What Is a Social Enterprise?

Posted December 10, 2020, By the Annie E. Casey Foundation

Social enterprises help provide jobs in communities

Social enter­pris­es are rev­enue-gen­er­at­ing busi­ness­es with a mis­sion. Whether it’s pro­vid­ing clean water, expand­ing health care ser­vices, strength­en­ing renew­able ener­gy options or — sim­i­lar to those the Annie E. Casey Foun­da­tion invests in — help­ing indi­vid­u­als enter­ing or return­ing to the work­force, social enter­pris­es use their prof­its and busi­ness prac­tices to address a soci­etal need. Though these enter­pris­es can take many forms across many indus­tries, they ulti­mate­ly exist to serve the com­mon good.

Char­ac­ter­is­tics of Social Enterprises

Com­mon char­ac­ter­is­tics of a social enter­prise include:

  • one or more social or envi­ron­men­tal objectives;
  • a focus on gen­er­at­ing rev­enue from goods and ser­vices, not just grants or dona­tions; and
  • the incor­po­ra­tion of non­prof­it and for-prof­it busi­ness structures.

How are social enter­pris­es structured?

While social enter­pris­es can take many forms, there are three com­mon models:

  • Give back: Donat­ing goods or ser­vices for each pur­chase made, often on a one-for-one basis. For exam­ple, a busi­ness might give a free pair of glass­es to a child in need for each pair a cus­tomer buys.
  • Inno­va­tion: Devel­op­ing and sell­ing inno­v­a­tive prod­ucts, such as solar pan­els or water-purifi­ca­tion sys­tems, to sup­port envi­ron­men­tal and ener­gy-access issues.
  • Employ­ment-Relat­ed: Train­ing and employ­ing indi­vid­u­als who oth­er­wise would have more lim­it­ed job oppor­tu­ni­ties and support.

Social Enter­pris­es and Jobs

For more than three decades, the Casey Foun­da­tion has invest­ed in employ­ment-focused social enter­pris­es to help non­prof­its devel­op busi­ness acu­men and to assist peo­ple in low-income com­mu­ni­ties in obtain­ing jobs and build­ing the skills need­ed to advance along career path­ways. The Foun­da­tion also sup­ports broad­er efforts to build the social enter­prise field with part­ners such as REDF, which cul­ti­vates peer net­works, advo­cates for bet­ter poli­cies and pro­vides tech­ni­cal assis­tance and capital.

There are an esti­mat­ed 500 employ­ment-relat­ed social enter­pris­es in the U.S. mar­ket, gen­er­at­ing over $1 bil­lion in rev­enue and employ­ing 56,000 peo­ple annu­al­ly. These enter­pris­es help indi­vid­u­als who tra­di­tion­al­ly haven’t had a path­way to well-pay­ing careers by:

  • offer­ing sup­port­ive work and skills-build­ing opportunities;
  • pro­vid­ing an inde­pen­dent source of income; and
  • open­ing doors to pro­fes­sion­al networks.

More specif­i­cal­ly, social enter­pris­es help youth and young adults, espe­cial­ly young peo­ple of col­or, by:

  • pro­vid­ing on-the-job train­ing and sup­port­ive ser­vices, such as childcare;
  • infus­ing trau­ma-informed care and pos­i­tive youth devel­op­ment approaches;
  • pro­vid­ing oppor­tu­ni­ties for youth lead­er­ship and com­mu­ni­ty engage­ment; and
  • adapt­ing hir­ing, reten­tion and advance­ment prac­tices to pro­mote racial equi­ty and inclu­sion.

An Exam­ple of an Employ­ment-Relat­ed Social Enterprise

Good­will of Cen­tral & South­ern Indi­ana runs 70 retail stores and an e‑commerce plat­form that pro­vide tran­si­tion­al or short-term jobs, as well as career advance­ment oppor­tu­ni­ties, for peo­ple with dis­abil­i­ties, those who have been involved in the jus­tice sys­tem and youth and young adults work­ing toward a high school diplo­ma. The Casey-sup­port­ed orga­ni­za­tion pro­vides on-the-job learn­ing and sup­port­ive ser­vices — includ­ing trans­porta­tion assis­tance — for its retail employ­ees, oper­ates a pub­lic char­ter school called the Excel Cen­ter and sup­ports state-lev­el advo­ca­cy for oth­er forms of non-tra­di­tion­al education.

We lever­age our social enter­prise to cre­ate path­ways through edu­ca­tion, health and work­force sys­tems for young peo­ple of col­or and their fam­i­lies,” says Bet­sy Del­ga­do, vice pres­i­dent of mis­sion and edu­ca­tion at Good­will of Cen­tral & South­ern Indi­ana. Doing so has enabled us to col­lect strong quan­ti­ta­tive and qual­i­ta­tive data that we’re using to address the sys­temic bar­ri­ers that have been placed in these young people’s ways.”

Social Enter­pris­es and COVID-19

  • Many social enter­pris­es, espe­cial­ly those in the food and retail indus­tries, have expe­ri­enced a sig­nif­i­cant loss in rev­enue since the start of the pan­dem­ic. Though they are start­ing to rebound, these busi­ness­es have still been forced to lay off or fur­lough work­ers, espe­cial­ly youth and young adults.
  • Access to cap­i­tal, the need to shift busi­ness strate­gies, vir­tu­al pro­gram­ming and staff man­age­ment are among the most press­ing chal­lenges affect­ing employ­ment-relat­ed enter­pris­es dur­ing the pandemic.
  • Some busi­ness­es have been able to piv­ot by sell­ing reces­sion-resis­tant goods.
  • Enter­pris­es that could access gov­ern­ment or phil­an­thropic fund­ing to com­ple­ment earned rev­enues and cov­er work­ing cap­i­tal have fared bet­ter, as have those that could mod­i­fy oper­a­tions quick­ly by adjust­ing staffing and work structures.
  • The most resilient enter­pris­es have been in indus­tries that offer clean­ing, main­te­nance and envi­ron­men­tal ser­vices, as well as sta­ple con­sumer products.

Social enter­pris­es open up greater access for young peo­ple of col­or to build skills and gain work expe­ri­ence in busi­ness­es that pri­or­i­tize race equi­ty,” says Patrice Cromwell, direc­tor of youth eco­nom­ic oppor­tu­ni­ty at the Casey Foun­da­tion. That is a crit­i­cal piece of Casey’s mis­sion and a much-need­ed oppor­tu­ni­ty in the labor market.”

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