Social Enterprise: The Answer for Increased Revenue?

There has been more and more discussion of “social enterprise” in the nonprofit world, especially as it relates to the potential to enhance existing revenue streams or offset lost revenue generated by more traditional fundraising methods. While the concept or definition of social enterprise can vary widely, at its core is the idea that revenue generation for the enhancement of the shareholders is not the primary goal.  Coupled with the goal of “enhancing” shareholder value is the idea of  “enhancing” the world we live in. Simply put, an enterprise is a social enterprise if it generates revenue and alleviates suffering at the same time.

As you contemplate whether a social enterprise is an appropriate venture for your nonprofit organization, there are a few key questions to think about and answer before proceeding:

Intention: What are you trying to accomplish? Are you doing this solely to raise money? If you answer yes, it’s most likely not a social enterprise. This does not mean you should not proceed, but it does mean that you need to contemplate and answer a different set of questions. Are you trying to raise money so you can carry out your mission? If so, how much will you focus on revenue generation? On the other hand, how much will the focus be on the mission?

Financial Capital: What resources will you need to begin your social enterprise and work towards profitability?

Human Capital: Who will you need on your team to accomplish your goals? Will you hire paid staff? What about volunteers?

Business Plan: Your social enterprise is going to need a comprehensive written plan with the following elements:

  • Business profile
  • Mission
  • Vision
  • People
  • Funding: revenue and expense projections
  • Other markets/competition
  • Licenses, permits, insurance, regulatory, or other legal issues.

A social enterprise can be an exciting venture and a significant part of your overall mission. It can not only contribute to the general revenue stream, but can also be a valuable tool in helping you accomplish your mission of improving the world around you. Ultimately, a social enterprise should increase your ability to improve the conditions of those you serve. It can also be a valuable public relations asset by exposing your mission to members of the community with whom you may not otherwise connect. Just remember that the key to long-term success and increased revenue in any social enterprise is proper due diligence and planning from the start.

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