3 Reasons to Love Social Enterprise

3 Reasons to Love Social Enterprise

April 13, 2020 • by Robert Jones


3 Reasons to Love Social Enterprise

3 Reasons to Love Social Enterprise 640 360 Robert Jones

There are lots of ways to make a positive change in the world, for both individuals and businesses. In trying to spend for good, we find it helpful to think about three main categories of impact.

At Cause Consumer, we’re all about connecting “spend-gooders” with companies that are trying to make the world a better place. The premise is simple: You’re spending money anyway, so you might as well spend with a business that support the causes you believe in.

Simple in theory, but maybe a little murky in practice. For instance, what does it mean for a company to “support” a cause? Every single Fortune 500 company is doing Corporate Social Responsibility (CSR) these days – making donations, partnering with nonprofits, offering PTO for employee volunteer efforts, and so forth.

That’s a huge and encouraging trend in the past 10+ years, but it’s not really what our storytelling or our community is all about.

We’re focused primarily on social enterprises – companies that started with a social mission and wrote their business plan around it. In terms of motive and strategy, it’s closer to the nonprofit model than the Fortune 500 model.

Think about a nonprofit like Goodwill or Salvation Army – they pursue grants to enable their mission and grow their impact. A social enterprise pursues sales in much the same way. Dollars aren’t a measure of success, but rather a driver of impact.

In other words, social enterprises are cause-first businesses. They sell things to advance their cause, rather than adopting a cause as a way to sell more of their things.

As with any other kind of business, there’s no “best” model for advancing a cause. Instead, we see social enterprises pursuing three main strategies:

Jobs

First, there are social enterprises that offer jobs for marginalized people and communities – think trafficked women (Branded Collective), people with developmental disabilities (Howdy Homemade), or youth coming out of the juvenile justice system (Ruthie’s Food Trucks).

Without the social enterprise model, these people would be largely unemployable, reduced to a life a dependency because of circumstances, zip code, genes, or maybe a single bad choice.

More than just a paycheck, a job can mean dignity, safety, and autonomy for people who have never experienced those things before. To put it another way, jobs are about hope, and that’s the heading we use for much of our storytelling about these social enterprises.

As a Cause Consumer, when you buy from these companies, you’re helping to provide productive employment – and the hope that comes with it – to marginalized people both at home and abroad.

We think that’s a pretty rewarding way to spend for good.

Giving

Tom’s Shoes popularized the idea of charitable giving powered by consumer spending – buy a pair of shoes for yourself and know that somewhere in the world a needy individual is also getting a pair.

Today this one-for-one strategy is among the most popular models for social enterprise, because it’s so easy for consumers to grasp the direct impact of their spending.

We’ve already shared stories about snack bars that provide child nutrition packets (This Saves Lives) or soap and toilet paper that provide critical sanitation products (Reel, Soapbox).

The beauty of this model is that it can make us aware of the privilege associated with our own consumption. Reaching for that bar of soap is pure reflex until you realize that in parts of the developing world only 1 percent of households have soap for hand washing. So if my purchase can provide a bar of soap in one of those homes, why would I make any other choice?

One-for-one models aren’t the only way that social enterprises structure their giving. Service industries and luxury goods aren’t well suited to the product donation model, so many companies choose instead to donate a set portion of revenues or profits to a nonprofit partner.

This is the one area where traditional companies with good cause marketing can sometimes get closest to approximating the social enterprise model. But cause marketing is generally temporary (like a promotion for Breast Cancer Awareness Month) and the donations are almost always capped ($1 per sale with a maximum donation of $100,000, for instance).

With a true social enterprise, the mission comes first, so there’s no cap and no “expiration date” on the giving. Every single time you buy from the enterprise, you know that you’re helping to advance a cause that you care about.

There’s a lot more to say on the subject of cause marketing, so stay tuned for a deeper dive.

Disruption

This category of impact is the hardest to describe but potentially the most far-reaching.

Some social enterprises are intended to shake up the way things have always been done in a hidebound industry – using the power of consumer demand to create better working conditions, fairer wages, or more sustainable processes, for instance.

Newly is a good example. By selling home décor items that are 100 percent recycled, they’re challenging an industry that relies on virgin materials and promotes a sense of envy to encourage quick replacement (and disposal) cycles.

It’s not easy to start that kind of social enterprise. The founders of Newly spent two full years researching supply chains and sustainability standards – a steep but unavoidable investment for disrupting a wasteful industry.

Or take the example of Five North Chocolate, a social enterprise that doesn’t have a one-for-one giving model or an employment strategy for at-risk youth. Instead, founder Ben Conard thinks holistically about the company as a way to promote healthy choices, encourage fair trade, honor indigenous farmers, and even start conversations about diversity.

If that seems ambitious for a chocolate bar, maybe the real ambition goes even further. In an offline conversation about her story, writer Jackie Brennan had this to say about Five North Chocolate:

“I do think I’m projecting a bit of my own hopes for the world here, but it could be pretty revolutionary to, in a way, reclaim chocolate. Sure, there are huge corporations built on a largely sugar-based approximation of ‘chocolate,’ but in a purer form, chocolate is truly good from a global economic and health perspective. I know that’s not exactly Ben’s rallying cry, but he is working on the restorative side of a broken system, and I think that’s a worthy a cause.”

Jackie is way smarter than I am, and I know I had to read that several times, but I think the bottom line is this: Some social enterprises are working toward system change using the power of consumer demand where they perceive other institutions as failing to act.

Maybe you agree with the need for a particular system change and maybe you don’t, but it’s pretty eye-opening to think about the power of the market in this way. Just one more reason to #spendforgood.

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Social enterprise is an evolving field, and definitions will be largely written by Cause Consumers like you. Tell us what you think of our categories, what drives your spending decisions, and what we might be missing. Comments are open!

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Cause: Community • Format: In Depth
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