Social enterprise is a relatively new term for a type of business that has existed for many years. The term relates to social entrepreneur, the name originally given to 19th century philanthropic businessmen and industrialists, who had genuine concern for the welfare of their employees.
There is no definitive answer as to what a social enterprise is and the terms use varies in different parts of the world.
In Britain, the focus is on the use of the profit as the defining characteristic. A commonly-cited rule of thumb is that at least half their income is derived from trading rather than from subsidy or donations.
In North America, there is less emphasis on generating a profit and more about social and environmental targets.
European usage of the term tends to add the criteria of social rather than individual ownership.
Whilst there is no specific definition the governments Department of Trade and Industry in the UK defines social enterprise as:
a business with primarily social objectives whose surpluses (profits) are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners’
DTI Social Enterprise Unit 2002
It may also be that a social enterprise accomplishes its social aim through its operation e.g. through the employment of people from a disadvantaged community who have difficulty in securing investment from banks and mainstream lenders.
Social enterprises are generally held to comprise the more businesslike end of the spectrum of organisations that make up the third sector or social economy.