In recent years, momentum behind the so called “social enterprise movement” gas accelerated. But what exactly is a social enterprise? A social enterprise is an organization applying commercial strategies to maximize improvements in human and environmental well-being. A social enterprise can be either a for-profit enterprise or a nonprofit, charitable enterprise. Aided by a new corporate entity type, public benefit corporations, social enterprises maximize social impact alongside profits for external shareholders.
Social and Profitable?
But how can organizations be both social and profitable? Jeff Ochs, a local entrepreneur and change maker developed an understandable way of working through this question. Jeff identified three “ways” a business can be social and profitable. Social by Sharing. Social by Selling. Social by Sourcing.
By far, the most common social business method is to be “social by sharing,” meaning the enterprise shares some of its profits with a charitable cause. The best-known example is Tom’s Shoes, which donates one pair of shoes to someone in need for each pair purchased.
“Social by selling,” in contrast arises when an enterprise sells a conventional private good to a population not served by the market. A Minneapolis-based example is Thedatabank, which sells software and IT services to nonprofit organizations, which traditionally are under-served by the technology industry because of their lower purchasing power.
“Social by sourcing” occurs when an enterprise has a social element related to how the enterprise either makes or delivers its products or services. Common ways for ventures to source socially include using new environmentally friendly processes, locating in a certain warehouse or neighborhood, using minority-owned suppliers, and using sustainable materials.
Social by Staffing
Social by staffing is a subset of the social by sourcing concept. This method to being social involves an enterprise intentionally employing a population that traditionally faces barriers to employment.
A well-known example is Cookie Cart in North Minneapolis. Ahead of her time, Sister Jean Thuerauf founded the social enterprise in the late 1980s to provide teenagers with a safe and engaging place to spend their time. The streets offered young people crime and gang involvement, but Sister Jean’s organization provided something educational and empowering. She invited teenagers into her kitchen where she helped them with their schoolwork and taught them to bake cookies. It didn’t take long for there to be more teenagers than there was room for her kitchen. So, she formalized her vision and opened a storefront and the nonprofit Cookie Cart was born. For close to three decades, Cookie Cart has provided teens 15 to 18 years old with meaningful work and leadership skills through the experience and training they receive working in the urban bakery.
Another social enterprise utilizing the social by staffing model is Tech Dump. Tech Dump is an electronic recycling organization that provides job training and practical experience for adults facing barriers to employment. Also, a nonprofit organization, Tech Dump takes pride in its commitment to hire individuals with criminal records who are working to return the labor market and become economically self-sufficient.
In this similar space, is the United Kingdom based Offploy. Founded by an entrepreneur with a “criminal record,” the social enterprise works as a third-party HR consultant aiding businesses who are committed to hiring ex-offenders. Offploy works closely with both the business and ex-offenders to provide support at every step of the employment journey. Their services include HR guidance, specialist legal advice, and staff training.
And there are examples of this social by staffing approach in the for-profit sector as well. While not a branded social enterprise, Walgreens has aggressively pursued a social by staffing model with its disability inclusion initiatives within its workplace. Through initiatives to hire U.S. military veterans, Target has also demonstrated a social by staffing commitment.
Holistic Social Impact
There are many methods for enterprises to be “social,” but the “social by staffing” method is especially holistic. By employing disadvantages individuals, organizations opting for this approach live out their social impact in a particularly tangible way. Their social mission is front and center in their organization, embodied by the people it is comprised of. As our economy continues to automate, it’s likely that more population segments will find themselves disenfranchised from the labor market, thus providing an opportunity for “social by staffing” enterprises to fill the void.
This article was written by attorney Kim Lowe.