Why do social enterprises exist? (For this purpose, think of a social enterprise as an entity, or a division within an entity, with the goals of making a profit, or using money making techniques, and pursuing a mission consisting of providing a social or public benefit.) A few years back, another lawyer and I surveyed CEOs of for-profit social enterprises in New York State regarding this very question. The consistent bedrock answer was the mission. The mission was its very reason for existence, its DNA. Here are five more reasons to create a social enterprise:
1. Creating Social Benefits. Social benefits can be provided, both within the company and in the ways it interacts with the community. For example, a company can seek to provide significant employment opportunities and training for individuals with disabilities, a criminal record, or a history of substance abuse. Social benefits can also extend to how a company wants to interact with its vendors, customers, employees, community and environment. It may seek a “triple bottom line” that measures not only what it generates in profits, but also how it deals with people and the planet.
2. Demonstrating Values and Trust. A 2014 PricewaterhouseCoopers global survey of CEOs found that a key challenge organizations face is building and maintaining trust. One answer to this problem is establishing a well-defined value system, which can be instrumental in developing trust both externally and internally. In addition, a value system can help employees deal with customers and vendors successfully because it gives them guideposts for decision making. The fact that a social enterprise is not just about profits, but also about the mission, may help it to develop and maintain trust with its target customers and partners.
3. Securing and Retaining Talent. Many employers have noted, or even complained about, the challenges of attracting and retaining talent. Compensation and benefits are obvious critical elements. But, employees themselves also consistently talk about the importance of working for an organization they can believe in with both values they can support and a culture which is encouraging and empowering. A social enterprise has a distinct advantage: it has a mission, and that mission can rally prospective and current employees. In working for a social enterprise, employees feel that they are making a difference as well as making a paycheck. Feeling a part of the mission can help engender loyalty.
4. Driving Marketing and Sales. Numerous marketing opportunities can be created for a social enterprise, including affinity marketing and increased or more favorable media coverage – opportunities that might not have arisen without a corporate social mission. Additionally, a company’s products or services frequently are perceived as more attractive to customers because of the company’s mission.
5. Attracting Millennials. If such a generalization is even possible, millennials struggle with loyalty – loyalty to an employer or to a brand. As many have noted, including the Wall Street Journal (February 2, 2015) and Business.com (February 22, 2017), having a mission is an important way to attract millennials to a company as an employer or as a provider of products or services.
As Simon Sinek put it so well, “People don’t buy what you do, they buy why you do it.” That comment could easily be extended to a company as a whole with the question, why does our company exist? For some, a social enterprise, which is pursuing a mission in addition to profits, is the answer.