For-Profit and Not–For–Profit Explained
Can Social Enterprises Be Profit Making Organizations?
Benefits of a For-Profit Structure
Challenges of a For-Profit Structure
The idea of building a commercially profitable business that has a social cause at the core of its mission is gaining in popularity, especially as the need for innovation and sustainability within this sector becomes increasingly important. Many non-profit leaders are considering moving towards this model with the aim of being competitive in the market, which will allow them to address their social concerns in the long-term.
However, as the line between the business and the social sector becomes blurred, skepticism emerges as to whether or not it is appropriate to ‘do well will doing good’. Are social issues better addressed within a non-profit structure, or is it possible to manage a double bottom line with both social and profit goals?
A social enterprise can be described as an enterprise that uses a commercial business model to address social or environmental issues such as poverty, drug addiction, homelessness, obesity and environmental pollution. To be a social enterprise, addressing this social or environmental issue must be its primary mission. (Drayton, 2006) This primary social mission clearly differentiates a social enterprise from a commercial enterprise whose primary function is yielding a profit for its stakeholders and which has adopted a triple bottom line strategy of profit, people and planet. (Norman, 2004)
Peter Jones CBE a renowned British entrepreneur and chair of Enterprise UK describes entrepreneurship as “..being about managing and exploiting risk, it’s about being creative and innovative, it’s about challenging ways of doing things” (Jones, 2011)
A Social Entrepreneur will share many of the characteristics of a business entrepreneur such as innovation, ambition, relentless drive and passion but the key driving force behind the social entrepreneur will be social or environmental development of some kind.
“A social entrepreneur is an individual who: is compelled to act for public or social benefit (rather than to make money) has an innovative approach in addressing a well defined problem and has an ability to effectively develop and grow their new idea to maximise impact. “ (Social Entrepreneurs Ireland, 2011)
However, while a business entrepreneur drives advancement through innovation within the business world a social entrepreneur drives advancement through innovation within areas of the social and environmental spectrum.
“Social entrepreneurs do not want to capture a market; they want to change the world. “ Bill Drayton” (Drayton, 2006)
The Founder of the Grameen Bank, Muhammad Yunus, Nobel Peace Prize Winner, is an excellent international example of a social entrepreneur. Here in Ireland, we also have fantastic examples of social entrepreneurship in Frances Black (The Rise Foundation), Dara Hogan (Fledglings Early Years Education & Care) and John Lawlor (Bridge to College) who were all recent awardees of Social Entrepreneurs Ireland’s Social Impact Programme. (Social Entrepreneurs Ireland, 2011)
Divergent views of the definition of social entrepreneurship exists in the literature, Tracy & Philips (2007) describe that for some scholars social entrepreneurship is viewed as the addressing of social issues regardless of the structures or process through which they are addressed and success of a social venture is evaluated based on the achievement of the social mission. Other scholars believe that a social enterprise can generate income while setting about achieving a social mission, and thus can be commercially viable as well as socially focused.
I am understand that there is an increased complexity involved with operating a for-profit social...
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