What is a social enterprise?
A social enterprise is an organization that employs a business model to tackle the world’s social and environmental challenges. There are only three ways that a social cause can garner income: donations, government grants and earned income. This third avenue is at the root of social enterprise.
Social enterprises are able to accomplish this in a wide variety of ways. Some social enterprises provide much-needed services to vulnerable communities—like the Grameen Bank, a microfinance institution for the world’s lowest-income communities, created by social enterprise pioneer Muhammad Yunus. Other social enterprises create a positive impact by creating employment for vulnerable populations and/or selling goods and services to fund charitable activities, like ME to WE does.
There are many great ethical companies. The Body Shop is a socially conscious company, but its foremost driving goal remains proﬁtability for its publicly traded parent company, Natura. In our definition, this is a traditional business and not a social enterprise. Similarly, there are high-performing charities that earn a portion of their revenue through sales, like the Salvation Army, which it also receives donations from diverse sources and can issue charitable tax receipts from the government. Canada Revenue Agency limits the Salvation Army’s ability to operate earned-income through business models. Legally, it remains a charity. Social enterprise is a model that brings the best of these two worlds together, combining profitability with purpose to create the most significant impact possible. In a 2018 study, Mission Measurement analyzed ME to WE, and determined that according to widely accepted definitions within the sector, ME to WE would be best categorized as a “social enterprise” insomuch as its legal structure allows the entity to earn income, but with a charter and systems ensuring that it overwhelmingly dedicates its purpose towards social good.
Appreciation for the power of social enterprise is growing around the world. For example, the “community interest company” has been formally recognized in UK corporate law since 2005. In Canada, social enterprise is a relatively nascent concept and not widely understood. Although organizations such as the MaRS Discovery District have been building momentum in Canada, a significant gap still exists.
This is something that has been recognized by the government itself. In its 2018 report, commissioned by the Government of Canada, the Social Innovation and Social Finance Strategy Co-Creation Steering Group recommended that Canada should “address the legal and regulatory issues impeding charities and non-profits from engaging in social innovation, social finance, and social enterprise.” In 2018, the Standing Senate Committee on Social Affairs, Science and Technology called on the government to learn from the experience of other countries and invest in the creation of a social finance fund for social enterprise.
Why a social enterprise?
The key benefit of social enterprises is sustainability. In an age of declining government funding, traditional charities find it increasingly difficult to find reliable long-term support for projects. Social enterprises like ME to WE are self-sustaining, empowering our partner, WE Charity, with the financial security to ensure long-term impact. By applying innovative business approaches, social enterprises can find solutions to the world’s greatest social and environmental challenges—solutions that would be beyond the capacity of traditional charities. And because they speak the same language, social enterprises have far greater power to build partnerships with the business world, leveraging corporate connections and infrastructure to scale impact even more—as ME to WE does through partnerships with socially conscious companies around the world.