‘Social enterprise’ has been a popular term in the media of late. Even the government has made it an area of special focus, offering grants and various programmes for the future.

In addition, the Jamaica National Foundation and the United States Agency for International Development have partnered since 2015 to sponsor SEBI (Social Enterprise Boost Initiative) to help spread this innovative, positive and impactful way of doing business in Jamaica.

But what exactly is a social enterprise?

At first glance, one clearly understands the definition of enterprise, that is “a business or company”. However, how does an enterprise become defined as a ‘social enterprise’?

One source defines social enterprise as a “ revenue-generating business with a twist”. A traditional business has the primary goal of simply making a financial gain; while a social enterprise also adds two or maybe three other goals – those of attaining a social, community, cultural, economic or environmental outcome.

In essence, the difference is in the motivation of the business. Its goal is to make some effect, change or impact in a community in one of the above areas listed – while generating income.

“A social entrepreneur is driven more by a passion to solve a social problem, and only chooses to use business as a mechanism to solve these problems,” as defined by The British Columbia Centre for Social Enterprise.

However, one should be clear; a social programme is not a social enterprise. According to www.thesedge.org, “if you are not selling a good or service into the marketplace, you aren’t running a business: you may be running a social programme, but not a social enterprise.”

You may simply be a social enterprise which is dabbling in entrepreneurship or a social programme with an entrepreneurial mindset or outlook.

Alternatively, being a business with social values or one that practises good corporate responsibility, doesn’t mean that you are a social enterprise either. For clarity, one good question to ask yourself is: “Is making a profit my primary focus?” If yes, then you are not a social business. In a social business, the social aim is the driving force of the business.

In addition, in social enterprises, there are often stipulations on the management policy in terms of stakeholders’ involvement, transparency, limits on compensation for executives, employees conditions and participatory governance.

Allisa Pelatan, an American lawyer based in France, specialising in social enterprise law and the creation of social enterprises, tells us that despite how it may seem, social enterprises have been around for a long time.

“I have seen the field of social enterprise grow significantly over the past 15 years. Social enterprises have always existed, but the concept of a double or triple bottom line company really started to catch the public eye in the 1980s, with Ben & Jerry’s as one of the first social enterprises. With regards to law as it relates to social enterprises, I would say we do not yet have an official legal field, and very few law schools teach on this subject. In fact, my law firm is the only law firm in France which is fully dedicated to social enterprise law and social entrepreneurs.”

Some may argue that social enterprises are just a way for capitalists to make more money under the cover of a social issue. Does social entrepreneurship actually work?

“I would say first off that there is nothing wrong with making money. The term “social entrepreneurship” also has the word “entrepreneur” which implies that there is some sort of business model. As for what we call “social washing”, there will always be room for wrong motivations within any good initiative; however, as of 2005, there are actually legal statuses and certifications which can reduce social washing.”

Finally, does social entrepreneurship work everywhere? Are there any countries where social entrepreneurship works better?

“Social entrepreneurship exists in virtually every country but has really flourished in the US and UK (common law countries) and now in continental Europe. We are seeing also a movement in Asia as well. Social entrepreneurship is popular thanks to pioneers all around the world such as Mohamed Yunus, who coined the term “social business” and created one of the first micro-credit institutions in Bangladesh ; Bill Drayton, who coined the term “social entrepreneur” in the 1970s and who founded Ashoka , providing fellowships for social entrepreneurs all around the world; or b-lab, a non-profit corporation who created the first international label “b-corp” for social enterprises in 2008. In fact, social entrepreneurs try to find innovative solutions to solve social or environmental problems, so I would dare to say that social entrepreneurs are needed everywhere!” Pelatan states.

Here are seven possible ways a social enterprise can function:

1. It can act as a Market Connector, that is, it becomes a facilitator of new and needed relationships between new markets and the beneficiaries. A great example of this is Kiva. For a small fee, this platform is designed to lend money to small business entrepreneurs in the developing world who would, in other circumstances, not be able to qualify for such loans.

2. It can be Fee for service: In this scenario, a direct fee is paid for services rendered to the benefiting group.

3. Cross – Compensation. In this example, one group of customers, those who can afford to, will pay for the service or product. The same product is then donated or sold at a lower cost to other individuals who need this service/product but cannot normally afford it. Alternately the proceeds from the sale of the service/product can be used to train, educate or aid the group in need.

4. Offering Employment and Skills Training is another way aspect of social enterprise. Here the focus is on providing skills, development and job training to the employees who are also employed to the company. The local Jamaican cafe Deaf Can would fall in this category. Here young hearing-impaired individuals are introduced to a new area, trained and given the skills and training to succeed. The profit from sales might go towards further training and resources needed for the business.

5. A social enterprise could also be in the form of a Cooperative. A business owned by its members and created for profit or as a non-profit. The services provided are then used by the members.

6. Market intermediary – At times a distributor or intermediary is needed to aid the beneficiaries in reaching an expanded market. In some instances the social enterprise will play this role offering the distributed product or service.

7. The social enterprise can also offer independent support. It can distribute a particular product or service to an external group or market, then use funds raised to support social programs targeted at the benefiting the group in need.

Is the concept sustainable?

Although social enterprises are becoming even more popular, the real question is whether the concept is sustainable.

Pelatan believes so. “Yes, definitely. I believe that the world is slowly waking up to the reality that our economy is broken and we need a new system. We have seen the negative effects of selfish ambition and corruption. We have seen that “maximising profit” can be very harmful for the environment, employees, people and society. I believe Milton Friedman’s statement that “the social responsibility of a business is to increase its profits” no longer applies today. We are in transition and social entrepreneurs will be the leaders in the future economy which I would call “social economy”.”

THE BENEFITS

Social businesses offer a real opportunity to respond to local, community, cultural and environmental needs, while offering training to disadvantaged individuals and communities, while making a profit.

These programmes can encourage creativity and initiative, while teaching civic responsibility and a concern for the needs of others. Such initiatives are ideal for our island where an entrepreneurial spirit is present, however, where there is often a lack of resources and capital to boost such businesses and ensure longevity, and long-term success.

As more individuals are driven to respond to the social issues present in their communities, we hope that more opportunities and training will be made available to introduce individuals to this powerful business model.