Charity and social enterprise
Similarities, differences, common traits
If you recently started digging into the topic of social innovation, you might have come across people repeatedly mentioning different types of socially-oriented organizations. Most likely, you have heard them talking about “charities” and “social enterprises“. If you didn’t quite get the difference between the two terms, then this article is right for you!
Charity vs social enterprise: similarities
Before analyzing the main differences between charities and social enterprises, let’s take a moment to discuss what the two have in common. As a matter of fact, both types of organizations exist for the same exact reason: tackling social problems. Because of that, their main goal consists in bringing positive change to the world. What we call a “social impact mission“.
In order to fulfill such philanthropic mission, both charities and social enterprises must operate efficiently and effectively. However, social enterprises use radically different logics, approaches and practices to achieve it.
Charity vs social enterprise: differences
As said, social enterprises are often confused with charities. Here, we try to discuss the main differences between the two concepts.
Another relevant distinction relates to “profits” (what’s left after all expenses are paid). Charities are always not-for-profit entities, meaning that leftover money – if there is any – must be reinvested in the core activities of the organization. Instead, social enterprises are free to choose between not-for-profit and for-profit structures. As you might guess, such decision strictly relates to the business models they choose to adopt.
Can a charity be a social enterprise?
Today, more and more charities are adapting to rapidly changing landscapes. This includes finding new ways to maximize income from different sources. As a consequence, some charities embraced entrepreneurial mindsets and approaches and started to sell products/services in order to achieve financial sustainability.
Now, legislations radically change from country to country. Therefore different restrictions might apply on how charitable organizations can generate income from running business activities. Yet, as Social Enterprise UK claims “(..) if a charity raises most (or a substantial part) of its income by trading, it’s probably a social enterprise already“. So, you got your answer.
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