Among the most influential economists of the post-war era, Milton Friedman is famed for his aggressive stance on capitalism. Business is only responsible to shareholders, he said. Increase profit at all costs. Social issues are no concern of yours.
Little more than a decade after Friedman’s passing, social enterprise, a hybrid sector, is merging for-profit methods—commerce and scalability — with non-profit goals — like community betterment or environmental protection.
Social enterprises are “businesses that are changing the world for the better.” Whether technically a non-profit or for-profit in their legal status, it would be wrong to refer to these entities as traditional companies, as their core purpose is social impact. These new hybrid organizations apply a business solution to solve a social problem, such as hiring individuals who recently transitioned out of the justice system, with a mission to reduce recidivism rates. Or, organizations might reinvest or donate the vast majority of profits into fixing a social problem.
The shift from Friedman’s philosophy has occurred around the world, with the US and the UK at the forefront of innovative practices. Canada, too, has also recently invested heavily in the sector.
Social enterprise, once considered a niche market offering, is becoming increasingly globalized as investors build social impact portfolios, business schools add social enterprise programs, and consumers devote more of their spending to good corporate citizens.
Historically, America has been a frontrunner in the space. Since 2008, the year social enterprise gained legal designation, 45 bills have been passed with legislation introduced in 35 states and the District of Columbia, codifying entities in the sector to make policy efforts easier. Additionally, federal legislative proposals are continuing to place social enterprise at the forefront of U.S. policy. Leading the way in America are companies like Grameen America, which was founded by Nobel Prize winner Muhammed Yunus. Grameen America has invested over $1 billion in women entrepreneurs in 13 cities around the country.
The United Kingdom (UK) has also been a frontrunner in growing social enterprises. The UK defined social enterprise decades ago, with designated legal models that allow for more comprehensive governance. In the UK, companies like Access Employment Ltd. (AEL) are pushing the envelope forward in terms of social entrepreneurship. AEL runs multiple socially conscious businesses and pledges to donate 100 percent of its profits to charity.
Our closest neighbor, trade partner and ally, Canada, recently also bet heavy on social enterprises. Although it has been slower to enact laws supporting such enterprises, tides are changing as in fall 2018 Canadian Finance Minister Bill Morneau announced a $755-million (CDN) social finance fund, a catalyst for treating philanthropy like an investment, driving returns by solving social issues.