The first thing you have to know that that there is no one agreed definition of Social Enterprises. It is important for you to understand how your potential partners or investor defines social enterprise.

For Capital Ideas, we use the definition promoted by our friends at Social Traders, Australia’s leading social enterprise intermediary. They define social enterprise on three criteria.

Social Enterprises are businesses that:

  1. Are driven by a public or community cause, be it social, environmental, cultural or economic
  2. Derive most of their income from trade from customers on an open and competitive market, not donations, sponsorships or grants
  3. Use the majority (at least 50%) of their profits to work towards their social mission

We also believe that social enterprises should be investable businesses.  They have the capacity and capability to scale quickly using debt or equity.  They can be either not-for-profit or for profit and can be in any industry as long as they are trading for the express purpose of making measurable, definable impact.

Even when they are for-profit, social enterprises are distinguished by their efforts to reinvest the majority of their surpluses back into the pursuit of objectively measurable impact.