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Blog > So you want to integrate Social Enterprise into your organization. How are you going to do it?

So you want to integrate Social Enterprise into your organization. How are you going to do it?

posted on 9:13 AM, August 14, 2017
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Social Enterprises are revenue-generating businesses with two goals:

  1. to achieve social, cultural, community and/or environmental outcomes, and
  2. to earn revenue

The ultimate aim of a social enterprise is to achieve sustainability by allowing an organization to support itself financially instead of relying solely on grants and donations. [1]

It is important to note that “social enterprise” is not defined in Canada’s Income Tax Act [2] nor in the Ontario Not-for-Profit Corporations Act. [3] That said, the term is gaining increasing traction, and the model is a useful one for social organizations which need to increase their financial independence.

A social enterprise can be integrated with a non-profit organization in a number of ways which exist on a continuum between fully embedded and fully external:

Embedded

In this case, the social enterprise and the social program are identical. The recipients of the social service are integral to the business model as either the market (customers), employees, or owners of the enterprise. [4] An example could be a café which employs and trains marginalized people who face challenges entering the traditional job market.

Integrated

In an integrated model, the social enterprise and the social program overlap. The business is a funding mechanism to expand and/or enhance the mission of the organization. An example could be a charity which provides material support to impoverished families, and which also operates thrift stores open to the public. The target population (impoverished families) may benefit from direct support of the organization, and may also be customers at the clothing and furniture stores.

External

When the social enterprise is external to the social organization, the social and business activities are fully separate. In this model, the business activities are unrelated to the mission of the organization; rather, the business exists to fund the social activities of the organization. An example could be a flower shop at a hospital, whose profits are used to fund hospital operations.

What does this mean?

When considering starting a social enterprise, it is important to decide the level of integration at the start, because that feeds directly into the mission of your enterprise. The mission will drive fundamental business decisions such as location, hiring policies, inventory, and pricing.

For example, say you decide to start a shop to sell knick-knacks. In an embedded model, you might train marginalized individuals to make the knick-knacks, and may hire them as sales staff. Your store manager may need to have some social work expertise in order to offer the employee training and support needed for the enterprise to be successful. Operating under an external model, on the other hand, you might source knick-knacks from factories and employ volunteers as sales staff. Your manager’s main focus would likely be profit maximization, in order to earn the greatest amount which can be transferred to your social organization.

Volunteer Ottawa and the Centre for Social Enterprise Development are partnering to bring you two courses related to Social Enterprise for non-profit boards. The first is a 3-hour introduction to social enterprise, while the second is a full-day, custom session with your full board and senior staff, which will walk you through all the steps related to organizational readiness for social enterprise.

Click here to register Wednesday, October 18, 2017. 9:00 a.m. to 12:00 p.m.

[1] MaRS, "Social Enterprise business models," MaRS, 6 December 2009. [Online]. Available: https://www.marsdd.com/mars-library/social-enterprise-business-models/. [Accessed 7 July 2017]. | [2] Government of Canada, Income Tax Act (RSC 1985, c.1 (5th Supp.)), Ottawa, 2017. | [3] Government of Ontario, Not-for-Profit Corporations Act, 2010, S.O. 2010, c.15, Toronto, 2016. | [4] Virtue Ventures LLC, "Embedded Social Enterprises," GrassRootsU, [Online]. Available: http://www.4lenses.org/setypology/eom. [Accessed 7 July 2017].
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