We all know that social impact is something that is becoming more important to individuals and businesses. This creates an opportunity for entrepreneurs to find a way to integrate their desire to start and run an organization with their desire to create social change. One of the best ways to do this is by utilizing the social enterprise model. This unique business model is a game changer for ambitious entrepreneurs who want to do business using their hearts as well as their heads.
In this article, we’ll look at this business model and 10 examples of organizations successfully leading the way.
Understanding the Social Enterprise Model
First, let’s take a look at what the social enterprise model is. Unlike traditional nonprofits, this business model does not rely on government grants, but rather commercial revenue. And unlike traditional commercial enterprises, these businesses’ main priority is to create social change instead of maximizing profits.
To receive verification from the Social Enterprise World Forum, a business must meet 5 criteria.
- Their primary purpose must be to solve a social or environmental issue.
- That purpose must take precedence when making business decisions
- They should have a sustainable revenue model
- Any surplus revenue should be reinvested into driving forward their purpose
- Their legal and financial structures should support their long-term goals
We have a whole article that breaks down the social enterprise model as well as its advantages and disadvantages here.
Why Start a Social Enterprise?
Some may wonder why this journey would be worth it or how they could keep people motivated on an idea that may only seem like a pipe dream. According to writer Adam Hayes, “Social entrepreneurship is a way to connect you to your life’s purpose, help others find theirs, and make a difference in the world, all while eking out a living.”
For many, tackling social entrepreneurship is about giving back in positive ways. While it may not be the most lucrative avenue for starting your own business, social entrepreneurship is more about the feeling you get when making the world a better place versus simply making more money.
Examples of Social Enterprise Businesses
1. TOMS Shoes
Blake Mycoskie came up with the idea for TOMS Shoes after taking a trip to Argentina in 2006. There, he came across the traditional Argentine alpargata—a lightweight, casual shoe that locals wore. He also noticed the many children walking barefoot in rural and urban areas.
Mycoskie knew that the lack of shoes in these areas could lead to cuts, infections, and soil-transmitted diseases. Also, in many schools, shoes are a mandatory part of the uniform. Without them, children are barred from receiving an education. This further perpetuates the cycle of poverty.
Mycoskie saw an opportunity to create a sustainable solution that wasn’t about handouts but about empowering communities. For every pair of TOMS shoes purchased, another pair would be donated to a child in need. Not only did Mycoskie create a revolutionary business but he also created a whole new business model.
This new model was labeled the one-for-one business model. Since then, many other social enterprises have adopted this model to initiate change in other areas of social need. TOMS has distributed over a million pairs of shoes to children worldwide. The company has reached vulnerable communities in places like Haiti, India, and various African nations.
2. Warby Parker
Warby Parker was started by four friends – Neil Blumenthal, Andrew Hunt, David Gilboa, and Jeffrey Raider. The group met at the Wharton School of the University of Pennsylvania. They noticed a significant gap in the eyewear market: glasses were either stylish but exorbitantly priced or affordable but not fashionable. This realization led to the birth of Warby Parker, named after two characters created by author Jack Kerouac.
The founders introduced a direct-to-consumer model that bypassed traditional channels, significantly reducing the cost of glasses. Warby Parker’s unique home try-on program, where customers could order multiple frames to try at home for free, was a game-changer in the industry.
Warby Parker’s social impact is rooted in its “Buy a Pair, Give a Pair” program. For every pair of glasses sold, the company donates a pair to someone in need. They achieve this by partnering with non-profits like VisionSpring to ensure that for each pair of glasses sold, a pair is distributed to someone in need. This model not only addresses the issue of affordability but also tackles the larger problem of vision impairment globally.
Warby Parker has distributed millions of pairs of glasses to people in need since it first launched and continues to do so.
3. Seventh Generation
Seventh Generation was founded in 1988 in Burlington, Vermont. The company was ahead of its time in recognizing the need for sustainable, non-toxic household products. Named after the Iroquois belief that one should think seven generations ahead when making decisions, the company has steadfastly adhered to this principle in its business practices.
From its inception, Seventh Generation has focused on creating products that are not only safe for people but also for the planet. Their range includes laundry detergents, household cleaners, baby products, and personal care items. One focus was to formulate to have a minimal environmental impact. Which they have succeeded for the most part. The company has been a trailblazer in using plant-based ingredients and ensuring that its packaging is sustainable and recyclable.
The impact of Seventh Generation is also evident in their corporate governance. As a Certified B Corporation, they are legally required to consider the impact of their decisions on their workers, customers, suppliers, community, and the environment. This holistic approach to business has made Seventh Generation a pioneer in organizations using the social enterprise model.
David Heath and Randy Goldberg met while working for a media company in 2007. Though they didn’t have a passion for socks, they became interested in them once they learned that socks were the number 1 most requested clothing item at homeless shelters. The duo worked on a business model that would sell premium socks as well as donate socks to those in need.
To gain traction, Heath and Goldberg decided to pitch their growing business on the hit reality show Shark Tank. The founders entered the shark tank asking for $200,000 for 5% of their company. They ended up giving up 17.5% but they left with the investor they wanted, Daymond John. The investor’s experience with his own clothing company FUBU made a big difference once he joined the founders. The company has generated $18.5 million in annual sales and is growing at a rate of 300% per year.
The company has also donated other clothing items totally over 100 million articles.
5. LSTN Sound Co.
This social enterprise was founded by Bridget Hilton and Joe Huff in Los Angeles. LSTN was born from a desire to create high-quality audio products while making a significant social impact.
The inspiration for LSTN came when Hilton saw a video of a woman hearing for the first time. This powerful moment led to the realization that they could use audio products as a means to facilitate hearing restoration. LSTN produces a range of audio products, including headphones, earbuds, and speakers, which are distinct for their use of real wood, giving each piece a unique aesthetic.
