The purpose of this typology is to elaborate the rich mosaic of highly differentiated and creative examples of social enterprise, and by doing so, to inspire innovative approaches to create greater value for people and the planet. The typology is also intended to advance the field of social enterprise by organizing these diverse approaches and strategies into a common framework. The occupation of identifying and defining operational models as well as organizational and legal structures is to provide a conceptual framework for efforts occurring in the field.

A basic premise used in this typology is that of a spectrum, which avoids bifurcating the landscape into opposing functions: one, the for-profit world whose raison d'être is to create economic value; and the other, the nonprofit world whose purpose is to create social value. In practice, these dichotomies are increasingly coming together through the application of methods that marry market mechanisms to affect both social and economic value resulting in total value creation. The emergence and the subsequent propagation of corporate social responsibility, business for social responsibility and social enterprise evidences this trend, and the social enterprise lens brings into focus this convergence through its methodological paradigm.

Value creation is the backbone of social enterprise and serves as a fundamental and unifying principle between different social change and economic development approaches. To this end, the typology is not intended to straightjacket practitioners into a prescribed set of formulas, but rather recognize and embrace the abundance of possibility under the umbrella of a larger vision.

Definitions of Social Enterprise

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As early as 1996 The Roberts Foundation Homeless Economic Development Fund defined social enterprise as "a revenue generating venture founded to create economic opportunities for very low income individuals, while simultaneously operating with reference to the financial bottom-line."

NESsT, on the other hand, uses the term social enterprise to refer to "the myriad of entrepreneurial or 'self-financing' methods used by nonprofit organizations to generate some of their own income in support of their mission.

Both definitions capture the social and financial characteristics of the social enterprise; however, The Roberts Foundation's definition emphasizes social enterprise as a program approach, whereas NESsT's definition stresses it as a funding approach.

History in Brief

Social enterprise has a lengthy private history, but a short public one. Nonprofit organizations have long engaged in income generation and businesses to either supplement or complement their mission activities.

The State of the Practice

Multi Sector - Social enterprise transcends traditional nonprofit sectors and applies as equally to health, environment, education and social welfare as it does to economic development or job creation programs...

Adaptive Design - A social enterprise is a mechanism for both accomplishing a nonprofit’s mission and generating funds for its social programs, therefore social enterprises must be designed to meet social needs as well as to achieve commercial viability...

Global Application - Although contemporary methodology is credited to the West, notably the United States and United Kingdom, nonprofit businesses, self-financing schemes, and earned-income activities have been practiced by nonprofit organizations around the globe for years...

Toward an Integrated Approach

The reality of the current state of practice is that social enterprises are often executed in isolation—treated as a distinct project or activity—when in fact social enterprise has profound effects on the whole organization. The three approaches to social entrepreneurship (funding, leadership and programmatic), alone or in combination, do not go far enough. The true opportunity for social enterprise as an agent of organizational transformation lies in integrating these approaches in a way that builds high performance organizations.

An integrated approach takes the best of business and marries it to social interest. It is strategic, requiring a long-term vision and clear objectives in order to manage performance and change, and to measure results across the organization. Capacity building is tied to objectives and is systematically incorporated across the organization to strengthen it and support cultural shifts related to the enterprise. This approach recognizes resources inherent both to the organization and the external environment, and mobilizes and manages these resources to increase organizational productivity and yield. Mission is the cornerstone, and serving it, the impetus for venturing. The social enterprise is first and foremost a vehicle to accomplish, strengthen, enhance or expand the organization’s mission.

An integrated approach challenges the notion that unrelated business ventures are social enterprises, believing that if business activities are not central or strongly related to the social mission then it is pure business undertaken by a nonprofit, and not social enterprise. An integrated approach gives us a social enterprise methodology that helps practitioners do what they do better—innovate, increase impact and effectiveness, and improve performance.