Understanding social enterprises

- February 21, 2022

Understanding social enterprises

Understanding social enterprises is important. New Life Portugal wants to make health and wellbeing more accessible. We think that everyone should be able to get the support they need – especially when someone is going through challenging times.

That’s why we set up our wellness retreat and mindfulness centre as a social enterprise.

In this blog post, we explain what that actually means as well as the benefits of a social enterprise and point out some other very inspiring companies who chose the same business model.

What is a social enterprise?

It’s not about the money: Even though a social enterprise strives for financial sustainability, profit is never the primary focus. Instead, it is first and foremost driven by a cause and the passion to solve a specific social or environmental problem. A social enterprise is mainly interested in the difference, in the impact it can make and the change it can create in the world.

Profits get reinvested or donated to fund whatever social or environmental goal is at the heart of the social enterprise. Don’t mistake it for a charity, though. A social business pursues making money from selling a service or goods and aims to be commercially viable. It may have investors or apply for grants but doesn’t sustain itself with donations. 

The main difference to a normal business is that instead of paying profits out to shareholders or making the owner richer most of the money earned gets put back into its social mission.

The first social enterprises emerged in the late 1970s in the UK. By now, there are over 100.000 social enterprises registered across all sectors. According to the State of Social Enterprise Report, they employ two million people and contribute roughly £60 billion to the economy.

It’s not just in the UK, though, that social enterprises are booming. It is a fast-growing business model from India to the US. Nobel Peace Prize laureate Professor Muhammad Yunus called them: “The new kind of capitalism that serves humanity’s most pressing needs”. Understanding social enterprises is important.

Features of a Social Enterprise

Clear mission

A social enterprise has a clear mission, a purpose to solve a specific social or environmental problem. The business is not only committed to its mission as the primary focus, it has it set out in its governing documents so it can’t be changed and deeply embedded into its identity as well as the experience it delivers through the goods and services it sells.

Owned or controlled in the interest of its mission

A social enterprise is advantageous to employees, customers and society at large as well as the environment and offers innovative and unique solutions to the problem identified in its mission. This means that the company is competitive and has a compelling unique selling point (USP).

It provides something that people want or need. A social enterprise is a business that’s independent of the government/state. It is owned or controlled in the interest of its social or environmental mission.

Financially sustainable

A social enterprise is an independent business the sells goods or services to generate revenues. More than half the income is earned through trading. Even though a social business might start with investors or grants, the aim is always to become self-sustainable.

Reinvests at least 50% of its profits

A social enterprise exists primarily to create social or environmental value and positive impact. It should give away or reinvest at least half the profits it makes into the mission it chose as a primary focus. If there are shareholders involved, the dividends they get need to be capped at 49% to make sure that a majority of the surplus money that is being made can be used to support its objective.

Asset lock

An asset lock is a clause in the governing documents of a social enterprise, explains Social Enterprise Mark CIC. It ensures that if the business ever gets bought by different owners due to bankruptcy, residual assets get distributed to achieve the social enterprise’s initial social or environmental mission. They can not be used for private gain.

Understanding social enterprises

A social enterprise should be accountable for and transparent about how it operates, how it is continuously striving to achieve its mission, the money it makes as well as the impact it creates.

Understanding social enterprises shoult matter

Understanding social enterprises

Advantages of Social Enterprise

Better relationships with customers

Due to its purpose and mission, a social enterprise builds relationships with its customers that go beyond and run deeper than the transaction for the desired product or service it provides. It will attract customers that care about the social or environmental cause the organisation stands for which holds great potential for brand loyalty or even brand advocacy.

Employee satisfaction

Never underestimate the power of having a purpose. People are better and more satisfied employees when they know they are making a difference when they feel that what they do matters in this world or drives change in society.

The focus on and commitment to a social or environmental cause will attract highly skilled staff whose values are aligned with those of the business. Having a strong sense of purpose will keep their motivation and satisfaction high.

This usually leads to employees choosing to stay with a social enterprise longer than they would with a normal business which reduces costs for recruitment and training of new staff.

Increased creativity and productivity

Getting to be part of creating social change increases productivity by up to 30% in employees. These are the findings of a paper titled “Corporate Philanthropy and Productivity: Evidence from an Online Real Effort Experiment” from the international platform of Ludwig Maximilians University’s Center for Economic Studies and the Ifo Institute.

It also boosts creativity because people feel inspired to contribute to something bigger than their paycheck.

Better reputation & enhanced brand awareness

When a social enterprise delivers a product or service that meets or surpasses the customer’s expectations while achieving its public or community mission it will be easy to attract attention and gain exposure for the goal that is being pursued.

Marketing and media coverage come easier to social businesses than to those that are solely focused on profit. It will also naturally get the interest of and engagement from like-minded individuals.

Understanding social enterprises has clearly advantages.

Understanding social enterprises Examples

Aravind Eye Care

Aravind Eye Care is a renowned Indian organisation and was among the first businesses in the world to embrace the social enterprise model. Their mission is to ‘eliminate needless blindness’ through affordable and high-quality eye care. Half of Aravind Eye Care’s patients either receive free or steeply subsidised treatment.

Their model is so successful that it went from one hospital with 11 beds to “14 eye hospitals, 6 outpatient eye examination centres and 94 primary eye care facilities in South India.” The Aravind Eye Care doctors have performed nearly eight million surgeries and handled over 65 million outpatient visits since it was founded in the late 70s.

One World Play Project

The One World Play Project has delivered more than 2 million ultra-durable soccer balls to 185 countries worldwide. Their mission is to help people thrive through play. The One World Futbol™ is designed for the toughest playing conditions and won’t ever go flat – even when punctured.

On their website, they explain: “Research shows that play is critical to the healthy physical, social and emotional development of children. Play helps individuals recover from trauma and enables hope, optimism and opportunity.” The One World Play Project has impacted over 60 million people since 2018.

Textbooks for Change

Education should be accessible and affordable for everyone. This is why Textbooks for Change provides high-quality learning materials to students regardless of their geographic or economic status.

People can donate their college and university textbooks and the organisation will resell 20% of them at affordable prices and donate 50% to partner campus libraries in East Africa. If a donated textbook is badly damaged, outdated or not usable for another reason, Textbooks for Change recycles it to ensure environmental sustainability.

BARON FIG – buy a book, plant a tree

Baron Fig sells high-quality notebooks. The company wants to empower and inspire thinkers and is dedicated to its environmental mission of leaving the Earth better than we found it. Therefore, Baron Fig has a tree planted for every notebook they sell. So far, they have planted almost 53.000 trees in over 30 countries.

Understanding social enterprises is key.

New Life Portugal’s mission

Understanding social enterprises

Our mission at New Life Portugal is to provide a supportive space for individuals to nurture their sustainable wellbeing. We offer high standard programs with a holistic and integrative approach.

And because we believe that everyone should be able to get the support they need, the fees we charge for our it cover the bare minimum to establish and operate a retreat centre in the heart of the Serra Da Estrela.

For those in need of financial assistance, we are setting up a scholarship fund. Once it is up and running, it will be possible to apply for full and partial scholarships. We are furthermore committed to ethical organisational practices, partnering with small businesses in our community, caring for our climate and natural environment and creating positive change in whatever small ways we can.

Our highly qualified and experienced counsellors, therapists, fitness and yoga instructors as well as mindfulness and meditation teachers are dedicated to helping and supporting you on your journey to sustainable wellbeing and health. Our paths offer a broad variety of therapy modalities, workshops and groups if you’re looking to reduce stress, heal from burnout, or find help for anxiety, depression, grief, loneliness or compulsive behaviours and can be tailored to your individual needs.

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