Social enterprise addresses a range of challenges that organizations often face including environmental, cultural and social issues, and offers a number of benefits.
When an organization uses social enterprise a number of benefits can occur, including financial independence, the ability to reach the organization’s goals, becoming more attractive to beneficiaries wishing to donate to the organization and improved growth. According to Weisbrod (1998), the benefits of social enterprise improve the organization’s use of their traditional sources of funding like charitable donations and government grants effectively.
What Does Sam Rye Say About Social Enterprise?
Same Rye is the Co-Founder of Wellington’s Collaboration Cafe and states that social enterprise allows self-governing through independence and freedom through entrepreneurship. You can learn more about Sam Rye’s social enterprise and the benefits that it offers on YouTube.
Download Branding Resources Guide
Building a brand starts by having the right tools and advice. Download our top 10 essential tools and resources to kick-start your branding.
Financial Independence
One of the main benefits that social enterprise offers is the ability to gain financial independence and sustainability. Typically, organizations that address environmental, social and cultural challenges are non-profit organizations. These organizations have relied on government grants and charitable donations in order to fund their activities.
Relying on these contributions and grants means that the organization does not control the amount of funding that they receive. Factors outside of their control like changes in government regulations and laws, competition and economic conditions affect the number of grants available and the number of donations that they will receive.
Social enterprise allows organizations to have funding that is under their control. This funding comes from business profits, which can be used to supplement or replace government grants and charitable donations.
The Auckland-based Chinese New Settlers Services Trust appropriates business activity funds to supplement the other types of funding that they receive.
Growing the Services and Scope of Services to the Community
Traditional organizational funding via grants and donations make it difficult for an organization to expand their services. The additional finances from a business allow the organization to use the funds to offer new services that cannot be funded with the donations and grants that they have received. These funds also allow them to invest in additional services and increase the scope of their organization. Smith, Cronley and Barr (2012) state that social enterprise helps organizations make their finances go further.
Business Offers Innovative Ideas to Achieve the Organization’s Mission
Social enterprise also allows organizations to explore new and innovative ways to reach their goals and achieve their mission. For example, the organizations could hire people with disabilities or provide loans at discounted rates for businesses that are environmentally friendly or align with the organization’s mission.
The Inside Out Project, located in Wellington, employs individuals suffering from learning disabilities. These individuals offer pet care or other odd jobs. This gives the individuals an opportunity to develop their skills and connect with their community in a way that they would never have been able to otherwise.
Social Enterprise Can Impact How the Organization is Perceived by Employees and Donors
Social enterprise can impact what others think about the organization, including the organization’s staff and its donors. For example, donors who have a business mindset may view the organization’s business activities to achieve the organization’s social mission as a positive thing. The characteristics of developing such missions may increase the organization’s donors’ willingness to support the organization because they know their donations will go further.
If you want to read more about this subject then take a look at the growth of social enterprise in Australia. It will also shed light on the benefits and reasons for growth of this business model.
