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Social Enterprise

Recently an article titled ‘Groupon: A Billion Dollar Social Enterprise?’ hit Twitter and generated an enormous response to its content and particularly, the author’s use of the word “social enterprise.”

The original article argued that that Groupon, the tipping pointconcept to buying discounted goods and services using the power of people, is the fastest growing company in history. Founded by a 26-year-old in 2007, the company has already reportedly turned down a $6 billion offer from Google to acquire it. However, an interesting backstory to this astounding success story is that Andrew Mason, the 26-year-old founder of Groupon, actually started out as a social entrepreneur. In 2007, when Groupon launched, Mason was also working on a website called The Point. The Point was based on people taking a pledge to take some sort of social action such as giving money or volunteering, which was leveraged by the amount of people that made the same pledge. For example, if you pledged to donate $100, and then said you would only complete this if 100 other people donated $100 – this would earn a charity $10 000, instead of your lone $100.

This simple but powerful concept – making a pledge and setting out a challenge to others that creates a much larger change – was in fact the basis of Groupon. Thus one could argue that “that Groupon might be the most successful social enterprise ever” because not only does it bring traffic to restaurants or clothing stores, but also bring attention to things like not profits and local sustainable food manufacturing. This is particularly done through their innovative G-Team.

The response to this article however, addressed the author’s choice of wording when he called Groupon, a “social enterprise.” One reader said:

“I think we need to be a bit more deliberate in applying the social enterprise label… But I do agree this could be the emergence of a multi-billion dollar corporate citizenship program AND virtually every corporate citizenship program would benefit from aspiring to be a social enterprise. But calling these things social enterprises takes away from the folks who build businesses from scratch for social impact.”

Which brings up the pivotal issue of what a social enterprise is defined as? Is it just a not-profit? Can it be a for-profit venture? In retrospect, the author said he believed a social enterprise was any organization with a primary focus on having social impact, defining his use of social enterprise as “loose” in the article.

I agree with this definition. As long as an organization is having some significant social impact through their work – they should be considered a social enterprise. However, whether they are a for-profit company that finds some way to create sustainable social impact or a “built from scratch” social enterprise – the impact is the important factor in the definition. Groupon was the result of a social entrepreneur finding a way to make money, create a sustainable initiative and have social impact. Therefore, we have to start thinking differently about the distinction between for-profit and not-for-profit – we have to start thinking about what is more effective, efficient and better for our communities.

What are your thoughts?

Check out the article here.