In the simplest terms, social enterprises are businesses that reinvest their profit to serve social or environmental needs. It can take many forms, from a worker-owned cooperative to an energy company generating green power and distributing it at a cost to low-income residents and more. The key is that every dollar earned by the business is reinvested to benefit the community.Why are social enterprises so important? Social enterprises aren’t about charity. They’re a way to build community wealth and create jobs in ways that address the root causes of poverty: lack of access, poor education, and the effects of discrimination, instead of just treating its symptoms with temporary fixes like food stamps or welfare.By putting resources and power in the hands of people who have historically been shut out from opportunities, social enterprises can make communities stronger, healthier places to live, and they can provide economic security for individual families – especially important in a time when unemployment remains high, and many jobs pay low wages or otherwise fail to provide living-wage work. The history of social enterprises Social enterprise has a long and rich history in American civil society. It can trace its roots to 19th-century mutual aid societies created by immigrants to help each other out while they struggled to build new lives in a new country.More recently, it includes worker cooperatives like the South Bronx-based Cooperative Home Care Associates, which now employs more than 2,000 home health aides who share in the company’s profits.Other examples include food coops and credit unions founded by community members to provide services they couldn’t find elsewhere.In recent years, social enterprise has grown into an international movement. In the U.K., social enterprises are now responsible for more than £7 billion in annual revenue, and they employ roughly 280,000 people.France’s economy is estimated to be worth €50 billion ($65 billion), with nearly 400,000 employees working in these businesses.Italy has some 90 million euros invested annually in social ventures. In the United States, over 30,000 social enterprises are employing 1.5 million people and generating more than $35 billion in revenue. However, these figures understate their contribution to our economy by a wide margin.The businesses that don’t report “profit” as income aren’t counted in these numbers – and many social enterprises, of course, do just that. In addition, there are thousands of small businesses across the country that provide an important service to their communities but aren’t designed as social enterprises – like a corner grocery store or a landscaping business. Why are social enterprises growing so much? In one word – necessity. Our economy and our communities are changing dramatically. Many established institutions aren’t keeping up with the shift to an information-based economy that’s rapidly leaving behind old ways of doing business. That includes government, where inefficiencies have become ingrained and where our elected officials are often more responsive to the needs of big business and its campaign contributors than to their constituents.At the same time, millions of Americans remain out of work – or have been forced into lower-paying jobs with fewer benefits. That’s why so many people started their businesses during this crisis: to be their boss and because they couldn’t find work in a company that provided the kind of life they wanted.Social enterprise is also growing because it’s been shown time and again to be an effective way to make communities stronger – and now there are more examples than ever before.Today, we have peer-to-peer networks that provide small loans to farmers in Mexico and microloans to women entrepreneurs in Africa. We have companies like Evergreen Cooperatives based in Cleveland, Ohio that are creating living-wage jobs while power is generated from waste material; a collaborative effort called Project Laundry List that’s putting unemployed workers back to work in Atlanta, Georgia; and LIFT in Boston that’s helping low-income residents buy food at better prices. What makes a business a social enterprise? There are many ways to tell if an enterprise is social. One way is to look at the mission of a company. If its goal is not primarily profit but rather social or environmental change, it could be considered a social enterprise.Another sign that an enterprise might be a social enterprise is creating jobs for people in need – perhaps from low-income communities or other disadvantaged backgrounds.A third way to tell if an enterprise is a social enterprise is the type of ownership structure or governance. For example, many cooperatives are considered social enterprises because they have different ownership structures that give workers and consumers more control over how their business runs. The benefits of social enterprises Social enterprise is not a silver bullet for all of our economic problems. But it can be an important part of the solution – both as a source of jobs and wealth-building opportunities, and because it’s built on principles that are at the heart of any strong community:CooperationAccountability to one anotherBuilding shared wealthReinvesting in the needs of local familiesThe social enterprise also offers us a new way to think about how we organize our economy: instead of starting with investment capital – and then trying to figure out what kind of business can best use it for profit – why not first ask what kind of businesses make sense for the economy we want to live in?One answer