Social Enterprises: Definition and Examples

Jun 09, 2023

by United Way NCA

Introduction

The COVID-19 pandemic highlighted the crucial role of social enterprises in supporting vulnerable communities. Following the global pandemic, social enterprises responded with innovative solutions to address social, economic and environmental challenges.
Learn more about social enterprises and how they help enact real change below.

What is a Social Enterprise?

The social enterprise definition is a business that prioritizes social or environmental goals over increasing profits. Many of these businesses leverage entrepreneurial approaches to help combat social crises. Social enterprises search for sustainable solutions to social problems by providing products, services and employment opportunities to those in need, including the Asset Limited, Income Constrained, Employed (ALICE) population, who are working and earn above the Federal Poverty Line, but do not earn enough to make a living wage. Social entrepreneurship is the development, funding and execution of these solutions.

Key Takeaways for Social Enterprises

  • Social enterprises function like traditional businesses, but their primary goal is to have a positive social or environmental impact, not profit.
  • Social enterprises are financially self-sufficient and reinvest their profits into achieving their social mission.
  • Social enterprises usually operate in sectors where markets have failed to meet social needs.
  • Many social enterprises address social needs by providing affordable housing, supporting people with disabilities or alleviating food insecurity.

Differences Between Social Enterprises and Nonprofits

Social enterprises and nonprofits are similar because they focus on social impact. However, they differ in their approach to funding and legal structures. Social enterprises are typically for-profit entities that prioritize social causes over profit and divert much of their revenue into resolving social issues.

On the other hand, nonprofits are 501(c)(3) organizations that rely on donations, grants and government funding to support their social mission. Social enterprises emphasize fiscal self-sufficiency, while nonprofits rely on fundraising to support their activities.

Social Enterprises and Job Opportunities

Social enterprises help create job opportunities for many people who face challenges while finding work, such as those with disabilities, veterans and those from underserved communities. Social enterprises help address inequalities in the workforce by providing people with valuable experience and networking platforms. These job opportunities play a critical role in fighting inequality and advocating for racial and gender equity, as people of color and women often face additional barriers to finding employment and upward mobility.

5 Examples of Social Enterprises

Social enterprises are diverse and can take many forms. Here are a few examples of well-known for-profit companies with a social mission.

1. TOMS Shoes

TOMS is a for-profit footwear company known for pioneering the “one-for-one” business model, where for every pair of shoes purchased the company donates a pair to a child in need. TOMS has expanded to other markets and causes, including eyewear and clean water.

2. Warby Parker

Warby Parker is a for-profit company known for disrupting the eyewear industry by selling affordable glasses online and donating a pair for every pair they sell. Warby Parker also has initiatives to support education and environmental causes.

3. Patagonia

Patagonia is a well-known outdoor clothing and gear company with a strong focus on sustainability and environmentalism. Patagonia has made numerous commitments to reduce its environmental impact and support conservation efforts.

4. Ben & Jerry’s

Ben & Jerry’s is an ice cream company that has long been associated with environmental and social causes. The company uses fair-trade ingredients and supports various social justice campaigns.

5. Newman’s Own

Newman’s Own is a food company that donates all its profits to charity. Since its founding in 1982, Newman’s Own has donated over $500 million to an array of different causes.

Social Enterprises in Conclusion

Social enterprises are innovative and impactful organizations that blend business and social advocacy to enact positive societal change. At United Way of the Capital Area, we are proud to partner with social enterprises who support our initiatives to improve the lives of ALICE community members in the National Capital Area.

If you are inspired by the work of social enterprises and would like to join a worthy cause, we encourage you to help us take action. From there, you can learn more about our community initiatives and find ways to get involved as a donor, advocate or volunteer. If you are a social enterprise who is interested in partnering with us, please contact us at CSR@uwnca.org. Together, we can build a stronger, more resilient community. When none are ignored, all will thrive.

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