Social enterprise organisations - economic development opportunity?

Scotland's Sunday Herald ran an article, Development of social enterprises could be, and I am still not sure if it could not be something overlooked here in Indiana.

IF, AS is hoped, the Executive is serious about introducing some new economic policy thinking, they could do a lot worse than look at the opportunities to provide services offered by social enterprise organisations (SEOs).

These are businesses which are run on a profitable basis, but do so to provide benefits for society. They take many forms, and while they are certainly not new, they are growing rapidly. Some work nationally, while others are purely local.

They embrace all sectors of the economy from financial services such as credit unions to tourism. For example, there is at least one very successful and award-winning boarding house in Edinburgh run by disabled people.

Then I ran "Social enterprise organisations" through Google and found something like a definition in Wikipedia. Social economy:

• According to the UK government's definition, the social enterprise sector includes organisations which "are businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners". Examples include co-operatives, building societies, development trusts and credit unions.

I know a little about credit unions and co-operatives, and can guess the rest. North America goes unmentioned in that particular Wikipedia article but does appear in Social enterprise:

The Social Enterprise Alliance, based in the USA with a membership that is mainly from the USA and Canada, just (March 2006) broadened its definition of Social Enterprise to

An organization or venture that advances its social mission through entrepreneurial earned income strategies.

from the prior definition

Any earned-income business or strategy undertaken by a nonprofit to generate revenue in support of its charitable mission.

This definition change specifically encompasses for-profit entities with a social mission, since some social mission organizations are choosing to incorporate as for-profit corporations (and some nonprofits are creating for-profit subsidiaries). The focus here is on the enterprise being carried out by an organization, and generating revenue, but not necessarily a surplus. Many social enterprises in North America are considered successful if they break even, or even if they operate at a loss if the effectiveness in social mission is achieved. For example, a social enterprise that employs formerly homeless people at a slight loss might be a big success if the amount of the loss is much less than the amount of the social supports that would otherwise be provided in lieu of employment.

Leading North American examples of social enterprise include Greyston Bakery (produces ingredients for Ben & Jerry's ice cream) and Housing Works in New York, Rubicon Programs in California and Kidslink in Ontario.

Much of the field in North America was driven by thinking from the REDF Foundation, which pioneered Social Return on Investment Analysis in connection with funding numerous social enterprises in the San Francisco region, such as Rubicon Programs. Working Assets, the San Francisco-based company, created a model of social enterprise through its mobile, credit card and long distance services that automatically generate donations to progressive organizations when customers use its services. To date, Working Assets has raised over $50 million to organizations like Amnesty International, Doctors Without Borders and Planned Parenthood.

The Social Enterprise Reporter covers news for and about nonprofit entrepreneurs in North America.

See also: social entrepreneurship

Back to the Sunday Herald article:

If there is one area which SEOs know particularly well, it is working with highly disadvantaged groups in helping prepare them for gainful employment, yet this is one of the most difficult issues for mainstream public sector agencies to deal with. Why not pass across more of this work to bodies with a great track record in actually delivering?.

SEOs are, I'm convinced, a resource of significant potential to Scotland. They are driven by the profit-motive, but have a clear social agenda. The range of their activities is remarkable, embracing virtually every sector one can think of. Most have sound management, often forged in demanding private sector milieus and in many cases they are succeeding where the public sector has failed to make much progress.

My brain reads those paragraphs and thinks of an alternative to Mitch Daniels' mania for privatization. I just do not know enough to be sure of my theory.