might be social enterprise: businesses that use investment capital to generate profits but then reinvest those profits as local resources – creating jobs and wealth for low-income families. The rise of social enterprises responds to some hard truths about our current economic system: It’s not working for everyone, and it can’t continue to grow – or even sustain itself – without some serious changes. Find out more about the social enterprise: What are the challenges for social enterprise? Social enterprises face many of the same challenges as any small business. It’s hard work to start a company, and it can be even harder to grow one into an enterprise that makes a large impact in its community, especially when you’re facing problems like poverty or discrimination, which can make it difficult to find customers willing or able to buy your product.Social enterprises also face additional challenges. For one thing, they’re often excluded from government programs designed for small businesses – even though their goals are very different than those of a traditional business. That’s why we need new public policies and new ways of thinking about how we invest in our communities to help spur social enterprise scale.In addition, there are challenges unique to the field of social entrepreneurship: For one thing, it’s not always clear what works best for a particular community or industry. That can make it hard for social enterprises to scale up their operations – and it can cause them to waste precious resources trying things that don’t work.Finally, there’s a danger of putting too much emphasis on the financial bottom line: While any business needs to pay attention to its balance sheet, risks are inherent in every new venture. What’s important for social enterprises is their impact on their communities and how well they reflect the values of those communities – not just whether or not they make a profit.What are the risks of social enterprise? Social enterprises face all the same challenges as any business: they need revenue streams, customers, marketing plans, and talented staff. But because they’re tasked with improving communities instead of just making profits, they’re far more vulnerable to the vicissitudes of the economy.For example, one of the fastest-growing areas for social enterprise is in green energy: businesses that produce and sell power from renewable sources like solar panels or wind turbines at a price lower than conventional utilities. It can save consumers money – but only if they have enough disposable income to spend on the extra cost of green energy.Social enterprises in the U.S. vs. the U.K. In the U.K., social enterprises have been around for a long time. They are an important part of the welfare state. In the U.S., there is still enormous potential to create more businesses that reinvest their profits into improving communities and living standards for people at all income levels. That’s because we don’t have a strong tradition of collective action or cooperative business models.There is also a cultural difference between the U.S. and U.K.: In the U.S., we tend to think about economic benefit as being limited to people who own businesses (and their shareholders). But what if there were more opportunities for everyone else – from the workers to the local communities – to benefit from a business’ success?It’s one of the key concepts behind social enterprise. When everyone involved in creating and distributing goods or services gets something out of it, their incentives change for the better: They’re more likely to work together towards common goals. They tend not to focus on short-term profit at the expense of long-term sustainability.The examples of social enterprises The first company that comes through my head is Green cooperatives – the largest green economic development initiative in the United States and one of the most significant in the world. Green cooperatives are only one part of the Evergreen Cooperative Initiative, but they are the most visible.The Evergreen Cooperatives include a laundry and a solar manufacturing plant, and a greenhouse/farm/community center in the heart of Cleveland’s low-income community. The Evergreen Cooperatives are owned by the workers, the consumers, and the community, and they are designed to create a sustainable economy in the city of Cleveland.Another example of a social enterprise is The Benevolent, which has created green jobs in Detroit. Benevolent is a social enterprise that creates jobs, hires from the community, and gives back. The Benevolent’s headquarters are in Detroit. It has two different business units – one called The B-Hive, which provides green cleaning services to large companies in downtown Detroit; another unit called Green To Thrive, which operates a greenhouse and provides food to the community.A third example of a social enterprise would be The Working World – an organization that organizes cooperatives in Latin America. It is a solidarity finance organization that lends money to workers to start their businesses. The differences between social enterprise and philanthropy Philanthropy is done for good reasons. It’s not about creating jobs. It’s about doing good and helping people in need. Philanthropists often donate money to organizations that help poor or disenfranchised organizations. Social enterprise is different. It’s about creating sustainable businesses owned by the people who work in them and benefit the community they serve. It is much more like a business than philanthropy – it has to be profitable and sustainable to survive.