According to the Department of Trade and Industry, “a social enterprise is a business with social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximize profit for shareholders and owners.” In other words, it is a mission driven venture that provides sustainability to the nonprofit organization. Examples of social enterprises operating around the country include development trusts, community recycling organizations, community-owned renewable energy initiatives, housing initiatives, and community service and retail shops. Social enterprises are organizations which trade in goods or services and link that trade to a social mission.

The growing practice of social enterprise is fueled by nonprofit organizations’ need for sustainability, particularly when support from traditional philanthropic and government sources is declining and competition for available funds is increasing. According to the Independent Sector, over 90,000 nonprofit organizations with tax-exempt status are registered each year in the United States. There is great pressure on funders and significant competition among nonprofit organizations to secure grant support. Developing a social enterprise is a unique way of developing a more self-resilient organization. The concept of social enterprise allows nonprofits to expand critical services to their clients while moving the organization toward self-sufficiency.

As funding for nonprofits becomes more restricted, nonprofits will continue to undertake social enterprise business activities as a means of sustaining their business. Social enterprises can oftentimes address the needs of areas by reversing economic decline through employment opportunities and generating economic growth in the community. They can also be utilized to provide innovative, enterprising solutions to local problems and enabling community growth and rejuvenation. Social enterprises contribute to local economic development through their trading activities which create local jobs and generate local income. They also tend to create a multiplier effect because of their own focus on local development.
 
For many years, nonprofit organizations have been involved in income generating strategies and businesses to increase or balance their mission. However, it is only in the last 15 or 20 years that academics, practitioners, and donors have been studying and recording cases of nonprofits adopting market-based approaches to achieve their missions. Horne Consulting can help you determine if social enterprise development is right for you and assist you in identifying a social enterprise project to meet the needs of your organization. You can learn more about a social enterprise program by clicking on the Beaufort-Hyde Construction Center Training Project link above.