It is important to mention Corporate Social Responsibility (CSR) here. In its most basic form, this involves a company visibly complying with the expectations of society; the minimal self-regulation it needs to operate with the consent of the public, or its own stakeholders. This might include care for environment, or transparency around its financial activities. Beyond this, companies might support initiatives that are described as having an impact on broader social issues. However, while prominent corporations can generate much attention for social initiatives, it is important to consider the overall impact of a company, and how CSR can play a role in creating a positive image regardless of actual change.
Having looked at the broader field of social economy, it should be easier to see the context in which SE works, and the forms of organisation it combines.
What is social enterprise?
SE seeks to help the same people as the broader social economy; those who are unable to get the support they need (food, shelter, healthcare and so on) by participating in the market economy in the standard ways (owning or working for a commercial business). It is different, however, in the way it creates a middle ground between funding-dependent/non-profit organisations, and profit-oriented commercial operations.
There are two equally vital aspects here:
- Self-sustaining: a social enterprise relies on its trade operations and investment to exist (at least to a critical degree), rather than on donations, grants or other non-commercial inputs.
However, social enterprise is not merely a business with a CSR program, because:
- Impact-oriented: the core activity and composition of a social enterprise is designed to have a positive effect on the broader community with regard to one or more specific issues. This is reflected in everything from the governance structure of the organisation, its employment program, its planning and strategy, to rules around managing profits
Some further detail and some examples around these aspects are needed for a full understanding.
More on Self-sustainability
The need for commercial sustainability is drawn from thinking more comprehensively about the two limitations from before – longer-term effectiveness and the market environment.
The organisations commonly taking care of disadvantaged people are primarily focused on front-line, vital support. Their efforts might revolve around clothing, housing, feeding, providing health care, support and so on. This process exhausts finances, since none are generated by the operation, rendering its type of network, infrastructure and purposes inoperative without new funding.
As a result:
- There is little systematic change, leaving the individual problems and situations to recur
- Working capital has left the control of the organisation, and will not be returned to its financial backer
- The market has developed around the recurrence of the social problems
- Social initiatives and the market are vulnerable to the volatility of public/gratis funding
Social enterprise creates a position in the market economy for those people to get what they need – either by participating in the operation as employee, benefiting from the goods/services it produces, or benefiting from the assets and capital made available.
- A system is created to prevent front-line problems from occurring
- Working capital is retained through successful trade, and can come back to the financial backer as a return on investment
- The market has developed around trade of a social nature
- Social initiatives and the market are less dependent the supply of public/gratis funding.
More on Impact orientation
Businesses keep a visible social mission to cater for customers and investors who want to have a positive impact on the world, while getting the standard of goods, services or returns that could be expected from regular commercial operations.
However, a visible purpose is, in some cases, little more than a marketing tool. Companies can use them to attract business, while ultimately having a minimal or even negative effect in regard to their claims. This is often the sole or primary aim of a corporate social responsibility strategy.
- Greenwashing, where the marketing and branding of a company or of its products misleads the public about the environmental impact of their business (Examples here).
- Pinkwashing, a similar form of marketing, but regarding a social or health issue (often suggesting an association with the cause of breast cancer sufferers or LGBT communities)
- Astroturfing, where the activities of commercial or political interests are disguised as having come from unrelated groups or individuals, often fabricating community-based collaboration (as in “grassroots” movements, hence the reference to AstroTurf, a brand of imitation grass).