social enterprise business models
Expert-defined terms from the Advanced Certificate in Financial Modeling for Social Enterprises course at London School of Business and Administration. Free to read, free to share, paired with a globally recognised certification pathway.
Social Enterprise Business Models Glossary #
Social Enterprise Business Models Glossary
A #
A
Asset Lock #
Asset Lock
- A legal restriction that prevents the distribution of profits or assets to own… #
This ensures that the organization's assets are used for its social mission rather than personal gain.
B #
B
Benefit Corporation #
Benefit Corporation
- A type of for-profit corporate entity that aims to create a positive impact on… #
Benefit corporations are legally required to consider the impact of their decisions on all stakeholders, not just shareholders.
C #
C
Cause Marketing #
Cause Marketing
- A marketing strategy in which a company aligns its brand with a social or envi… #
Cause marketing can involve donating a portion of proceeds to a charity or promoting a cause through advertising campaigns.
D #
D
Double Bottom Line #
Double Bottom Line
- A business model that focuses on both financial returns and social or environm… #
Organizations with a double bottom line seek to achieve financial sustainability while also creating positive change in society or the environment.
E #
E
Externalities #
Externalities
- The unintended consequences of an economic activity that affect third parties,… #
Externalities can include environmental pollution, social inequality, or public health issues that are not factored into the cost of production.
F #
F
Franchise Model #
Franchise Model
- A business model in which an entrepreneur or organization grants the rights to… #
Franchising can be a way for social enterprises to scale their impact through partnerships with local entrepreneurs.
G #
G
Global Reporting Initiative (GRI) #
Global Reporting Initiative (GRI)
- A non-profit organization that develops and promotes standards for sustainabil… #
The GRI framework helps organizations measure and communicate their social, environmental, and economic performance to stakeholders.
H #
H
Hybrid Model #
Hybrid Model
- A business model that combines elements of for-profit and non-profit organizat… #
Hybrid models may generate revenue through sales or services while also relying on donations or grants to support their social mission.
I #
I
Impact Investment #
Impact Investment
- Investments made with the intention of generating social or environmental impa… #
Impact investors seek to support businesses that address social challenges or promote sustainability while earning a competitive rate of return.
J #
J
Joint Venture #
Joint Venture
- A business arrangement in which two or more organizations collaborate on a spe… #
Joint ventures can be a way for social enterprises to pool resources, share expertise, and expand their impact.
K #
K
Key Performance Indicators (KPIs) #
Key Performance Indicators (KPIs)
- Quantifiable measures used to evaluate the success of an organization in achie… #
KPIs can assess financial performance, social impact, operational efficiency, and other key aspects of a social enterprise's performance.
L #
L
Lean Startup #
Lean Startup
- A methodology for developing businesses and products that emphasizes rapid exp… #
The lean startup approach helps social enterprises test their ideas, adapt to market feedback, and minimize waste.
M #
M
Mezzanine Financing #
Mezzanine Financing
- A hybrid form of financing that combines debt and equity components #
Mezzanine financing typically involves a loan with an equity stake or warrants attached, providing investors with the potential for higher returns in exchange for higher risk.
N #
N
Nonprofit Organization #
Nonprofit Organization
- An organization that operates for a charitable, educational, or social purpose… #
Nonprofit organizations can generate revenue through donations, grants, and fees for services but are not designed to generate profits for owners or shareholders.
O #
O
Outcome Measurement #
Outcome Measurement
- The process of tracking and assessing the results or effects of a social progr… #
Outcome measurement helps social enterprises demonstrate the impact of their work, improve their effectiveness, and make data-driven decisions.
P #
P
Public #
Private Partnership (PPP)
- A cooperative arrangement between government agencies and private sector organ… #
Public-private partnerships can leverage the strengths of both sectors to address social challenges and achieve shared goals.
Q #
Q
Qualitative Data #
Qualitative Data
- Information that is descriptive and non-numerical, such as narratives, observa… #
Qualitative data can provide insights into the experiences, perspectives, and emotions of stakeholders in a social enterprise.
R #
R
Return on Investment (ROI) #
Return on Investment (ROI)
- A financial metric used to evaluate the profitability of an investment relativ… #
ROI is calculated by dividing the net profit from an investment by the initial investment amount and is commonly used to assess the financial performance of social enterprises.
S #
S
Social Entrepreneurship #
Social Entrepreneurship
- The practice of creating and scaling business ventures that address social or… #
Social entrepreneurs use innovative approaches to generate positive impact while achieving financial sustainability.
T #
T
Triple Bottom Line #
Triple Bottom Line
- A framework that evaluates an organization's performance based on three dimens… #
The triple bottom line approach aims to measure and optimize the impact of a business on people, planet, and profit simultaneously.
U #
U
Unearned Income #
Unearned Income
- Income received from sources other than direct sales of goods or services, suc… #
Unearned income can provide a stable revenue stream for social enterprises and support their mission-driven activities.
V #
V
Venture Philanthropy #
Venture Philanthropy
- An approach to philanthropy that applies principles and practices from venture… #
Venture philanthropists provide not only financial support but also strategic advice, networking opportunities, and capacity-building resources to help social ventures grow and achieve impact.
W #
W
Worker Cooperative #
Worker Cooperative
- A type of cooperative in which workers collectively own and democratically man… #
Worker cooperatives distribute profits among members, provide job security, and promote employee participation in decision-making, fostering a sense of ownership and empowerment among workers.
X #
X
X #
Efficiency
- The extent to which an organization operates efficiently and minimizes waste i… #
X-efficiency can be achieved through effective management, innovation, and employee motivation, leading to improved performance and competitiveness in social enterprises.
Y #
Y
Yield #
Yield
- The income generated from an investment, typically expressed as a percentage o… #
Yield can come from interest payments, dividends, or capital gains and is an important factor in assessing the financial performance of social enterprises.
Z #
Z
Zero #
Based Budgeting
- A budgeting technique that requires organizations to justify all expenses from… #
Zero-based budgeting helps social enterprises prioritize spending, identify cost-saving opportunities, and align resources with strategic goals to achieve financial sustainability.