The Emergence of the Social Enterprise

The dilemma for non-profit leaders is how to diversify their organization’s sources of revenue while protecting its social mission

The Essentials

Government funding cuts over the past decade have motivated non-profits to add a revenue generating component to their organization’s activities, explains Jean-Baptiste Litrico, Distinguished Faculty Fellow of Strategy and director of the Centre for Social Impact at Smith School of Business. Here, Litrico discusses the emergence of the “social enterprise”. 

Video Highlights

0:13 The need for non-profits to diversify their sources of revenue started about a decade ago, in conjunction with government funding cuts. The idea of adding a revenue generating component to their activities was motivated by the need for financial stability.

0:55 Non-profit leaders may be hesitant to engage with revenue generation out of concern that doing so could result in some “mission drift”. The dilemma for non-profit leaders is how to diversify sources of revenue while protecting the organization’s social mission.

1:41 When the idea of social enterprise was just emerging, non-profits initially thought of revenue generation as something separate and disconnected from their regular activities. As the concept took hold, we saw non-profit leaders becoming more creative and inventive with their ideas to integrate revenue generation with their existing day-to-day activities.

2:49 For example, Aki Energy is a social enterprise based in Manitoba that provides renewable energy solutions to First Nations communities. It employs and trains individuals in those communities as part of those projects. 

3:37 We need to rethink traditional attitudes toward funding the operations of non-profits. We need to think about managerial innovation; how to invent new forms of organizations to address those long-standing problems.