This is the first in a four-part series where I explore marketing and branding in the social enterprise industry. Today’s post demystifies the world of social enterprise and lays the groundwork for digging in from the marketing angle. Check back on Tuesday for part two!
Social enterprise. Charity. Social innovation. Corporate social responsibility. Non-profit. Social impact. Systems change…if you have a desire to make our world a better place, then you’re probably familiar with these terms. You’ve used them yourself, you’ve probably donated time or money to organizations who label themselves as such. But do you really understand what these terms mean? Does anybody really know what they’re all about?!
Keep reading as I lay out for you what a social enterprise really is, what a social enterprise is not and why marketing for a social enterprise needs to be approached a bit differently.
First Thing’s First: What is NOT a social enterprise?
Before we get into definitions, let’s start off by clarifying what is not social enterprise. They may have elements of social innovation or social change, but the organizations and activities below are not social enterprises.
- A non-profit organization or charity that is funded through donations, grants, government funding and/or service or membership fees
- Corporate social responsibility
- Social programs
- A non-profit that charges a fee for membership or goods/services offered
- A business that donates to charity
So, What IS a Social Enterprise?
Social entrepreneurship as a whole can be described as any sort of entrepreneurship or business that creates social value or seeks to address social issues. Therefore a social enterprise, in its broadest sense, is an entity with profit-generating activities that simultaneously work to affect positive social change.
But if only it were that simple! There about as many definitions as there are social enterprises, also known as social businesses. This is due to the varied nature of social business activities, with many different social missions and models of change, numerous revenue models and various legal structures (which are different in each country or jurisdiction). I won’t be getting into these nuances, as this is ultimately about marketing. Now, what are others saying about social enterprise?
The BC Centre for Social Enterprise says:
“Social enterprises are revenue-generating businesses with a twist. Whether operated by a non-profit organization or by a for-profit company, a social enterprise has two goals: to achieve social, cultural, community economic and/or environmental outcomes; and, to earn revenue.” -BC Centre for Social Enterprise
MaRS’ definition takes a more nuanced approach, with a distinction between social enterprise and social business. In MaRS’ view, social enterprises are strictly part of a non-profit organization, while social businesses are “commercial for-profit entities, created by social entrepreneurs to address social issues. SPBs maintain their social purpose at the core of their operations, while existing in the market economy and delivering shareholder value.”
A social enterprise, according to MaRS, is:
“ Social enterprises are revenue-generating entities generally owned and operated by a non-profit organization (which may or may not also have charitable status). Since there are no shareholders, any profits from the operation are re-invested into the work of the organization.” -MaRS
Is your understanding of social enterprise more clear now? Great, now let’s throw one more thing into the social change mix…corporate social responsibility.
Are Corporate Social Responsibility and Social Enterprise the Same Thing?
Corporate Social Responsibility and Social Enterprise often look similar, but don’t be fooled! They are two separate activities that should not be confused.
How do you distinguish between them? It’s important to ask what the role of social change is in the organization as a whole. If social change is their primary goal, then they are a social enterprise. If financial profit and delivering financial value to their shareholders is their primary activity and purpose, with social impact as a secondary or less important activity, then they are simply engaging in corporate social responsibility.
How can you determine this? Remove the social impact activities from the organization’s operations. What’s left? If removing the social impact activities removes all or most of the organization’s operations and revenue, then they would be a social business. If removing the social impact activities leaves a fully functioning and profitable operation, then what they do for the world is simply corporate social responsibility.
Is Social Enterprise Marketing Any Different From Business or Non-Profit Marketing?
If you take away the ‘social’ then you’re left with ‘enterprise’, so wouldn’t the regular rules of marketing apply?
Social businesses have incredible, unique stories that can and should be shared with the world. Stories are excellent for raising awareness of important causes, as well as brand awareness and driving sales. A social enterprise should never shy away from telling their story and sharing their impact.
But their story, I would argue, is not their value proposition. It cannot be their unique selling point. Pulling on heartstrings and making people feel good may encourage initial sales, but if the product or service you offer isn’t of high-quality or isn’t priced appropriately, will they repeat that purchase? Some will, but many won’t. And that doesn’t bode well for the long run.
To be truly sustainable long-term, social entrepreneurs need to find an optimal balance between their model of change and a high-quality end product that is competitive in the market against other businesses lacking a social mission.
As far as marketing goes, social business marketers must put product and quality first in their marketing strategy and use their story as additional leverage instead of making it the core value proposition or marketing message.
Social enterprises are on the rise, with many social entrepreneurs finding new ways to apply business principles to social problems. Social innovation has existed for centuries. Now, the increasing number of social businesses are creating new models of change and having a positive impact on millions of lives around the world. As social entrepreneurs market their businesses and causes, they need to find a better balance between leveraging their stories and putting their product first to create sustainable business models that will expand and sustain their positive impact that our world needs.
How can they find this optimal balance? Stay tuned for next week’s post as I dive further into the world of marketing for social enterprises with best practices and strategies for building a social enterprise brand and marketing it successfully.