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.
There is a wide spectrum of third sector organisations and, as organisations evolve, they may move along the continuum and so are categorised differently.
At the right hand end of the continuum, impact enterprise/social business is a loose term. Here it’s used to describe for-profit companies whose activity centres around creating positive social or environmental impact but in which the ultimate ownership of profits and assets rests with individuals or shareholders.
A socially responsible business is typically one who considers the social and environmental impact of its activities and attempts to mitigate against some of these negative effects. The term Corporate Social Responsibility (CSR) is often used to describe private sector activities in this area. Some socially responsible businesses report on their “triple bottom line”.
Read next: The key characteristics of a social enterprise
