Social enterprises are organizations that run businesses to implement social and/or environmental changes. It is important to note that the main objective of a social enterprise is social impact rather than profits.
However, these social enterprises still need money to enable them to continue implementing and creating impacts in the society.
It is therefore a precarious position of constantly trying to maintain a balance between these two important factors.
Most people ask if they are for social impacts, why not remain solely that and run as non-profits? The truth is it is not easy either to run as a non-profit, sometimes, depending on the type of project, the organization intends to carry out running as a social enterprise might be the best fit.
This helps them have a level of financial sustainability as well as some measure of scalability while remaining true to creating the changes and impacts in society.
The decision on how to run the organization must be taken with the impacts in mind.
Running a social enterprise can be quite tasking, but being able to secure funding can go a long way of easing the burden.
There are several startup funding available for social enterprises however, these opportunities are limited as most investors want good returns on their investments.
No doubt, there are funds like social impact bonds and impact investing funds that these social enterprises can access easily once their impact is felt and measurable.
There are also grants, which is a non-repaid funds based on impacts as well. Grants are usually the first funding option for most social enterprises.
Another means of funding is crowdfunding, where members of the public contribute towards achieving that goal by donating any amount of money they can.
While this is also a favorable way of funding social enterprises it might take some time before the needed capital is actualized.
In cases where the funding options above are not readily accessible, the social enterprise can go for equity investment, which involves giving equity to investors in exchange for their investment and dire situations.
In all of these, social enterprises must ensure that they stay true to their goal of creating an impact on society.
One of the things that can help them remain on track is having a clearly established mission that is at the core of every decision-making process.
This will help the management always take decisions that will foster that mission and nothing else. Also, the social enterprise can decide to draw up a dual bottom line, this way they are prioritizing both social impacts and profits.
Additionally, tracking and measuring impacts will go a long way in encouraging social enterprises to remain committed to their goal. This would also help them when they want to secure funding.
Finally, collaborations and partnerships with organizations and individuals with goals that align with their projects will go a long way in helping the social enterprise maintain a balance between profits and purpose.
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