with the help of volunteers.
4. NGOs and charities
These are non-governmental and non-profit organizations that use business methods to support their missions, such as fair trade, social marketing, or social franchising. For example, Oxfam is an NGO and charity that runs fair trade shops, campaigns for social justice, and provides humanitarian aid. Another example is Teach For All, a social franchising organization that recruits and trains leaders to teach in under-resourced schools around the world.
5. Opportunity employment
These are businesses that create jobs or training opportunities for people who face barriers to employment, such as people with disabilities, refugees, or ex-offenders. For example, Greyston Bakery is an opportunity employment business that hires anyone who applies, regardless of their background or skills, and provides them with training and support. Another example is Thaki, an opportunity employment business that refurbishes donated laptops and distributes them to refugee children for education.
6. Donate back
These are businesses that donate a portion of their profits or products to a social cause, such as TOMS shoes, Warby Parker, or Bombas socks. For example, TOMS shoes is a donate back business that gives a pair of shoes to a child in need for every pair sold. Another example is Warby Parker, a donate back business that gives a pair of eyeglasses to someone in need for every pair sold.
7. Transformative products or services
These are businesses that offer products or services that directly address a social or environmental problem, such as clean energy, health care, or education. For example, M-KOPA is a transformative product business that provides solar-powered home systems to off-grid households in Africa, enabling them to access electricity, lighting, and entertainment. Another example is Khan Academy, a transformative service business that offers free online education to anyone who wants to learn.
These are some of the types of social enterprise that you should know about. They show how business can be used as a force for good in the world, and how social entrepreneurs can create innovative solutions to the most pressing challenges of our time.
Types of Social Enterprises and Their Global Demand
Social enterprises are businesses that have a social or environmental mission as their primary goal, while also generating profits to sustain their operations. Social enterprises can take different forms depending on the legal structure, ownership model, and sector they operate in. Here are some common types of social enterprises and their global demand.
Trading Enterprises
Trading enterprises are businesses that sell goods or services to generate income and achieve social or environmental goals. For example, they may sell fair trade products, recycled materials, or organic food. Trading enterprises can be owned by workers, customers, or communities, or they can be independent entities. Trading enterprises are one of the most popular types of social enterprises, especially in developing countries where they can create jobs and income for marginalized groups. According to the Global Entrepreneurship Monitor, about 3.2% of the adult population in 59 countries were involved in social trading enterprises in 2019.
Financial Institutions
Financial institutions are organizations that provide financial services to low-income or marginalized groups, such as microfinance, credit unions, or ethical banks. Financial institutions aim to improve the financial inclusion and empowerment of their clients, while also being financially sustainable. Financial institutions are in high demand in many regions where access to formal financial services is limited or costly. According to the World Bank, about 1.7 billion adults worldwide did not have a bank account in 2017. Financial institutions can help bridge this gap and offer affordable and convenient financial solutions.
Community Organizations
Community organizations are groups that are owned and controlled by a community of members, such as cooperatives, social housing, or community land trusts. Community organizations aim to provide benefits and services to their members and the wider community, such as affordable housing, health care, education, or energy. Community organizations are often driven by local needs and aspirations, and they can foster social cohesion and democracy. Community organizations are in demand in many areas where public or private services are inadequate or unaffordable. According to the International Co-operative Alliance, there are about 3 million cooperatives worldwide with over 1 billion members.
NGOs and Charities
NGOs and charities are non-governmental and non-profit organizations that use business methods to support their missions, such as fair trade, social marketing, or social franchising. NGOs and charities aim to address social or environmental problems through advocacy, awareness-raising, service delivery, or capacity-building. NGOs and charities often rely on donations, grants, or subsidies to fund their activities, but they may also generate income from selling products or services related to their cause. NGOs and charities are in demand in many sectors where there are unmet needs or gaps in public policies. According to the Johns Hopkins Center for Civil Society Studies, there were about 10 million NGOs worldwide in 2016.
References:
http://www.locallivelihoods.com/cmsms/uploads/PDFs/Social%20Audit%20-%20A%20Management%20Tool.pdf
http://www.shababinclusion.org/files/1576_file_MEYI_Social_Entrepreneurship_final.pdf
https://eprints.mdx.ac.uk/12955/3/Doherty_et_al-2014-International_Journal_of_Management_Reviews.pdf
https://www.gemconsortium.org/report/gem-201920-social-entrepreneurship-report
https://globalfindex.worldbank.org/
https://www.ica.coop/en/cooperatives/facts-and-figures
https://ccss.jhu.edu/wp-content/uploads/downloads/2016/06/UNDP_WorkingPaper_2016.pdf
https://corporatefinanceinstitute.com/resources/esg/social-enterprise/
https://en.wikipedia.org/wiki/Social_enterprise
