Thursday, 22 November 2012

What is a Social Enterprise?

What is a social enterprise?

The term enterprise is a regularly used term in business. The term enterprise itself refers to ‘the undertaking of a task or project’ in business it refers to trading a good or service and those involved are called enterprisers or entrepreneurs. A social enterprise is set up for social reasons to benefit a community, rather than purely for profit. The easiest way to gain an understanding of how the social aspect of enterprise creates a difference is to look at two examples and compare.

An example of a social enterprise: Kigali Crafts

Kigali Crafts is a British based firm that runs international, its purpose is to import crafts, such as jewellery, to the UK from Kigali in Rwanda. Its aim is to sell these products through online sales as well as through faires and profits that are made are sent back to Kigali in Rwanda to help the genocide survivors. By doing so it creates social benefits for the community, firstly the community, learn new skills so that they are no longer reliant on aid and become self-sufficient. The money made from selling the crafts goes directly back to them, which helps them to buy food and rebuild their lives. 

An example of a profit driven enterprise

To contrast we could consider how a high street jewellery company trades. They may sell similar produce to Kigali crafts yet operate via online sales and global high street stores. They are driven by profit, selling goods to make a turn over, all profit made goes to the company directors and shareholders. Therefore they are an enterprise but not a social enterprise, as society does not directly benefit from there existence.

The benefits of a profit driven enterprise 

It is important to note that large companies do benefit the wider economy through their success. They create jobs, provide a service to the local area, pay rent for their shops as well as purchasing goods from other business which all pumps money into the local community, on a national level they also pay taxes and other subsidies which all improve the national economy. Although this would suggest that our generic high street jeweler is helping society it is not a social enterprise as it is doing so indirectly. To be deemed a social enterprise a business must have its main aim entwined in society.

No comments:

Post a Comment