# Social Enterprises: Purpose, Function, and Real-World Examples

![Social Enterprise](https://www.investopedia.com/thmb/LDqEf4LRSqePOQYd2kfJ23e5J4c=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/social-enterprise.asp-Final-13fe1180bfe44e828a428eee9e92edbe.png)

*— Theresa Chiechi / Investopedia*

> **Definition**
>
> A social enterprise is a business that prioritizes specific public interest objectives over shareholder profits.

## What Is a Social Enterprise?

A social enterprise is a business designed to achieve core positive social objectives and impacts as its primary purpose. Social enterprises strive to maximize positive impacts on society and the environment while generating a profit.

A concept developed in the 1970s in the United Kingdom, the profits generated are primarily used to fund social programs. Social enterprises often focus on benefiting marginalized or economically disadvantaged groups by permanently improving their socioeconomic conditions.

Some examples of social enterprises are Warby Parker, Grameen Bank, and NeighborWorks America, a congressionally chartered nonprofit that supports community development.

### Key Takeaways

*   Social enterprises balance financial activities with social goals, using profits to fund social programs rather than maximizing shareholder returns.
*   Unlike traditional businesses, social enterprises prioritize addressing unmet needs or solving social and environmental issues through innovative business practices.
*   Funding for social enterprises largely comes from selling goods and services, distinguishing them from charities that rely primarily on external donations.
*   Examples of social enterprises include Warby Parker, TOMS, and Grameen Bank, each demonstrating a commitment to improving social well-being while sustaining business operations.
*   Social enterprises often seek to employ individuals from at-risk communities, offering them opportunities for stable employment and above-average wages.

## How Social Enterprises Work

The concept of a social enterprise was developed in the United Kingdom in the late 1970s as an alternative to traditional commercial enterprise. Social enterprises exist at the intersection of the private and volunteer sectors, balancing financial activities with social goals such as providing housing for low-income families or offering job training.

Social enterprises mainly fund themselves by selling goods and services, and they also receive grants. Because profit maximization isn’t the primary goal, a social enterprise operates differently from a standard company. However, generating revenue is still essential for sustainability, distinguishing them from traditional charities that rely solely on external funding.

[Sustainable revenue](https://www.investopedia.com/terms/s/sustainablegrowthrate.asp) differentiates a social enterprise from a traditional charity that relies on outside funding to fulfill its social mission. This goal doesn’t mean social enterprises can’t be profitable. Instead, it’s simply that their priority is to reinvest profits into their social mission rather than fund payouts to shareholders.

> **Fast Fact**
>
> The Organisation for Economic Co-operation and Development (OECD) identifies social enterprises as being highly participatory, with stakeholders actively involved and a minimum number of paid employees.

## Comparing Social Enterprises and Social Entrepreneurship

A social enterprise isn't to be confused with [social entrepreneurship](https://www.investopedia.com/terms/s/social-entrepreneur.asp). Social enterprises are businesses formed to fulfill a business purpose and solve societal needs through commercial activities. In contrast, social entrepreneurs develop solutions to social and environmental problems using existing business techniques and strategies. [Social entrepreneurs](https://www.investopedia.com/articles/investing/092515/10-most-successful-social-entrepreneurs.asp) seek innovative ways to drive change, whereas social enterprises fulfill a business purpose and solve societal needs through their commercial activities.

Social entrepreneurship is growing quickly and getting attention from the media, officials, universities, and groups like Ashoka and the Schwab and Skoll Foundations. Its appeal stems from the inspiring stories of individuals who have created solutions to various social and environmental problems, similar to business entrepreneurs but with a focus on societal impact. One prominent social entrepreneur is Bill Drayton, founder and current chair of Ashoka, an organization dedicated to identifying and supporting social entrepreneurs worldwide.

