As businesses increasingly promote their sustainability efforts and social values, it’s easy to assume that every company striving to “do good” qualifies as a social enterprise. But is that really the case?

No, social enterprises are distinct in that their primary goal is to address societal or environmental issues, setting them apart from traditional businesses focused mainly on profit. While many companies today adopt corporate social responsibility (CSR) initiatives or support charitable causes, these efforts are usually secondary to their main goal: generating profit for shareholders.

What Makes a Social Enterprise Different?

A social enterprise is built from the ground up with a social or environmental mission at its core. It operates like a business—offering products or services—but the primary purpose isn’t just to make money. It’s to solve a real-world problem in a sustainable way. Any profits earned are typically reinvested into advancing that mission, not distributed to private investors.

For Example:

• A clothing brand that hires and trains refugees as part of its production model is a social enterprise.

• A solar energy company that provides low-cost power to off-grid communities reinvesting profits to reach more families is a social enterprise.

Meanwhile, a large fashion retailer that donates a portion of its profits to charity or uses recycled materials in some of its products is not necessarily a social enterprise—those are CSR efforts layered onto a traditional profit-driven business model.

Why the Confusion?

The growing popularity of socially responsible branding has blurred the lines between traditional companies and social enterprises. Terms like “green,” “ethical,” or “purpose-driven” are often used in marketing, even when they don’t reflect a company’s core operations or intent.

How Can You Tell the Difference?

Look at the company’s mission statement, how they use their profits, and who benefits from their success. If their main goal is social or environmental impact and their business model is structured to support that goal sustainably, then it’s a social enterprise.

Conclusion

Not all companies are social enterprises—and that’s okay. But understanding the difference helps consumers, investors, and communities make informed choices about who they support and why. Social enterprises are unique in that they redefine success in business—not just by financial gains, but by the positive change they create in the world.