Economic and Social Criteria of Social Enterprise

OECD identified a set of key economic and social elements that help define social enterprise across national differences:

Economic Criteria:

1. Unlike traditional non-profit organisations, social enterprises are directly engaged in the production and/or sale of goods and services (rather than predominantly advisory or grant-giving functions)
2. Social enterprises are voluntarily created and managed by groups of citizens. As a result, while they may receive grants and donations from public authorities or private companies, social enterprises enjoy a high degree of autonomy and shareholders have the right to participate (‘voice’) and to leave the organisation (‘exit’);
3. The financial viability of social enterprises depends on the efforts of their members, who are responsible for ensuring adequate financial resources, unlike most public institutions. Social enterprises therefore involve a significant level of economic risk; 
4. Activities carried out by social enterprises require a minimum number of paid workers, even if they may combine voluntary and paid workers. 

Social criteria:

1. Social enterprises are the result of an initiative by citizens involving people belonging to a community or to a group that shares a certain need or aim. They must maintain this dimension in one form or another
2. Decision making rights are shared by stakeholders, generally through the principle of ‘one member, one vote’. Although capital owners in social enterprises play an important role, decision-making power is not based on capital ownership;
3. Social enterprises are participatory in nature, insofar as those affected by the activities (the users of social enterprises’ services) are represented and participate in the management of activities. In many cases one of the objectives is to strengthen democracy at local level through economic activity;
4. Social enterprises include organisations that totally prohibit the distribution of profits and organisations such as co-operatives, which may distribute their profit only to a limited degree. Social enterprises therefore avoid profit maximising behaviour, as they involve a limited distribution of profit.
5. Social enterprises pursue an explicit aim to benefit the community or a specific group of people. By doing so, they directly and indirectly promote a sense of social responsibility at local level.

pdf source: The Social Enterprise Sector: A Conceptual Framework.