For those who want to make a positive impact in our world, you don’t have to wait until you’ve reached Financial Freedom to give to charity and make a difference. There are crosspoints where changing the world in a positive way and fueling your Freedom Generator meet.
One powerful way is creating a social enterprise company. By building your dream business, you make your time on this planet matter and generate a profit. In this article we’ll go over what a social enterprise is and how you can go about deciding what kind of company to create.
What Is A Social Enterprise Company?
We’re getting our definition from the Social Enterprise Alliance. They say a social enterprise company is “an organization that address a basic unmet need or solve a social problem through a market-driven approach.” In other words, a type of business model with a mission to make a lasting social, financial or environmental impact.
Social enterprises may have the intention to benefit an underserved population or giving back to the community. And often the revenue earned from the company’s goods or services goes back to serve others.
One example of a social enterprise is a market in a low-income neighborhood. The area may have a high unemployment rate. And access to fresh produce and healthy eats are probably scarce. Besides selling locally grown food and nutritious food options, the market may give back by employing those who live in the community. A portion of the profits may also go toward improving the neighborhood. In some cases, free nutritional workshops or cooking classes might be offered.
What Are The Different Types Of Social Enterprise?
There are several different types of social enterprise. Some of the more common models include:
Non-profit – Non-profits is an umbrella term describing an organization or small business with a mission to make a difference in society. They also have a requirement to invest any profits back into the company. In exchange, these businesses are tax-exempt. That means they don’t pay tax on money they receive through donations or fundraising efforts.
Microfinance – Microfinance companies offer financial services to entrepreneurs who lack access to traditional banking services. These companies may serve small businesses in developing nations. For instance, Kiva.org is an online platform that lets people loan money to underserved entrepreneurs and students across the world.
Co-operative – A co-operative is a type of social enterprise that is jointly owned and managed. The members of a co-op may make decisions about the business by way of a democratic voting process. So when you hear of a co-op credit union, it’s a non-for-profit, member-owned operation. The core principles of a co-op include providing training and education for members and concern for the community. These are independently run organizations.
Community-based organization – Community-based organizations, or CBOs, are non-profits with a local focus and mission to improve the life of its residents. For example, the local market with social initiatives is an example of a CBO.
Fair trade – You’ve most likely seen the “fair trade” labels on bags of coffee or chocolate bars. Fair trade is a model advocating for producers in developing countries to receive greater compensation. And, just like it sounds, fair trade promotes fairer trading conditions and greater standards for sustainability.
Buy one/donate one model – Companies such as Toms Shoes and Warby Parker have made this type of social enterprise a popular one. They use a buy-one, donate-one business program. So when someone purchases a pair of glasses, a pair is either given or sold inexpensively to those in developing countries who can’t afford them.
Know Where Your Passions Lie
Here’s how you figure out what type of social enterprise company you should build.
Whether you’re building a Legacy Business or a Profit Business, ask yourself what causes you care most deeply about. Maybe it’s about bringing greater awareness of zero-waste living or bringing clean water to developing countries. Or perhaps something more general like educating youth about finances.
If you’re still in brainstorm mode, to get inspired check out existing social enterprises featured on sites such as Idealist.org, Net Impact and Conscious Capitalism. You’ll find no shortage of social enterprise companies.
Building a social enterprise company not only sets you free, but also empowers you to make a difference in the world. By co-creating an environment that supports social enterprises to improve the human experience, you’ll accomplish multiple lifelong goals at once.
The views and opinions expressed are those of the guest author and do not necessarily reflect the views and opinions of MindShift.money.
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Jackie is a personal finance writer and content marketer. She is passionate about telling money stories and spreading financial literacy to a mainstream audience.