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Defining Social Enterprise

Why Social Entrepreneurship in South Africa

"Social entrepreneurship is hard to define, with different interpretations in different countries. In South Africa it is emerging as a blend of for and not-for-profit approaches, which balances the value and trust of social organisations with the efficiencies and profit motive of business. Within this is a conflict that challenges our cultural interpretation of charity – to make money out of social services is interpreted as inherently wrong and counter-intuitive to the mission-focus of civil society. 

It is this dissonance that makes social entrepreneurship so powerful in South Africa, as it forces us to look at what we assume is right and challenge the ‘norm’. Multiple reports talk of a crisis in civil society, and question the sustainability of the current system of funding which is largely dependent on grants. Compounding this is a fractured relationship with a government that subsidises rather than funds non-profits to deliver essential services, in fields such as child protection, education and health."

Read more in Gordon Institute of Business Science

Social entrepreneurs on building South Africa’s economy

The stories of 14 social entrepreneurs are told in the book The Disruptors, written by Gus Silber and Kerryn Krige. Silber is an award-winning journalist, speechwriter and author. Krige heads up the Network for Social Entrepreneurs at the Gordon Institute for Business Science (GIBS) in Johannesburg, which focuses on achieving social and economic change through social enterprise. The authors share their journey in the writing of this book, and speak about why this book is important.

Key Characteristics of a Social Enterprise

Social Enterprise is often described as a ‘movement’ or a way of doing. Social Enterprises are characterised by the following:

  • They have a core social or environmental aim
  • They trade as a means to a social or enviromental end
  • The mainly reinvest their profits into their social or enviromental aim
  • Ethical values guide their activities
  • They can take a number of different legal forms.

 

Read more: Key Characteristics of a Social Enterprise

The Social Enterprise Continuum

Organisations exist on a continuum, ranging from grant-dependent traditional NPOs operating with the primary intention of social value creation, to traditional businesses generating income through trading activities, and operating for the purpose of economic value creation. Towards the centre of the continuum are social enterprises. 

socialenterprisecontinuum

 

There is a wide spectrum of third sector organizations and, as organisations evolve, they may move along the continuum and so be categorised differently.

At the right hand end of the continuum, impact enterprise/social business is a loose term, here used todescribe for-profit firms whose activity centres around creating positive social or environmental impact but in which ultimate ownership of profits and assets rests with individuals or shareholders. 

A socially responsible business is typically one who considers the social and environmentalimpact of its activities and attempts to mitigate against some of these negative effects. Theterm Corporate Social Responsibility (CSR) is often used to describe private sector activities inthis area. Some socially responsible businesses report on their “triple bottom line".


Source: © Social Enterprise Academy 2017. Used with permission.

Social Enterprises in South Africa: Discovering a vibrant sector

This research is the largest and most comprehensive study of social enterprises in the country to date. The result is a rich set of data that will be interesting and useful to many stakeholders, locally gibsreportsmalland globally. 

Some key findings include:

  • Social enterprises in South Africa are distinctively different to traditional non-profit and forprofit enterprises, in keeping with existing literature.

  • While South African social enterprises have much in common with their counterparts elsewhere, some aspect of their structure and functioning, specifically sector of operation and legal status, are context-specific.

  • In South Africa, the opportunity to achieve a social impact is abundant, since social enterprises are ideally placed in local communities to reach underserved beneficiaries and trade with customers that other institutions might not be willing or able to engage with. Social enterprises can also create jobs in their communities. However, resources are scarce – social enterprises struggle to access appropriate funding and physical resources, even as the data demonstrates that both public and private sectors play a role in supporting social enterprise. In the face of this resource scarcity, social enterprises are innovative in the goods and services they develop and deliver, and the way they operate.

Read more in Social Enterprises in South Africa Discovering a vibrant sector, May 2018

The survey was led by the GIBS Entrepreneurship Development Academy at the University of Pretoria, in academic partnership with the Bertha Centre for Social Innovation and Entrepreneurship at the University of Cape Town Graduate School of Business, with funding from the Government of Flanders and the SAB Foundation.

 

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