Social Enterprise or Corporate Social Responsibility

Three important differences

There has been a noticeable shift in the amount of good that companies are saying these days. There are numerous foundations, sponsorships, grants and donations going on from big corporations, that some might start to think they’re a social enterprise.

Well, quite frankly, 99% of them are not, they are just exercising their CSR departments to show you that they care, and unfortunately in some cases that they want you to think that they care.

This is completely different to being an actual social enterprise, so we’ve broken it down into three parts for you to be able to assess whether a company might actually be one, or is just doing a bit of good and shouting about it.

Stakeholders vs Shareholders

As a social enterprise, you are constantly thinking about all your stakeholders. You reach far and wide, not just at your staff, but your customers, your suppliers, your local community and the environment.

Yes, the environment.

Potentially one of the biggest stakeholders for anyone out there, and I’m not too sure as a percentage, how many companies support that stakeholder. As a social enterprise, you are looking to have a positive impact on all your stakeholders.

In traditional companies, it’s the shareholder that rules supreme. If it involves cutting quality and therefore costs in certain parts of the world to create more of a profit and thus more dividend for your shareholders, you’ll do it. If it means shipping or flying something halfway across the world for better profits at the detriment of the environment, you’ll do it.

It’s a careful balance, as any enterprise has to make a profit, but how much profit at the loss of others is the key between being a social enterprise and not being one.  

Enshrined vs entwined

Social enterprises are often started as a social enterprise, they haven’t converted into one, or drifted into becoming one. More often that not, the impact they wanted to see was the reason they started. Therefore, when establishing the company, they would have used a structured which set certain things in place, an asset lock, or a CEO pay ratio, by making them part of the company’s constitution and terms.

Meanwhile CSR departments can often represent as much of the company as they wish, in fact they can even work separately to the company, as a silo, doing so much good and working closely with the marketing department so others know what good is being done.

In more progressive companies, CSR is found in each department, after all, every employee is part of their social responsibility and should benefit from and contribute to any policy or program.

However, the entwining can be untwined and then brushed to one side when say, profits aren’t as good or customers aren’t asking for it.

Being vs doing

Finally, a social enterprise is, day in and day out, it breathes, eats and cries social enterprise, impact, wanting to better the environment and society whilst also wanting to grow financially to increase reach.

Meanwhile a company does CSR when it wants to, or when it needs to, it forms part of the day, or part of the work. CSR often gives the workers a chance to give themselves a pat on the pack for some great impact made, whilst social entrepreneurs get so used to doing good, they see it as normal, and strive to do more.

Positive Impact

Both social enterprise and CSR produce positive impact, but the key thing to look at is the rest of the impact being caused by the company who has a CSR department. Are they merely greenwashing what they do, or trying to balance out the harm?

If you have a CSR department and want to improve, get in touch and we can work on making your whole organisation deliver a better and stronger impact.

Who are social entrepreneurs exactly?

We’ve split them into three groups.

As the concept of social enterprise has grown and gathered pace over the past years, there has been an explosion in numbers of people starting their own.

Just as a social enterprise can be almost any business that already exists, a social entrepreneur can be anyone, however they often fall into three categories, each with their own strengths and experience to bring to the table.

NGO Leaders

With the ever-changing economical and political environments that we face, NGOs often find themselves second guessing how much grant or donor funding will be available. Add this to the long wait for project funds, in some case up to 12 months from submitting a work report, and suddenly NGOs face cash-flow problems that they shouldn’t really based on the great work they do.

This can often force innovation and a shift outside their comfort zone, as they identify where they could possibly generate income through trading which would then be used to enhance the work they do or at the very least provide cashflow for those months where you’re waiting for the funder to approve your interim report and release the funds!

Accidental social entrepreneur

These people started doing something for a bit of fun and sometimes for free, think of products like upcycled furniture, clay maps for the blind or high quality climbing equipment. Then people started asking if they could buy it. First it was their family, then friends of the family, and suddenly a few people they didn’t even know.

