What is a Social Enterprise?
Sally Little, ACSW, MBA
Entrepreneurial Solutions, LLC
www.enterpreneurialsolutions.biz
slittle@hawaii.rr.com
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Social Enterprise Track
Social Enterprise includes both nonprofit and for-profit organizations
focused on delivering a double bottom line – financial and social returns
Profit/Mission Continuum
Focus for Social Enterprise Track
Mission- Traditional
Nonprofit
focus
Activities
 Tax-exempt,
 Social
return
on investment
through
achievement
of mission
Objectives
Mercy Corps
 American
Cancer
Society

Businesses
with Social
Outcomes
 Business
mission-related
activities that are
not commercially
motivated
Definition
Examples
Nonprofit
Earned
Income
A
for-profit
company that
pursues financial
return and
simultaneously
generates social
outcomes
activities that
generate earned
income to
support a
nonprofit mission
 Financial
 Financial
and social
return on
investment
and social
return on
investment
Greyston
Bakery
 Pioneer Human
Services

Conducted by Nonprofit Organizations
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Edison Schools
 Microfinance
 Solar/green
power cos.

Traditional
Business
Activities
 Activities
motivated by
the primary
purpose of
returning profits
to shareholders
 Financial
return on
investment
 General
Motors
 American
Express
Conducted by For-Profit Organizations
Profitfocus
Social Enterprise Track
The UH Business Plan Competition is reflecting growing trends of
incorporating social outcomes by adding a Social Enterprise Track
Businesses held
to increasing
socially
responsible
standards
Businesses
developing cause
related marketing
partnerships with
nonprofits
UH Business
Plan
Competition
Social
Enterprise
Track
Development of
social enterprise
curriculum at
leading business
schools
Increasing earned
income (business
venture) activities
in nonprofit sector
Growth of socially
responsible
investment funds
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Definition of Social Enterprise
Social enterprises are defined as
nonprofit or for-profit business
ventures that strive to achieve a
quantifiable double bottom line of
financial and social returns. These
ventures are financially selfsufficient.
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Double Bottom Line
Social return on investment-Social impact
Financial return on investment-Profitability
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What is social return on
investment?
Quantifiable social impact of the
venture
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Types of Social Enterprises
 Nonprofits
with income from products/services
supplemented by external support and subsidies
 Nonprofits
with income from products/services not
supplemented by external support and subsidies
 For-profit
company that pursues financial return and
simultaneously generates social outcomes
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Wai’anae Organic Farmers Cooperative
Wai’anae Community Re-Development Corporation
www.waianaeorganic.com
Nonprofit with income from products or
services that are provided or produced and
supplemented by external support and
subsidies.
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3 elements of Waianae Organic Farms
 Mission-
Operate a youth leadership development training
program for low-income and at-risk youth using agriculture
as the teaching methodology
 Social
Return on Investment- Educate community on
health and wellness, distribute organic fruit and
vegetables via farmers markets, Café in Waianae serving
organic foods, teach young men and women how to farm
the land-Quantifiable
 Financial
return on investment- $145,100 profit in 2004,
Sales- $85,400, Grants-Fundraising-$154,200.
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Goodwill Industries of Hawaii
www.higoodwill.org
Nonprofit with income from products
and services that are provided or
produced and are not supplemented by
external support and subsidies
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3 elements of Goodwill Industries of Hawaii
Mission—Provide
training, job placement, and
support services to people with barriers to
employment since 1959
Social
Return on Investment—Served 6,470
people, placed 1,079 in employment-quantifiable
Financial
Return on Investment--$38,916 profit
(figures 6/30/04)
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Greyston Bakery
www.greystonbakery.com
A for-profit company that pursues
financial return and
simultaneously generates social
outcomes
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3 elements of Greyston Bakery
Part of Greyston Foundation’s integrated system of nonprofit
and for-profits that offer a wide array of community development
programs including job training, housing, and child care.
 Mission-
 Social
Return on Investment- Actively recruit and hire employees who
have difficulty finding employment in the past. Management services
provided by Greyston Foundation. Greyston Foundation is sole
shareholder.- Quantifiable
 Financial
Return on Investment- Yearly generate $3.5 million in
revenues
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Other Examples
Edison
Schools—For profit,
www.edisonschools.com
Stoneyfield
Farms, www.stoneyfield.com
Microlending,
Unitus, www.unitus.com,
Accion, www.accion.org
www.fastcompany.com,
Capitalists Awards 2006
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go to Social
Definition of a nonprofit tax-exempt corporation

Generally talking about nonprofit corporation that has received 501(c)(3) tax-exempt status from the
Internal Revenue Service

Many tax-exempt classifications

501(c)(3) must be organized for one or more of the following purposes:
—
—
—
—
—
—
—
—
Religious
Scientific
Charitable
Educational
Testing for public safety
Literary
To foster national or international amateur sports competition
For the prevention of cruelty to children or animals
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How does a nonprofit differ from a for-profit?
 Nonprofit
is essentially owned by the community; It is governed by a
board of directors that generally serve without compensation; there
are no shareholders.
 Upon
dissolution, all assets must revert to a 501(c)(3) that generally
has a similar mission or the government; As a founder you cannot
recover your investment at dissolution
 Profit
in a nonprofit cannot inure for the benefit to the benefit of the
board of directors and compensation for employees cannot be
excessive
 Donations
to a 501(c)(3) are tax deductible.
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Social Enterprise Track
To judge the social enterprise track entrants, UH will consider traditional
business criteria as well as socially specific assessments

Traditional Business Criteria (in line with UH’s current judging criteria)
•
•
•
•
•
•

Feasibility of business model in chosen marketplace
Marketability of product or service to customer base
Potential for financial return
Attractiveness for funding from additional investors
Management team strength, experience, and readiness
Sophisticated understanding of risk and contingency plans
Social Enterprise Track Criteria
• Integration of the venture’s social and financial missions
— Is it reasonable to expect that the financial and social goals can be achieved simultaneously? Do these goals
make sense together?
• Social Return on Investment
— How does the enterprise serve a social purpose
— Are socially responsible core values expressed throughout the venture
— What is the venture’s potential to meet its social goals
— What is the social impact both monetized and non-monetized of this enterprise?
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