What is a social enterprise? The three main impact models of social enterprise in Australia

Across the world there are numerous definitions of social enterprise but, commonly they share two main features. A social enterprise is an organisation that, first and foremost, exists to create social value. A social enterprise sells a product or service in order to finance its achievement of social value. You could consider creating social value as a social enterprise’s destination and trading as the vehicle that’s going to get that social enterprise to its destination. 

In Australia, the commonly accepted definition of social enterprise is that they are organisations that: 

• Are led by a mission consistent with a public or community benefit; 
• Trade to fulfil their mission; 
• Derive a substantial portion of their income from trade; and 
• Reinvest the majority of their profit/surplus in the fulfilment of their mission. 

This definition is used by academics but also by organisations like Social Traders who certify social enterprises for the purpose of supporting them to access procurement opportunities. 

There are, however, a range of organisations that fit this definition. In fact, in Australia, seven different types of social enterprise have been identified. That said, there are three main impact models of social enterprise that we will share with you here – it might even help you hone the model of your own social enterprise. 

Type 1 (Work Integration Social Enterprises) – Exist to provide employment, training and support for people marginalised from the mainstream labour force. 

Example: Home Ground. Home Ground is a social enterprise cafe in Mornington. Its mission is to support young people and create community and belonging in its local neighbourhood and the wider Mornington Peninsula region. It provides vocational training and employment pathways for young people experiencing disadvantage. 

Type 2 – Exist to provide a product or service to a community experiencing a lack of access due to market failures

Example: Rye and District Community Financial Services Limited. Rye and District Community Financial Services Limited was established upon the withdrawal of banking services from the Southern Mornington Peninsula in the late 1990s. The organisation works with Bendigo and Adelaide Bank to manage the Rye, Rosebud and Dromana Community Bank Branches. The organisation gives eighty percent of its profit back to the local community through sponsorships and grants to schools, clubs and not-for-profit community groups. 

Type 3 – Exist to generate funds for social programs or projects 

Example: Revamped Jewellery. Revamped Jewellery is a social enterprise in Mornington that recycles and recreates jewellery to generate an income stream for charities that support local women and families.

At Frankston Social Enterprise Hub, we are working with all different types of social enterprise because we believe all have the potential to help us achieve our mission of creating an enabling environment for social enterprises to thrive and create jobs, particularly for disadvantaged job seekers in the Frankston Mornington Peninsula region. If you or someone you know are involved in social enterprise or want to be involved in social enterprise and need some support, check out some of our free offerings in 2022.