Terminology Torture: What the Heck Qualifies as a Social Enterprise?

Friday, May 23, 2014

NPQ has written quite a bit lately about the notion of social enterprise, and much of it reflects a combination of excitement about alternate economic arrangements and concern about a sort of vagueness in definitions and accountability schemes and an overselling or fetishization of some boutique forms.

Here, in Pro Bono Australia, Daniel Flynn of the Thankyou group, an Australian social enterprise, lodges a complaint about the vagueness embedded in the way some enthusiasts discuss social enterprise. In particular, he had quite a bit to say about a recent experience he had at the Skoll World Forum on Social Entrepreneurship: “For the last five years, I’ve thought a social enterprise is a business that exists for the sole purpose of a social outcome.” Apparently his view was not fully shared at that convocation and he came away concerned about the inclusiveness of the term.

“Of course, there are creative ways to structure the business to ensure the right funding model for growth,” writes Flynn, “but all of that is done for one purpose only: maximization of social impact. The label ‘social enterprise’ has always been very inclusive and some might say too broad. Organizations like Social Enterprise UK and Social Traders in Australia have solid definitions that frame what a social enterprise should be…But unlike the charity sector, there is no regulating body to ensure these definitions are adhered to. My concern is that because there is little, if any, regulation in the social enterprise sector, there is too much room for abuse—abuse that I believe could have a serious negative impact on the sector as a whole. Let me explain. A couple of weeks back, I was sitting in a workshop room with 150 conference delegates at Skoll World Forum and I heard someone say: ‘It’s great to have Coca Cola in the room today. They are doing great work in the social enterprise space.’ I literally had to pinch myself. Did I just hear that? And it didn’t stop there. Many more major corporations were present at the event to share about their work in the area of social impact.”

Source: Nonprofit Quarterly (link opens in a new window)

Base of the Pyramid, social enterprise