This work includes the following tasks:
- Understand the role and importance of social enterprises in the economy,
- Explain the objectives, organization and features of social enterprises and contrast them with for-profit organisations;
- Evaluate the characteristics and motivations of a social entrepreneur;
- Recognise successful revenue sources and business models used by social enterprises,
- Identify and support ideas for possible new revenue streams for selected social enterprises;
- Analyse the management perspectives and external stakeholder perspectives of selected social enterprise and how objection to new developments might be countered;
- Identify formulae for success within social organisations;
- Explain how a social enterprise might become sustainable and provide researched examples;
- Explain how ‘blended values’ may impact development of selected social entreprise,
- Evaluate the distinct role of innovation in the third sector
LO 1: Understand the role and importance of social enterprises in the economy
1.1. Explain the objectives, organization and features of social enterprises and contrast them with for-profit organisations
The primary objective of social enterprises is to help target socially vulnerable people integrate into society. It pursues goals that address societal problems while making profits and growing commercially. In addition, social entrepreneurs adopt self-sustaining strategies to implement their courses instead of relying on charity and grants (Miesing, 2020). In this case, social enterprises are considered to be third-sector organisations in the economy. Evers (2020) defined third-sector organisations as organisations that are neither public nor private. They encompass voluntary, community, and social enterprises. They are value-driven in that they aim to attain social goals such as improving public welfare and enhancing environmental and economic well-being. They are not driven by profit maximisation objectives like other commercial organisations. As such, social enterprises are able to attain considerable social impact and financial returns. Also, social enterprises function like charitable organisations serving the community without too much emphasis on revenue generation and profits (Evers, 2020).
Social enterprises are leaders in implementing the triple-bottom-line of sustainability objectives in the business world. The triple-bottom-line of sustainability refers to business operations that consider social and environmental concerns in the same way they value profits (Evers, 2020). Social enterprises' objectives encompass the generation of profits, caring for the planet, and promoting value to society. They invest funds to serve the community. Besides, these organisations reinvest excess revenues to continue pursuing their goals. Third-sector organisations, especially social enterprises, benefit society in numerous ways. For instance, these organisations help to understand the needs of communities and suggest measures to address them (Evers, 2020). They ensure greater engagement between the targeted community and the solution providers.
Consequently, social enterprises are able to deliver solutions that the private and public sectors may find difficult to deliver. For instance, projects such as plastic waste recycling may not be sufficiently profitable for the private sector to pursue while public policymakers may not prioritise it (Evers, 2020). Therefore, social enterprises act as intermediary organisation that pursues these often beneficial projects on behalf of communities. They also support innovations in the development of solutions that address social problems such as pollution, unaffordability of education, and inaccessible healthcare, among others (Baijal, 2016). In line with these arguments, Miesing (2020) indicated that social enterprises act as people’s voices on the need to address specific problems within wider society. Due to the increased awareness of the modern consumer concerning the environment and legal provisions, they demand that businesses implement corporate social responsibility measures.
Social entrepreneurs are neither philanthropic nor for-profit entities. Whereas for-profit businesses such as SMEs and listed companies focus on ways to maximise profits, social entrepreneurs emphasise the environment and social impact of business decisions. Social entrepreneurs invest in research and development to create innovative solutions to improve the environmental status (Terziev & Arabska, 2017). Nevertheless, social entrepreneurship is not only focused on doing good, but also on creating hybrid business models. They understand that environmental and social governance goals should be quantifiable within the overall company’s performance metrics. These companies aim to perform better in the corporate social responsibility and governance performance metrics. In addition, the company is motivated by the ability of the community to access social services such as healthcare, education, and a clean environment. They research, create, and implement innovative solutions that enhance access to these services (Terziev & Arabska, 2017). They also have corporate policies and guidelines that ensure that the goals are embedded in their operational philosophy and governance. These guidelines act as checks on the company to ensure that they do not engage in unethical practices.
1.2. Evaluate the characteristics and motivations of a social entrepreneur
People have diverse motivations for engaging in entrepreneurship. For instance, there are people who want to be their own bosses or pursue their hobbies. Other people consider entrepreneurship as an opportunity to make huge sums of money and build an empire (Baijal, 2016). However, in recent years, a new wave of entrepreneurs has emerged, motivated by the need to solve societal issues such as social inequalities, pollution, environmental degradation, and so on. According to Terziev and Arabska (2017), these new entrepreneurs are called "social entrepreneurs." Terziev and Arabska (2017) defined social entrepreneurship as a process where people develop and finance solutions targeting social issues within society. A social entrepreneur is, therefore, a person who engages in the exploration of business opportunities that positively impact the community and the world. Unlike non-profit organisations, social entrepreneurs pursue social solutions with the goal of generating profits (Miesing, 2020). Nevertheless, their emphasis remains on the creation of social and environmental changes.
