These days, consumers have a growing list of expectations when shopping for goods and services. Where does the product come from? How much environmental devastation has been caused by which multinational? For each of these considerations, there seems to be a different type of organization that believes it has the answer.
Traditional businesses think the free market will solve social injustice through competition. B Corps are sure that stricter regulations are required to ensure businesses do their part. There are also charities, who consider social responsibility through donations as the best option. In this article, we’re going to look at social enterprises. While we all know about corporations and charities, and you can find out more about B Corps here, social enterprises aren’t so well-known.
According to Muhammad Yunus, who pioneered the concept of social enterprises, the purpose is to create “a new kind of capitalism that serves humanity’s most pressing needs.”
What is a social enterprise?
So what exactly does Yunus mean when he describes social enterprises as “a new kind of capitalism?” To put it simply, a social enterprise is a sort of hybrid between the traditional business and a non-profit charity. While social enterprises do make money, the primary purpose is “to create social, cultural, and/or environmental value,” say Common Good Solutions.
The whole idea is that the whole community should benefit from the businesses that operate in that area. There are two main ways social enterprises accomplish this goal.
So how does a social enterprise create this ‘value?” The first differentiator between a standard company and a social enterprise is recruitment. Typically, a traditional business employs whoever is considered the best fit for that role. Skills and experience are usually the main considerations when staff are appointed. A social enterprise works a little differently. There is a tendency for the workforce to be from disadvantaged backgrounds or from at-risk sections of their community.
One amazing benefit of social enterprises is the way they can help uplift these disadvantaged people, not only with jobs but with vital skills and experiences.
More emphasis is placed on employee well-being than what might be found at a big company, with long-term relationships with employees placed on an equal, if not higher, footing with profit and expansion.
Let’s look at Babban Gona as an example of how a social enterprise can do exceptional things for its employees. Nigeria has a 50% youth unemployment rate, so this social enterprise offers agricultural training to these young people seeking work. Through this training program, the yield of these small-hold farms is 2.3 times the national average.
Speaking of profit, another key difference between a social enterprise and a regular business is how it considers profit.