Enterprises Primer
Mapping the demand for social enterprise
Canada’s nonprofit and voluntary sector is the second largest in the world when expressed as a share of the economically active population (12%) – nearly as many full-time equivalent workers as all branches of manufacturing in the country (Imagine Canada 2005). The Canada Revenue Agency notes that there are over 161,000 nonprofit and voluntary organisations, of which approximately 83,000 are registered charities. (Pearson 2008:2). It accounts for 6.8 percent of the nation’s gross domestic product (GDP) and, when the value of volunteer work is incorporated, contributes 8.5 percent of the GDP (Imagine Canada 2005).
Excluding hospitals, universities and colleges, the dominant revenue source (48%) of nonprofit and voluntary sector revenue is fees, compared to 39% for government support and 12% from philanthropy (Imagine Canada 2005:15). While this varies sectorally, this figure reflects the importance of alternative revenue streams compared to traditional government and foundation funding. This does not discount the importance of grants, particularly to address the reliance by government on nonprofit and voluntary organizations to deliver the services financed by the Canadian welfare state (Imagine Canada 2005:15). However, as these grants continue to become even more short-term and unstable in nature (Imagine Canada 2005:26), many nonprofits are actively considering alternatives such as social enterprise.
What is social enterprise?
A social enterprise is defined by its purpose: its social and/or environmental outcomes and its mission informs the structure and governance of the enterprise.
A social enterprises take on many diverse forms and purposes; however they share similar characteristics:
- Enterprise orientation - they are directly involved in producing goods or providing services to a market;
- Social and/or Environmental aims - they have explicit social or environmental aims such as job creation, training or provision of local services. Their ethical values may include a commitment to building skills in local communities. Their profits are principally reinvested to achieve their social/environmental objectives;
- Social ownership - many social enterprises are also characterized by their social ownership. They are autonomous organizations whose governance and ownership structures are normally based on participation by stakeholder groups (eg employees, users, clients, local community groups and social investors) or by trustees or directors who control the enterprise on behalf of a wide group of stakeholders. They are accountable to their stakeholders and wider community for their social, environmental and economic impact. Profits can be distributed as profit-sharing to stakeholders or used for the benefit of the community.
Source: "Unlocking the Potential: A guide to finance for social enterprises", Social Enterprise Coalition, 2004 p.8
(Note: Reference our primer with other current discussions from Quebec, Ontario, Alberta.....)
