Defining Social Entrepreneurship

Social entrepreneurship (SE) is a new buzz word that has become a hot topic in recent years. In a way, it is a convergence of two sectors that traditionally sat on opposite ends of the spectrum: the private sector and the public sector.

Major corporations in the private sector are now looking to become more socially responsible, primarily through greater emphasis on Corporate Social Responsibility (CSR). Major non-profits on the other hand, are looking to instill more business discipline in the way they run their operations, and are looking for more sustainable ways of funding beyond traditional fundraising methods.

Social enterprises thus emerged as an alternative solution. Various definitions of social enterprises exist. The Skoll Foundation defines SEs as “businesses that trade in the market in order to fulfill social aims. They bring people and communities together and provide the opportunity for economic and social development.”

We emphasize that SEs are profit-making but not profit maximizing enterprises that must be the double bottom line. They should solve a traditional social problem in a more innovative way.

The success of traditional non-profits are measured by its ability to achieve social impact given its limited resources, and the success of for-profits are measured by its ability to generate financial returns for the shareholder.

The success of social enterprises are determined by both. If a SE can achieve high social impact but cannot generate financial returns, the enterprise becomes unsustainable in the long run. If a SE can generate significant financial returns but have no social impact, it is still unsuccessful because it is unable to solve the social problem that it was originally aiming to solve.

The Double Bottom Line captures the essence of how SEs should evaluate their impact.

Impact Evaluation