Challenges of Establishing and Operating Social Enterprises

Abstract

A social enterprise is an organisation that is financially self-sufficient, like a conventional commercial enterprise. However, its primary objective is to achieve the set social purposes and goals that it considers to be important rather than maximizing profits This definition implies that social enterprises show similarities with both civil organisations and for-profit enterprises. Consequently, there are specific challenges related to their foundation and accounting. Since maximizing profits and social and environmental benefits are equally important during the operation of these enterprises, the profits they generate are used to achieve further social goals and are not distributed to individual shareholders. Thus, income from supplying goods and services constitutes the major source of their income. Successful social enterprises generate profit which is reinvested to subsidise the social mission they have defined. Their assets can often be used for community purposes exclusively.