## Successful Social Enterprise Examples

Many social enterprises successfully maximize improvements in [social well-being](https://www.investopedia.com/terms/s/social_good.asp). Here are some notable examples:

*   Warby Parker is an American eyeglass retailer that donates a pair of glasses to someone in need for every pair sold.
*   TOMS, a California-based retailer, has pledged to donate shoes or sunglasses for every pair sold.
*   Grameen Bank is a microfinance community development bank founded in Bangladesh that makes small loans to the impoverished without requiring collateral.

These are just a few examples of how social enterprises can drive significant social and environmental impact while still operating a sustainable business.

## Key Considerations for Social Enterprises

Social enterprise employees come from many backgrounds, but priority is given to those from at-risk communities. This includes long-term underemployed workers who have often been informally paid in the past.

[Social enterprise opportunities](https://www.investopedia.com/ask/answers/041015/why-social-responsibility-important-business.asp) may seek to provide a living wage, which is typically above the minimum wage in most cities. Some social enterprises may specifically seek to hire individuals from at-risk groups as part of their mission.

## What Are Examples of Social Enterprise?

Social enterprises are usually a blend of private and volunteer sectors. A credit union, a coffee shop that sells fair-trade beans and hires candidates from at-risk communities, or a neighborhood food co-op are all examples of social enterprises. Examples include Navy Federal Credit Union, Warby Parker, and Grameen Bank.

## How Can I Start a Social Enterprise?

If you own a business, you could partner with a nonprofit, food pantry (if applicable), or other charitable organizations and donate your time, money, or products. If you’re starting from scratch, the first step is to identify a problem and your solution, explain your action plan to potential funders, and make sure you have experts to support and validate your endeavor.

## How Can I Get Hired to Work for a Social Enterprise?

You can start by researching organizations that match your values and skills, networking with professionals in the field and gaining relevant experience through volunteering. You can tailor your resume to highlight your passion for social impact and apply for jobs on specific job boards and the organizations’ websites. Finally, you can prepare for interviews by understanding the mission and values of the social enterprise and showing how your skills align with their goals.  

## The Bottom Line

Social enterprises aim to achieve social goals as their primary purpose and financial stability as their secondary goal. They differ from charities and traditional businesses in that profits are generally used for social causes, targeting disadvantaged or marginalized communities.

Social enterprises like Warby Parker, TOMS, and Grameen Bank demonstrate that businesses can successfully address social and environmental issues while remaining financially sustainable—a vital factor for helping communities.

> **Article Sources**
>
> 1.  Harvard Business Review. “[Two Keys to Sustainable Social Enterprise](https://hbr.org/2015/05/two-keys-to-sustainable-social-enterprise).”
>     
> 2.  Social Enterprise UK. “[All About Social Enterprise](https://www.socialenterprise.org.uk/all-about-social-enterprise/).”
>     
> 3.  Organisation for Economic Co-operation and Development, via Internet Archive Wayback Machine. “[The Social Enterprise Sector: A Conceptual Framework](https://web.archive.org/web/20160616144048/https://www.oecd.org/cfe/leed/37753595.pdf),” Page 1.
>     
> 4.  Stanford Social Innovation Review. “[The Strength of Social Enterprise](https://ssir.org/articles/entry/the_strength_of_the_social_enterprise).”
>     
> 5.  Ashoka. “[William Drayton, CEO & Chair](https://www.ashoka.org/en-us/people/william-drayton).”
>     
> 6.  Warby Parker. “[Buy a Pair, Give a Pair](https://www.warbyparker.com/buy-a-pair-give-a-pair).”
>     
> 7.  TOMS. “[Our Story](https://www.toms.com/us/about-toms.html).”
>     
> 8.  PR Newswire. “[TOMS Introduces TOMS Eyewear, The Next One for One™ Product](https://www.prnewswire.com/news-releases/toms-introduces-toms-eyewear-the-next-one-for-one-product-123372898.html).”
>     
> 9.  Grameen Bank. “[About Grameen Bank (GB)](https://grameenbank.org.bd/about/introduction).”
>     
> 10.  Stanford Social Innovation Review. “[Social Enterprise Is Not Social Change](https://ssir.org/articles/entry/social_enterprise_is_not_social_change).”