Should social enterprises be non-profit?

Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

No, every business requires funds to operate, social enterprise is not different in that aspect knowing that funds are relatively scarce and in these time of recession it make it more difficult. Therefore, it will be useful to for the enterprise to create a means of financial sustainability, where every social firm is financially stable and depending on donation to run it business. Social enterprise is a firm that makes profit but with a non-profit motive.

From the various discussions in class and from different speakers invited they have constantly referred to social enterprises as a businesses and not a charity organization. As such a business needs to make a profit to compete favourable in the market and to ensure it continual survival, however for a social enterprise they have to make profit so as to invest in there societal, social or environmental aims and also to a maintain level of suitability.

For many social enterprises, being sustainable - in every sense of the word - enables them to become more independent and to reduce any dependency on public grants. It also ensures they can continue to help provide a solution for a social or environmental problem. Sally from SocialFirms UK mention self-sustainability as one of their long term goal.

Not 'profit-making' however, is important for the social entrepreneur. Being 'profitable' helps self-sustainability of the enterprise, and also serves as a mechanism for self-monitoring and assessment. To quote from Dr Yunus (Grameen Bank): "Grameen's central focus is to help poor borrower move out of poverty, not making money. Making profit is always recognised as a necessary condition of success to show that we are covering costs. Volume of profit is not important in Grameen in money-making sense, but important as an indicator of efficiency."

2. The goal of social enterprises is to improve the society rather than create economic value for investors or customers.Citing examples from the guest speakers and your placement experience, explain in what way are social entrepreneurs different from business entrepreneurs?

The basic difference between the business and the social entrepreneurs is majorly the objectives or purpose for setting up the firm, a business entrepreneur aim of creating an enterprise is to build a business and making profit. but, on the other side a social entrepreneur's aim is to identify and satisfy any social and environmental needs which other economic and social institution fails to identify i.e. creating social change. Furthermore, many commercial businesses would consider themselves to have social objectives, but social enterprises are different because their social or environmental purpose remains fundamental to their operations.

In as much as the mode of operation is similar to an extent but the policies setting them up also differs. As for social enterprise in the UK there are some criteria and polices that have to be obeyed.(DTI). Like any business entrepreneur, social entrepreneurs also find gaps and create a venture to serve the unserved 'markets'. in the case of sally who identified that young boy who had an illness and was socially excluded sally look around and found that no government agencies serve this set of people and decided to serve the unserved.

A business entrepreneur might create changes in the society, but that is not the primary purpose of starting the enterprise. Similarly, a social entrepreneur may generate profits, but that is not the primary reason for starting the enterprise.

Profitability - not 'profit-making' - however, is important for the social entrepeneur. Being 'profitable' helps self-sustainability of the venture, and works as a mechanism for self-monitoring. Dr Yunus (Grameen Bank) "Grameen's central focus is to help poor borrower move out of poverty, not making money. Making profit is always recognised as a necessary condition of success to show that we are covering costs. Volume of profit is not important in Grameen in money-making sense, but important as an indicator of efficiency."

Another key difference between the social and the business entrepreneur is in the meaning of wealth creation. For the business entrepreneur, 'wealth' is same as profits. For the social entrepreneur, however, wealth also encompasses creation/provision of the social and environmental capital or means through which other are. Therefore, to be viable, a social entrepreneurship venture must show a positive Social and/or Environmental ROI.

The main difference here is the explicit focus on a social return on investment improvements on issues such as environment, health, poverty, equality, justice and safety rather than simply a financial return on investment.

3. With a larger number of venture capitalists investing money in social organisations, expecting returns, would the ideology of social entrepreneurship be diluted in the long run? If yes, how?If not substantiate using examples from guest speakers, readings and placement experience.

Yes and No

Venture capitalist are in recent time are beginning to invest in social organization, because the world is moving towards ethical business, anyone not associated with such business or promoting such is at risk of losing its reputation either directly or indirectly. Venture capitalists have underlining aim of expecting returns, this might not be explicit when investing, but gradually with an increase in the profit of these social organization they pressurize the management in paying returns. With the inflow of venture capitalist into social enterprise, there is tendency for some social entrepreneur to yield to the demands of the venture capitalists on increase in returns on investment. With introduction of the term social venture capitalist (who invest in social organization with no expectation of returns) it helps to distinguish from the conventional venture capitalist who are interested in returns only.

No, with the formulation of social enterprise policies and creation of monitoring body DTI and other regulating bodies in the UK this will help to check on the quack social organizations and prevent the ideology from being diluted.

4. What have you learned from the module? What were some of its strengths and weaknesses? What would you recommend to improve it?

These module as served as an eye opener to the term social enterprise, as this was the first time I will be consciously coming across the concept, my understanding of the concept as being greatly increased, with the placement experience I have being able to gain an insight into how a typical social enterprise operates and some challenges they are faced with. Some of the strength was the involvement of some social entrepreneurs to give account of how there firm works and some of their recent and future projects. Also the lecturer made the classes interesting and constant efforts to allow for class participation by calling on names, furthermore the case study session was fun as it helps to develop additional understanding of social enterprise using relevant examples and cases. On the other hand the placement timing was short which did not allow for better understanding of the enterprise. More social entrepreneurs should be involved as they are practically involved in the day-to-day running of the enterprise. Choice of enterprise for placement should be carefully selected, also placement should not be made far off from the university and individual interest should be considered when allocating to an enterprise.


  • Boschee.J and McClurg.J (2003), Toward a better understanding of social entrepreneurship: Some important distinctions. Dees.J, Emerson.J, & Economy.P, (2001), Enterprising nonprofits: a toolkit for social entrepreneurs, John Wiley, New York. Morino. M (2007); "Entrepreneurs & Philanthropy: Potential and Pitfalls" National Philanthropic Trust Paton.R (2003), Managing and measuring social enterprises, Sage Publications, Los Angeles ; London,