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Social enterprise: What’s in a name?

1 February 2023 at 5:33 pm
Tara Anderson
Tara Anderson examines some of the myths around defining social enterprise and why they are problematic.

Tara Anderson | 1 February 2023 at 5:33 pm


Social enterprise: What’s in a name?
1 February 2023 at 5:33 pm

Tara Anderson examines some of the myths around defining social enterprise and why they are problematic.

By their nature, definitions are exclusionary

Definitions by nature are exclusionary and that’s a good thing. It means they become uniting because they allow us to stand up loud and proud and say – this is who we are! We are the businesses that specifically exist for good – how exciting is that?!

If you’re not a social enterprise and create impact in a different way, then we respect and applaud you! We need all the impact organisations we can get in the economy – cooperatives, First Nations businesses, B Corps, charities etc. When we conflate these different impact types, we reduce the value and uniqueness of all of them.

Rather than attempting to merge these different impact models into an amorphous category of ‘impact’, let’s join forces, collaborate, celebrate the unique contribution of each and collectively build a wellbeing economy.

And if you’re not yet a social enterprise but want to be – either a charity converting to build trade activity, or a business looking to embed purpose, then we applaud you too! We’re here for you on the journey and look forward to you becoming a social enterprise when you’re ready.

Without a special legal form, how can you define it?

Yes, there isn’t a specific legal structure that defines a social enterprise. But that’s one of the fabulous things about them – they can take any form. Because it’s not about what social enterprise is (i.e., a legal structure), it’s about what does enterprise does (it’s a business model). And that doesn’t mean we can’t define it.

While there may be further legal forms created in Australia, similar to the Community Interest Company model in the UK, the important point is that multiple are needed, because social enterprises are diverse. The shared definition is what provides the common ground across any legal structure.

We can’t agree on a definition, so isn’t it OK to have many?

In Australia, we do have an inclusive definition of social enterprise. It was first developed through the Finding Australia’s Social Enterprise Sector (FASES) research in 2010. Then it was operationalised by Social Traders over five years of working directly with the sector, to ensure the definition was inclusive of all social enterprises – any structure, any stage of development, any impact model.

The definition is very simple:

  1. A primary social, cultural or environmental purpose.
  2. A substantial proportion of income through trade.
  3. Investing efforts and resources into purpose so public benefit outweighs private benefit.

Any social enterprise doing those three things is included. This includes the cooperatives, First Nations businesses, B Corps, charities and any other for-purpose businesses that meet this definition – it’s inclusive of all. The certification process used to assess social enterprises against the definition is world class – it’s governed by an independent and international advisory panel and has been verified by EY.

Today the Australian definition of social enterprise is used for certification, as access to SEWF’s global verification, by government for verification for grants, and has been adopted by Social Enterprise Australia in the language of the new social enterprise sector marketing playbook.

The work on definitions in Australia is done. It’s all in place. When we insist on continuing to debate definitions, or suggesting that we don’t have an agreed definition, we’re wasting time talking to ourselves. When what we most need to be doing is engaging the wider world.

Does this really matter?

The reason I’m so passionate about this, is because if we don’t stand up and define ourselves clearly, social enterprise has no chance of becoming business as usual. The sector will continue to stay small and niche. And our ambitions for the sector are way too big to stand by and let that happen.

If we expect people who have never heard of us to understand us, we have to clearly tell them who we are. If we expect businesses to buy from us, they need a list that has been de-risked because they’ve been checked to be genuine. If we want government to create policy around the sector, they need to know which organisations are included within that. 

If we want consumers to buy from us with confidence, they need to know what exactly makes a social enterprise purchase different to the plethora of other ethical purchase choices. And if we want to teach it to others, we need to say what exactly ‘it’ is.

Imagine trying to train a surgeon by telling them it’s related to veterinary science, it has elements of nursing, and it’s similar in some ways to being a GP. But never mind with the specifics because it’s ultimately all about ‘medicine’. Confused?

Imagine trying to encourage more people to donate to charity by saying there are some registered charities, and then there’s the unregistered charities that we’re pretty sure are charities, although we can’t say for sure. But it’s ok because we’re being inclusive. Confidence dropped?

The social enterprise model is unique from other impact types, and we should celebrate it

This is why Social Traders created certification. It’s why our international counterparts did the same. It’s why SEWF introduced global verification. Because it’s needed. It’s not a money-making activity – we rely on our government and philanthropic partners to subsidise it. But we do it because it’s crucial for sector growth. And importantly, it protects the sector against social washing – those who claim to be a social enterprise but aren’t and draw resources and attention away from genuine social enterprises.

If we continue to insist that we’re a fuzzy concept with blurred boundaries, under the guise of being inclusive, the wider public will turn away and we will never grow. And we will continue to miss chances to celebrate the magic of the social enterprise model – using business to generate purpose above all else.

My ask: stand up and be proud of who we are

I have one ask of all social enterprises and the social enterprise intermediaries that are here to see them grow – let’s be proud of our identity as social enterprises! Let’s clearly state who we are (with the definition we already have) so we can tell the country why we matter.

At Social Traders we’re doing just that. We’re encouraging business and government to buy from you. We’re working with government to create policy and funding for you. We’re working with other impact intermediaries to connect opportunities across different impact types. And we’re doing all of that by telling them who you are.

Tara Anderson  |  @ProBonoNews

Tara Anderson is the CEO of Social Traders.

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