What is a social business?

A social business is similar to a social enterprise in that both operate with commercial and social goals.

However, while a social enterprise will reinvest its profits into the company or to further its social goals, a social business may also seek to generate a return for its shareholders. It aims therefore to do good by doing well.

Our directory currently has 3206 examples of both social businesses and enterprises.

How does it work?

You can see successful examples of social businesses all around you. Think of JustGiving, the online donation platform which has revolutionised the way we give to charity; or Divine Chocolate which pioneered Fairtrade chocolate. These companies are set up to address a certain social need – be that alleviating poverty, improving communities or increasing the amount donated to charity – but also to make money. As such, they occupy a space between social enterprise and regular businesses as this diagram shows.

Because of their emphasis on return on investment as well as social benefit, it can be easy to mix up a social business with a regular company with a social aspect. Marks & Spencer, for example, would not qualify as a social business despite its highly effective Plan A designed to make the company, as it says, ‘the world’s most sustainable retailer by 2015”.

To qualify as a social business a company needs to pass what we call the test of equivalence. The social goal must be of at least equivalent importance to the commercial. In other words, any investment in the business must lead to an incremental increase in social impact. As long as it passes this test we would call it a social business and will be happy to list it on our directory.

Social business vs. social enterprise

At ClearlySo we work with both social businesses and social enterprises. It is not our intention to say one is better than the other. It would be counterproductive to exclude a company just because it generates investor return as well as a sizable social impact. Our approach therefore is to be as inclusive as possible. Both social businesses and social enterprises are, in their different ways, proving that companies can do business in a way that also does good and, at ClearlySo, that is something we want to encourage.

You can read our full definition of a social enterprise here to compare the differences.