Social enterprises are not charities or businesses, as we have traditionally known them. Social enterprises blur the lines between these two. They are businesses; in as much as they trade, make money and employ staff. However, profit is not their end game. Social enterprises do these things to tackle social problems, improve communities, and/or benefit the environment. There is no agreed definition, legal structure or single business model for social enterprise in Australia. The mission is the primary determinant of whether or not an organisation is a social enterprise. To be a social enterprise you will:
- Trade sustainably, which means make enough money to cover costs, make a profit and achieve a measurable social benefit.
- Achieve a social benefit through the way you operate, that is, via the impact of your products or services, and/or how any profit is used.
- Deliver a social benefit that meets community, environmental, cultural, economic and/or social needs.
Social enterprises typically have a not-for-profit legal structure and may be registered charities. In some cases, B Corps fulfill the requirements of being a social enterprise even though they have a for-profit legal structure. Regardless of their structure, a social enterprise will not distribute profit to owners or shareholders; instead, profits are used to achieve the mission.
What matters most is the mission: to achieve a measurable social benefit, and the actions you take to achieve that – not the legal structure.
If you are having trouble understanding what social enterprise is, you are not alone. That’s why we have crafted our Social Enterprise Ruler, to help make sense of social enterprise in Australia.