This piece was originally published as a guest blog on the Third Sector website.
Recently, Craig Dearden-Phillips and Rob Greenland, two of our most respected social enterprise commentators, both wrote blogs that, taken together, shattered the illusion of a consensus on the definition of social enterprise.
The part in particular that stood out for me was when Rob asked how wages and loan interest are any different to paying dividends. A poll on the issue was split down the middle.
Well, wages and interest count as costs, whereas dividends are different as they come out of profits extracted from the bottom line. But distributing profits is not necessarily any less ethical than repaying debts. Equity can even be fairer than debt, as there is no obligation to repay and it shares risks and rewards. And social entrepreneurs may need to share profits in order to attract the capital they need to achieve the impact they seek to deliver.
But as our most popular definition of social enterprise says, it's first what you do with the majority of these profits that distinguishes you as a social entrepreneur and second, in Rob's words, that the "primary aim of the business will be a social one."
How can we test for this? Well, we might learn from the most boring of places, the Office for National Statistics, which classifies whether organisations sit on or outside the public accounts. They look at who controls an organisation through owning more than half the voting shares or controlling more than half the voting power, or through regulation.
So what would the ONS make of Circle Partnership, Europe's largest healthcare partnership, for instance, who call themselves a social enterprise? Do they have a social mission and how is it controlled? Do remote investors own less than half the shares? Or more than half as conflicting reports suggest?
For Craig, this control and the majority rights to the profits are "often the fair reward for risk" and if his salary was the only reward he received, then that wouldn't reflect the risks he takes. While for others, there is sufficient reward in the social impact they achieve, and, if you don't get off on that, then sure, a private business model makes perfect sense.
A ‘pure' ownership model is no guarantee of social impact. Apple or Boots may well deliver more net benefit than Network Rail or Eton College. So Craig - and Circle - sit in this interesting space emerging "between the private sector and just beyond the outer-edge of the social enterprise sector". But crucially, this is beyond social enterprise, in what we might call social or ethical business.
For years, the biggest challenge for social enterprise has been awareness and understanding out in the real world. We are starting to win. The people on the street are starting to get it, newsreaders say it without clarification, newspapers no longer include an explanation.
If Craig's "progressive business sector" is delivering more and more social impact then that's a wonderful thing. As Rob says, we should be "relaxed about people making money out of social business and a variety of business models". But can we all agree that this needs a different term? Social business or ethical business, for example?
Please, Rob and Craig, don't undo your own great work over the years in promoting social enterprise by diluting and confusing it when others have become attached to it - and just at the point where it's starting to hit the streets.