At this stage they realised the impact they could have and the income they could generate, and so had to suddenly enter the world of business. Often reluctant, most definitely accidental, their social enterprise began to be formalised and with strategical direction and decision making.

Passion entrepreneur

A number of people have worked in the same line of work for a decade or two, and whilst at first the rush and buzz of the 9–5 had them trapped, they slowly grew tired of this and dabbled in other things.

These other things may have included running art sessions for kids, cooking up plant based food for vegetarians or providing workshops to single mothers. Not too long after do these passion entrepreneurs realise they’d missed a trick, this is actually what will get them up in the morning.

They harness their earning income, save up for a period of time, use their transferrable skills and soon after start a social enterprise that focuses on their real passion, instead of their profession.

The fourth group that is gaining traction are the people who start purposely start social enterprises, having learnt about them at school, from their network or their own research. Let’s hope we see a shift in primary, secondary and tertiary education to ensure social enterprise becomes the norm, different from teaching in the 2000s where we were taught the only point of business is profit!

If you need help developing your idea or social enterprise, get in touch with us via our website.

What funding is available for social enterprises?

Grants, loans and angel funds too.

As we know a social enterprise, by definition, should generate at least 50% of its income through trading. However just like any other company, it may take a while before it gets to this point, and therefore there are a number of ways that a social enterprise can sustain itself before hitting that goal.

Some are able to bootstrap or fund their own social enterprise until that moment, which definitely provides you with a unique story to tell, but let us look at one of the advantages of being a social enterprise — access to a range of funds.

Public funds

Due to the good that social enterprises mostly do, they can identify and often access a range of funds and tenders that usually non profits go for. These can come from local authorities, trusts and foundations, and usually come with a strict set of expectations and reporting guidelines.

They will be published to meet a certain need, and there will be a tender or application process where you will explain what you do and how you do it.

While the majority of these funds might fund only your social and environmental activities, it is up to you to be inventive in ensuring your social enterprise benefits from this funding, and that you continue on the path towards the 50/50 split.

You can even more proactive, and reach out to local commissioners or departments to see if they are willing to pay for your service or product without going through a longer tender process. Being a social enterprise, they are receptive to ideas, as long as you already have a good reputation in the community and they understand what a social enterprise is, of course!

Private funds

On the flip side, you have all the funds that private companies can apply for, be it credit based such as loans or finance, or also commonly a capital investment.

If you’re thinking about access loans or finance then it’s important to look at all the organisations offering this, as you may be able to find preferable rates depending on the status of your company.

If you’d prefer to have a bit of advice with the money, then you can look out for coworking spaces, startup competitions, entrepreneur programs and similar who will provide funding in return for a stake in your company, and often a few other criteria too.

To be able to access these sorts of funds you often need to have some sort of pitch deck available, and have researched the potential your company has to make it big. It’s well worth having a lawyer look over the contract you might be signing too, and think about what restrictions you might want in that investment contract.

Pitching at a startup competition can often seem quite daunting, so just get out there and try a few times with no worry about the outcome. You’ll learn a lot about how to present, your name and company name will be out there and you can always reach out to funders later on.

Social enterprise funds

Last but also least, are funds specifically for social enterprises. It’s a growing pot of money but for now, nowhere near the amount in the other two funds. The best thing about these funds is they understand that you’re trying to balance people, planet and profit.

Therefore, there won’t be any awkward questions about why you wouldn’t want to maximise shareholder profits, or why you’re involved in filthy capitalism!!

Sometimes you’ll find them easily by search for social enterprise funds, but other times you will have to try other keywords such as impact, for good, purpose driven and similar phrases. Ultimately, you should join forces with other social entrepreneurs in your region and support each other in staying in the loop.

There are also some private companies offering discounts on services for social enterprise, for example AirBnB remove their 20% fee for any social enterprise or nonprofit experience. Keep any eye out for them, or simply drop them an e-mail and ask, the worst they can do is say no!

If you need help with your pitch deck, then get in touch via our website.