Social enterprises are for-profit organisations that lead the implementation of corporate social responsibility objectives. As such, social responsibility has become the main motivation of their corporate strategy. Villiers (n.d) described corporate social responsibility (CSR) as a self-regulating business model that assists companies in becoming accountable. Social enterprises draw motivation from the implementation of a CSR agenda. That is, these companies are conscious of the overall impact that they have on society. They evaluate all their actions based on the economic, social, and environmental blueprint that they have.
To social enterprises, engagement in CSR is an ordinary business course. Consistent with this argument, Terziev and Arabska (2017) explain that the operations of social enterprises aim at enhancing society and the environment and minimising the negative business impact on them. Studies added that social enterprises maximise shareholders’ value and profitability without ignoring their employees' wellbeing and societal welfare (Ridley-Duf & Bull, 2012). While social enterprises utilise viable, commercial, and profit-oriented tactics to generate operational funds, financial resources are not their main motivation. Dissimilar to other for-profit organisations, social enterprises plan and implement corporate strategies that address community and societal problems.
LO 2: Recognise successful revenue sources and business models used by social enterprises
2.1. Identify and support ideas for possible new revenue streams for selected social enterprises
Revenue streams for social enterprises may include fees from offering products or services, grants, support from for-profit organisations and so on. However, these revenue streams depend on the business model and type of social enterprise (Johnson, 2014). As highlighted in the previous section, social enterprises create business solutions to address social problems. In this regard, the main pillar of social enterprise’s business model is to attain sustainability and enable non-profits to adopt innovative ways of generating funds. The model considers business principles, market features, values, community responsiveness, and serving the public interest. In line with this argument, the MaRS Startup Toolkit (2021) identified the two key elements of a social enterprise’s business model. Firstly, the model includes an operating strategy, including the internal organisational structure and external partnerships, which are vital for the creation of the organization’s intended impact. Secondly, the business model includes a resource strategy, defining the terms that will guide the organisation in acquiring the resources it needs to operate. Based on these two elements, argues that social enterprises have embedded business models which define their revenue streams (MaRS Startup Toolkit, 2021).
Specifically, the embedded business model refers to a model where the enterprise and social programmes are inseparable and the business is designed for a specific group of clients who are essential to the mission. An integrated business model refers to a model where business activities overlap with social programmes and the business acts as a funding mechanism to promote the social enterprise’s mission in society. The external business model refers to a case where the social and business programmes are separate and unrelated to the organization’s mission (MaRS Startup Toolkit, 2021). In this model, the business acts as a funding source for the social activities that the organisation engages in. However, different enterprises have different approaches to business operations. FutureLearn (2013) highlighted that social enterprises were developing new tactics and models aimed at profit maximisation while concerned about social and community expectations. These businesses develop and explore innovative methods, focusing on profitability and social welfare maximisation. For this paper, I considered the case of Platform to explain social enterprise’s business models and their funding sources.
Platform is a U.S.-based social enterprise offering low-cost classes, workshops, and other activities for migrant workers. The organisation has become one of the best-known social enterprises in the world. The organisation targets children from low-income backgrounds and those who are unable to cater to their education expenses (Johnson, 2014). They charge low prices for educational services compared to other educational institutions. Despite offering low prices, they do not compromise on the quality of education. The education prices are the main source of revenues for Platform. Additionally, they organise workshops and training and development opportunities for migrant workers. However, these services are significantly cheaper compared to the prices charged by for-profit educational institutions. Comparatively, for-profit educational institutions are costly and unaffordable for many low-income American families, especially immigrants (Johnson, 2014). As such, for-profit educational institutions act as a barrier to access and inclusivity in education within the community.
Another source of revenue for social enterprises such as Platform is a grant from the government. The enterprises have occasionally received support from the government. Such support is often directed towards improving infrastructure. The government funding also targets books, and other academic resources (Dugan, 2019). Whereas economic activity and government grants are the primary sources of income for many social enterprises, there are others that earn revenues from sharing data on their clients with other organisations. For instance, organisations dealing with poor communities can share data that can help with comprehensive research on poverty and the inability to access healthcare and education. Social enterprises become vital partners in research about various social problems that the community faces. Some of the most common types of data that these organisations may share include data on income levels of the clients, economic trends, access to healthcare, market trends, and overall population features (FutureLearn, 2013).