What sets LSTN apart is its philanthropic model. For every product sold, LSTN helps provide hearing aids to a person in need. This is done through their partnership with the Starkey Hearing Foundation. This commitment to social responsibility is at the heart of their business model. The Starkey Hearing Foundation works globally, and LSTN’s contributions have helped thousands of individuals in over 100 countries.
LSTN Sound Co.’s approach demonstrates a successful blend of entrepreneurship and social good. Their work highlights the potential of businesses to address global challenges through innovative and sustainable models.
6. Love Your Melon
Love Your Melon was founded in 2012. The appeal company has grown into a notable example of a successful social enterprise. It was started by two friends, Zachary Quinn and Brian Keller, who were then students at the University of St. Thomas in Minnesota. The idea was conceived as part of an entrepreneurship class project, with a mission to support the fight against pediatric cancer.
The company’s primary product is high-quality, comfortable beanies. The founders initially set a goal to give a hat to every child battling cancer in America. They achieved this initial goal in 2014 and have since expanded their product line to include other types of apparel and accessories.
Love Your Melon’s business model is centered on a commitment to donate 50% of its net profits to support pediatric cancer research. The funds also help to provide immediate support for children and their families battling the disease. This commitment places them at the forefront of businesses that are not just profit-driven but are equally dedicated to making a tangible social impact.
The impact of Love Your Melon is significant. By the end of 2023, the company had donated millions of dollars to pediatric cancer research and family support.
7. FEED Projects
FEED Projects is a social enterprise with a mission to fight hunger and malnutrition around the world. Lauren Bush Lauren, a model and activist, founded the idea in 2007. The idea for FEED came about when Lauren was a student and Honorary Spokesperson for the UN World Food Programme. While traveling and witnessing the effects of hunger firsthand, she was inspired to create a business that could address this global issue.
The company started with the idea of creating products that would help fight against hunger. FEED Projects is best known for its iconic burlap bags, which resemble the bags of food distributed by the World Food Programme. Over time, the product line expanded to include a variety of bags, accessories, and apparel.
Each FEED product sold has a number stamped on it. That number represents the amount of school meals provided to children around the world through the purchase. This transparent model allows consumers to see the direct impact of their purchase. The meals are funded through FEED’s partnerships with organizations like the United Nations World Food Programme and No Kid Hungry.
The company had provided millions of meals to children globally. As you can imagine this has helped make a significant dent in the fight against childhood hunger.
Ecosia is a unique and impactful social enterprise. The company runs a search engine that uses its profits to plant trees around the world. Founded in 2009 by Christian Kroll, Ecosia was born out of a desire to address environmental issues like deforestation and climate change. Kroll was inspired by the potential of the Internet to fund sustainable development projects. He then decided to create a search engine that could generate income for tree planting.
Ecosia works like any other search engine. However, the main difference is that it uses the ad revenue generated from users’ searches to fund tree-planting projects. The company transparently publishes its financial reports. This way, people can see just how much revenue is generated and how much is spent on planting trees.
By planting trees, they contribute to reforestation. This is vital for biodiversity which combats climate change and supports local communities. Trees help to restore degraded landscapes, improve soil quality, and provide sustainable livelihoods to local communities through agroforestry practices.
As of 2023, Ecosia has planted millions of trees across various continents, in countries including Brazil, Indonesia, and Madagascar. Their projects not only focus on tree planting but also on preserving and restoring natural ecosystems.
Baronfig is a distinguished example of a purpose-driven company in the design and stationery industry. Founded in 2013 by Joey Cofone and Adam Kornfield, Baronfig started as a Kickstarter campaign to create the perfect notebook. They called this product the Confidant. The campaign was a huge success, reflecting a demand for thoughtfully designed stationery that caters to the needs of writers, artists, and thinkers.
Baronfig has since expanded its product line to include a variety of notebooks, pens, and other stationery tools. Each product is meticulously designed with an emphasis on functionality, quality, and sustainability.
Baronfig stands out for its community-centric approach. The company regularly engages with its user community for feedback and ideas, ensuring that its products genuinely meet the needs of creative professionals. This collaborative approach has fostered a loyal customer base and a strong sense of brand community.
Additionally, Baronfig maintains a commitment to supporting education and the arts. For every Confidant notebook sold, they plant a tree, addressing the environmental impact of paper production. Also, they collaborate with artists and designers for limited edition releases, showcasing and supporting creative talents.
Baronfig has established itself as a brand known for high-quality and thoughtfully designed products. More importantly, it is best known as a company that values sustainability, community engagement, and support for the arts. Their business model balances commercial success with social and environmental responsibility.
Issues or Problems With Social Enterprise Businesses
Like any entrepreneurial goal, social entrepreneurship can face its share of setbacks or issues as well. For instance, some may consider the idea more of an ideological one versus a practical one, especially when it comes to securing the funds for your dream. While there are many successful social entrepreneurs out there, many of them pursue their social entrepreneurial goals once they make a name for themselves in the business market. This helped them put funds towards their mission, without having so much pressure on succeeding right away.
Another issue is getting the support you need from the local community and those closest to you. It can be hard enough to get excitement behind your idea, let alone one that you want to change the world with. You have to be sure and passionate that you want to pursue this dream, especially one that may not be the most financially sound at first. However, if there is a need, a goal, and a plan to make it happen, then anything is possible.
Like any entrepreneurial aspiration, if you have the desire to make it happen and see it through, others will see that and want to jump on board with you. As you get ready to take on your entrepreneurial dream or are living it right now, think about the powerful ways you can influence the world for the better. While it may seem small at first, with passion and determination, anything can become as great or powerful as you make it to be.
Co-writer: Summer Anderson