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Social Enterprise and How it Works

How does the third sector size up to the previous two?

The Social Enterprise model has been gaining media attention worldwide as an innovative type of financial exercise. 

This new business structure still has yet to be completely defined and understood, raising questions about how it will affect the existing economy. 

Examining what social enterprise is, where it fits within the traditional sectors, what its main goals are, where it has become popular and how it has grown in the past several decades can offer insight into the phenomenon.

A widely accepted and concise definition of the social business model has yet to be agreed upon by academia or the international economic community. 

Instead, many have tried to understand social enterprise by how it compares to already existing phenomenon. Through this comparison, some academics have labeled it the third sector of the economy, because of the model’s deviance from the standard public and private, for profit sector.

So how does the third sector size up to the previous two? Some of the features may seem familiar: social enterprises generate income by selling goods and services like most private businesses; social enterprise also has a core mission to impact the local community, region or globe in a meaningful way, similar to the traditional non-profit design. 

In some ways, social enterprise could be considered a union of the two ideas, with a mission at the core of its foundation and revenue playing a supporting role.

Some of the common goals of social enterprise include –but are not limited to –fair trade practices, medical access, youth outreach, environmental impact and women’s rights. One example is The Elvis and Kresse Organization, which takes industrial waste materials and turns them into luggage, donating 50 percent of its profits to the Fire Fighters Charity. 

Another example is Divine Chocolate, a fair trade chocolate company co-owned by the cocoa farmers cooperative KuapaKokoo in Ghana and Women Like Us, which connects women with flexible employment.  

Efforts like these have flourished since the mid 1990s in locations such as the United Kingdom, which estimates the total number of social enterprises at 68,000. Other countries in the EU, like Slovania, are struggling to generate efforts as quickly, but are benefiting from the assistance of the European Social Fund. 

In Asia, social enterprise faces different challenges, but has grown enormously with 116,000 entities in Thailand alone.

The successes can in part be accredited to legislative support, such as the Public Services (Social Value) Act. Despite progress and increased understanding, however, the realm of social enterprise must still be explored through legislation, academia and international dialogue.   

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