What exactly are social enterprises?

A social enterprise forms when entrepreneurs look to solve social problems in addition to customers’ problems. Some companies are entirely social enterprises, meaning that their sole purpose is to address a basic unmet need or solve a social problem though a market driven approach. Other companies have services lines or divisions that are a social enterprise but other divisions or services that are not. In that case, a social enterprise can be found at the intersection of company revenue and impact.

The following are six common social enterprise models. As we review them, I encourage you to find one company in your local community that matches each description. You’ll be surprised to discover how many social enterprises are hiding in plain sight!

Entrepreneur support is when a company sells its services to a targeted beneficiary services. An example of this would be my friend and podcast co-host, Vicki Bohlsen’s company, Bohlsen Group, a unified marketing firm for good. One of Bohlsen Group’s service lines is offering marketing services to nonprofit organizations. By targeting the beneficiary group (nonprofit organizations), Vicki has developed a social enterprise division within her company.

Market intermediaries provide services to clients to help them access markets. An example of this would be a fair trade organization that buys goods or services from a local artisan and then sells it to a broader audience.

An employment social enterprise model is when a company offers employment opportunities and job training to clients and then sells its products or services to an open market. Goodwill Industries is a classic example of an employment social enterprise model. Frequently youth and people with disabilities are often the “trainees” in these employment models.

Fee-for-services models sell social services to clients or a third-party payer. Membership organizations, museums and clinics often employ a fee-for-service structure.

The low-income client model is the selling of social services to clients who would otherwise be unable to afford these services. There are prescription drug programs, utility assistance programs and other ancillary health care services that are often provided under this model.

Cooperatives provide members with benefits through a collective purchasing structure. Credit unions, food coops and companies that specialize in bulk purchasing employ this type of social enterprise in their practice.

Were you able to identify examples of each type of social enterprise in your community?

If not, don’t worry because Vicki and I will be highlighting examples of some truly innovative social enterprises on the next season of Taking Care in Business.