2.2. Analyse the management perspectives and external stakeholder perspectives of selected social enterprise and how objection to new developments might be countered
Social enterprises, charitable organisations, and research firms are important partners in the data-sharing industry. This is because social enterprises often have valuable data that they can sell at a high price to offset some of their revenue gaps. In addition, Dugan (2019) indicated that organisations such as Platform collaborate with several NGOs and charitable organisations, which pay to ensure that the partnership continues. These organisations can be domestic or international. Often, collaboration among not-for-profit organisations and social enterprises happens when two or more parties share a common mission. In this case, partnerships allow social enterprises to access new markets and expand their reach globally.
Revenue streams of social enterprises also depend on the interested parties. Apart from the local community, multiple stakeholders are affected by the social enterprise projects (Dugan, 2019). Reflecting on Platform, it is important to note that its involvement in community activities draws attention from stakeholders, including the government, which can offer financial support. It also attracts regulatory authorities, which scrutinise their operations and provide guidelines on the best way to achieve their mission. Though the organisation offers educational services at a low cost, support from various organisations ensures that it can build partnerships and access new sources of funding. Lastly, with the increase in technological advancements and the exploitation of big data, governments have developed copyright laws that could hinder the enterprise from generating revenues through the sale of a client’s data (FutureLearn, 2013). These laws are to ensure that social enterprises can monetize their data without compromising their clients’ privacy and personal data.
LO3: Identify formulae for success within social organisations
3.1. Explain how a social enterprise might become sustainable and provide researched examples
Since some of these social enterprises provide services for the lowest income earners, generating sustainable revenues and incomes can be challenging. Looking at the case of Platform, the organization's commercial sustenance originates from the multiple services that they offer to the targeted populations. For instance, apart from low-cost training, they support career development programs, build educational facilities and link the community to potential financiers. In addition, the organisation creates value by being attractive to many people (Terziev & Arabska, 2017). As such, many people from low-income backgrounds, migrant workers, and young employees can easily access high-quality education by participating in the programs. This approach is similar to that of other enterprises that have adopted profit-generating and commercial tactics to generate revenues to pursue social good.
For social enterprises to be socially sustainable, the organization's management must evaluate how they are impacting the people and society. For instance, Platform is a socially sustainable social enterprise that provides needed support to the underprivileged community and income groups. They do so without imposing significant new expenses on low-income families. It also ensures that the majority of deserving members of the community are able to afford and access the educational facilities. As such, they ensure that they increase literacy and employability levels within these communities. People who go through the programme are more likely to get employed and become self-sufficient, thus reducing their dependence on social welfare. With education, the unemployment rate will drop in society (Terziev & Arabska, 2017). Moreover, sustainability includes investment in innovations that will improve operational efficiency and expand to larger communities. For example, online courses can act as a platform for immigrant families to participate in workshops and seminars.
Social enterprises promote measures to protect the environment and biodiversity. These measures include investment in green projects that improve societal sustainability. These projects prevent and protect natural resources against overexploitation. They enhance awareness of the unsustainable use of resources. While green operations are becoming common practise in the corporate world, social enterprises rely on these green operations, such as recycling plastic waste, as a source of revenue. Green investments support the long-term future of the organization. In addition, organisations building healthcare and learning facilities for low-income families can use renewable resources such as solar energy to reduce their dependence on fossil fuels. Technology is another important component of the value creation and sustainability of social enterprise business models (Miesing, 2020). For example, the adoption of digital learning strategies helps to minimise paper use while also increasing the indulgence of the students in workshops. The goal of sustainability in social enterprises includes conserving energy, contributing economically, and addressing social issues.
3.2. Explain how ‘blended values’ may impact development of selected social entreprise
Social enterprises such as Platform also create value by enhancing awareness of the existing social inequalities in society. As such, it becomes an ally of the community in people’s development, energy conservation, and positively impacts the living standards of the people in society. It creates a framework for networking and makes services available to larger sections of society. Usually, charitable organisations are reliant on government grants. Though public trust in charitable organisations has declined in recent years, they still have an important role to play in the promotion of social justice and addressing social inequalities in society. According to Evers (2020), social enterprises are now taking over the role of charities in offering services to low-income and vulnerable communities at affordable rates.
Social enterprises provide the basic essentials that communities need to develop, especially those that average members of those communities cannot afford. However, without charities, vulnerable members of society, such as the elderly and disabled, could be limited in their access to quality education and healthcare. Social enterprises reduce the gap in access to social services such as education, employment training, and healthcare. Unlike charitable organisations, social enterprises aim to be less dependent on grants and donations. As such, organisations like Platform develop sustainable business models by engaging in multiple economic activities. Enhanced awareness helps the organisation to find new opportunities in different cities.
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- Quote paper
- Mourine Atsien (Author), 2022, Social Enterprise and Third Sector Organisations, Munich, GRIN Verlag, https://www.grin.com/document/1326039
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