Social enterprises are social mission driven organizations which trade in goods or services for a social purpose. Their aim to accomplish targets that are social and environmental as well as financial is often referred to as having a triple bottom line. In consequence, social values are more sophisticatedly and naturally a part of what such organisations do and how they do it than they are in enterprises that practice corporate social responsibility or in citizen enterprises.

It could be that the profit (or surplus) from the business is used to support related or unrelated social aims (as in a charity shop), or that the business itself accomplishes the social aim through its operation, say through the employment of people from a disadvantaged community including individuals and existing business who have difficulty in securing investment from banks and mainstream lenders.

Social enterprise is a relatively new term for a type of business that has existed for at least a century. The term social enterprise relates to social entrepreneur, the name originally given to 19th century philanthropic businessmen and industrialists, who had genuine concern for the welfare of their employees. Today, its use varies in different regions. In Britain and North America, there is less emphasis on generating a surplus and more on the double bottom line nature of the enterprise. European usage tends to add the criterion of social rather than individual ownership.

Social enterprises are generally held to comprise the more businesslike end of the spectrum of organisations that make up the third sector or social economy. A commonly-cited rule of thumb is that at least half their income is derived from trading rather than from subsidy or donations.

Social enterprise in the British context

The original use of the term social enterprise was first developed by Freer Spreckley in 1978, and later included in a publication called Social Audit – A Management Tool for Co-operative Working published in 1981 by Beechwood College. In the original publication the term social enterprise was developed to describe an organisation that uses Social Audit. Freer went on to describe a social enterprise as:

"An enterprise that is owned by those who work in it and/or reside in a given locality, is governed by registered social as well as commercial aims and objectives and run co-operatively may be termed a social enterprise. Traditionally, ‘capital hires labour' with the overriding emphasis on making a ‘profit' over and above any benefit either to the business itself or the workforce. Contrasted to this is the social enterprise where ‘labour hires capital' with the emphasis on personal, environmental and social benefit." (For a copy of the original pamphlet that first described social enterprise please go to http://www.locallivelihoods.com Publications and download a PDF copy of the Social Audit - A Management Tool for Co-operative Working 1981 copy.)