WHAT IS SOCIAL ENTERPRISE?
An international definition
Social Enterprise Europe has been working developing and promoting social enterprise for nearly two decades in 25 different countries. In order to continue with our work with our many partners we need a working definition that is modern and relevant.
The following definition was complied at the end of 2011 following a documented debate with our members and supporters in 14 different countries.
Social enterprise describes organisations that rely on trading for their main income and consider themselves businesses. These may include enterprises that have the public sector as their main clients but whose income is predominantly through contracts awarded via open tendering.
Social enterprises are radically different from private sector businesses. They seek to make profits but they define themselves as enterprises that:
- Prioritise their declared ethics and values
- Have as their main purpose the verifiable fulfilment of agreed social objectives
- Are governed, owned and managed as democratic and socialised enterprises
Different social enterprises may focus on one or two of these principles but we would expect that all businesses claiming social enterprise status to be able to demonstrate a fundamental adherence to all three.
Social enterprises should set their own criteria for measuring their success and their compliance to these three principles, using the active participation of their primary stakeholders. Further external assessments of social enterprises should be through the democratic involvement of other social enterprises and their peers.
“Not for Profit” is a misleading criterion. It is good practice for social enterprises to provide incentives to workers and social or community investors through dividends. Distribution of profits or payments to individuals should not compromise the enterprises' value statement or social objectives.
Some wanting to set up social enterprises will be sole traders. These businesses are best described as “Social Entrepreneurs”. There is a wider definition of Social Entrepreneurs that includes individuals working in the private and public sectors.
We can therefore summarise our international definition of social enterprise as:
- Businesses whose prime purpose is social, who operate ethically and are democratically owned and governed.
