Social Enterprise vs Charity
Why I love the Social Enterprise Model
As a passionate supporter of the Fair Trade flavour of social enterprise, I’ve long admired this model of doing good through business. So, why do I love social enterprise so much, and what makes it different – or better – than charity? In this article I explore my thoughts on why the social enterprise model is so powerful.
What is a Social Enterprise?
Social enterprises are organisations - sometimes not-for-profits, sometimes for-profit - whose operations are focused on doing good for the world, not just profit..
That is – they put people and the planet first.
There are a lot of flavours and types of social enterprises out there. Some create employment for disadvantaged groups; others focus on environmental outcomes or fill gaps in care for vulnerable communities. There are many and varied – reflecting the purpose and passions of those who run them.
The key difference between a social enterprise and a charity is that social enterprises are businesses. That is, they don’t rely on donations for their income. They have a business model that generates income through trade and reinvests profits back into their mission.
Self Sustaining
What I find most powerful about social enterprises is their self-sustaining nature. Because they earn their own income, they’re in control of their own destiny.
They can grow in a positive way, and the impact they have can grow with them.
Being in control of their own destiny also gives them flexibility in how they tackle challenges - something that charities, often bound by donor expectations, can find more difficult.
Empowering
One of the most inspiring aspects of social enterprise—especially the Fair Trade model—is how it empowers people to build something of their own.
Traditional charity, while well-intentioned, can sometimes leave people feeling uncomfortable or dependent. Most of us have an instinctive desire to contribute and create, not just receive.
In Fair Trade enterprises, for example, there is a focus on providing access to market and fair employment for disadvantaged makers and producers. This enables the producers to build their own enterprise, support their families and their community, and be in control of their own future.
By providing fair employment, there are many flow on effects. If adults are fairly paid, their families are well fed. Their children do not need to work, and can go to school, and even on to tertiary education. Family members can receive medical care.
Fair trade enterprises in many parts of the world have gone on to build large successful enterprises, spanning generations. The owners of these enterprises have been empowered through building their own enterprise provide broader support to their community, meaning the community is no longer dependent on charity or handouts.
Long Term
Another reason I really love social enterprise is that it is about building systems for the future. It is not a sticky tape patch-up solution – it’s a model for building lasting systems that work.
Social enterprises do good not just by what their activities produce, but by how they go about doing business. This means that they have the capacity to build systems that support communities in an ongoing, self-sustaining way.
No one wants to rely on charity forever. Social enterprise offers people the opportunity to be part of the solution - empowered, inspired, and motivated - rather than recipients of handouts.
Does Many Things at Once
What makes social enterprises, and particularly Fair Trade businesses, so remarkable is that they create positive impact in multiple ways at once.
They can support a cause that they are passionate about, by working in that space. But they can also do good at every level of their business by:
providing positive employment experiences
ensuring no discrimination in their work practices
having transparent supply chains
working with respect for the environment
So often in the past when I wished to support a charity, I felt I had to choose between their cause and another good cause. Or close my eyes to where they were sourcing their promotional items from, or that they were using lots of plastic in their operations.
Because social enterprises have more flexibility in their operations, they can make a difference not just through their end products or services, but through how they do business. It’s possible to “tick all the boxes” and do good at every level.
Making Money for Good
The idea that we can actively focus on making money – and that can be good for people and the planet - is challenging for some of us.
Many of us were brought up to believe that the really good people are poor. We might also believe that wealthy people are selfish or exploitative. There is plenty of pop culture out there that fuels these beliefs.
This can make it challenging to switch from the idea of charity, giving money to a good cause, to making money for good. We can sometimes focus on the ‘social’ part of social enterprise and struggle with the ‘enterprise’ side of it.
The reality is money can be made and used for good – or not. We choose how we go about making money and how we spend it.
Social enterprises show that it’s possible to build profitable businesses that are ethical, empowering, and deeply impactful. They prove that commerce and conscience can coexist - and even amplify each other.
I believe that’s where the real power of social enterprise lies: the ability to make money for good.
I’m all about that. What do you think?
