Social Enterprise
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What is a "social enterprise"?
A social enterprise is any nonprofit business, venture, activity or strategy conducted for the purpose of generating earned income in support of a nonprofit's charitable mission.
What is a "social investor"?
A social investor is an individual donor, foundation or corporate representative or philanthropic advisor who considers gifts of time, property or money not as mere charity, but an investment in sustainable social change.
What kinds of earned income strategies are currently being used by social entrepreneurs?
Members of the Social Enterprise Alliance employ all of the strategies listed below. While not all-inclusive, this list offers a glimpse of the creative and mission-affirming methods being utilized.
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- Social purpose business: a discrete business venture undertaken by a nonprofit organization for the dual purpose of creating jobs or training opportunities and contributing net income back to the nonprofit in support of its charitable mission, e.g. Greyston Bakery.
- Consulting: selling a nonprofit staff's special knowledge or expertise to others for a fee.
- Cause-related marketing: an agreement between a nonprofit and a for-profit business that allows the business to use the nonprofit's identity or image to increase sales with a portion of sale proceeds donated back to the nonprofit, e.g. Share Our Strength.
- Rental: allowing temporary use of a nonprofit's equipment, vehicles, meeting space, or other tangible asset for a fee.
- Licensing: a legal agreement allowing another entity to use a nonprofit's product, image or intellectual property for its own purposes in return for a fee.
- Government contracting: a contractual agreement with a governmental agency to provide a product or service in return for a negotiated payment.
- Set-aside contracts: providing goods or services to government under provisions of federal, state, or city preferential purchasing laws, e.g. 8-A, JWOD, etc.
- Unrelated business: a commercial venture with no definitive relationship to a charitable mission undertaken by a nonprofit for the sole purpose of generating profits (unrelated business income taxes generally apply), e.g. Prairie Home Companion product line.
- Corporate partnership: a relationship between a corporation and a nonprofit consisting of the exchange of either human or financial assets to achieve mutual goals.
- Acquisition: purchase of an existing business enterprise.
- Joint venture: a relationship between entities involving the mutual investment of resources to create a new product or service.
- Franchises: acquisition of the right to produce or sell products or services under the name and brand of a third party, e.g. ServiceMaster.
- Cooperative: commonly-owned corporations where workers control a portion of the business and maintain "shareholder rights" in addition to wages. *
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| * from Social Enterprise Alliance FAQs |
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