Loyola University Chicago

Quinlan School of Business

What is Social Enterprise?

Social enterprise seeks innovative means of providing critical social services for disadvantaged people who cannot afford these services or are otherwise excluded. Social services for the disadvantaged have traditionally been offered in the social sector by nonprofit organizations and government welfare agencies, with some contribution from for-profit businesses through conventional social responsibility programs.

In recent years, dissatisfaction with this triad of nonprofit organizations, government welfare agencies, and corporate social responsibility programs has produced innovative approaches to meeting urgent human needs under challenging conditions. The result has been the development of organized activities which blur the boundaries between nonprofits, governments, and businesses and employ proven business practices and market-based approaches.

Not only have nonprofits and governments attempted to learn from business, but corporations have moved beyond social responsibility as philanthropy and community outreach to making social benefit integral to their core strategy. New organizations have also arisen which conduct business with an uncompromising social mission that is pursued alone or in combination with the goal of economic return.

The aim of social enterprise is not to turn the provision of social services into businesses but to enable existing providers of social services to have greater impacts and to create imaginative new organizations for meeting vital social needs.

Social enterprise may be defined as organized activities with a central mission to provide social services by innovative means that (1) blur the distinctions between nonprofit organizations, for-profit businesses, and government agencies, (2) employ the concepts and methods of business, including market mechanisms, and (3) obtain substantial funding for their social mission from business activities.