Defining social enterprise
Australia’s definition of social enterprise was developed in the 2010 research project Finding Australia’s Social Enterprise Sector (FASES) and has three parts:
- A defined primary social, cultural or environmental purpose consistent with a public or community benefit.
- A substantial portion of income from trade.
- Investing efforts and resources into purpose such that public/community benefit outweighs private benefit.
The definition covers all legal structures and types of impact – it’s inclusive for all social enterprises delivering public benefit over private gain.
Image: OC Connections Enterprises
Definition development and relevance
The FASES research took into account the views of 539 sector stakeholders, extensive domestic and international literature review, a series of workshops, surveys and detailed data analysis.
We've ensured the definition continues to remain relevant through ongoing feedback from the social enterprise sector. Feedback is collected via daily one-to-one conversations with social enterprises, sector consultations, and through the 1,600+ certifications conducted over the last seven years.
The definition and certification have been adopted widely across the sector and the funders, governments and businesses that rely on it.
Image: CommUnity Construction
World-leading certification framework
Social Traders certification is established, trusted and world-leading.
Established with a sustainable business model
Social Traders has been running certification since 2017. Our national team have deep experience in certification. Over half the costs of certification are funded through Social Traders own trade revenue, which minimises the cost to social enterprises.
Rigorous protection against social washing
To certify a social enterprise Social Traders collects and verifies over 200 data points on each social enterprise. These include governing legal documents, financial data, impact data and social costs. Social Traders holds rigorous standards. Approximately 10% of applications are rejected because they don’t meet the criteria.
Overseen by an independent expert advisory group
The Certification Advisory Group provides advice and external technical guidance on complex cases. The group also provides insights into international developments in the social enterprise sector, expertise and guidance on the evolution of the certification framework including balancing increasing accessibility for certification with increasing need for risk mitigation as the sector grows and reflecting sector innovation.
Informed by international and local research
The definition was developed with reference to international social enterprise certification frameworks, is tailored to the specifics of the social enterprise sector in Australia.
Co-designed with Minter Ellison and EY
Minter Ellison and EY support the development and evolution of the framework. This includes recommending improvements to the process and criteria, developing the example legal terms for for-profit social enterprises, and creating the risk and audit framework.
The framework is inclusive of all legal models, all stages of development and all impact types, and is constantly evolving based on ongoing feedback from social enterprises and the wider sector.
One-to-one support for every applicant
Certification is developmental and supportive. We have a team that works with social enterprises through the application process, to help them articulate their social impact model, and the activities and costs associated with delivering their mission. We provide guidance and referrals for early-stage and transitioning businesses and charities that want to become a social enterprise to develop their business to a stage where they can be certified.
Continually reviewed using sector feedback
Social Traders actively seeks feedback on certification, through conversations with social enterprises and stakeholders, surveys, forums and consultations. We also conduct specific reviews as required, for example: Indigenous social enterprises (2023), Fair trade social enterprises (2020), Community banks (2023).
Confidence in certification
We take a multi-layered approach to ensure ongoing confidence in the certified status of a social enterprise.
Dedicated certification team: working closely together to ensure consistency and integrity in the data captured.
Escalation process: if a social enterprise is not satisfied with the outcome of its certification application, it can be referred to our Certification Advisory Group for further consideration and advice.
Recertification: certification is provided for three years for an established business, or one year for a startup business with less than two full years of trade. For enterprises on a three-year certification, we conduct an annual audit of a random sample of enterprises, based on a risk-based approach.
Self-reporting of changes of status: our membership agreement requires certified social enterprises to advise of any changes to the ownership, governance, organisational objectives or solvency status during a certification period. Where this occurs, Social Traders will conduct a review of the certification.
Complaints and review policy/process: we have a Complaints and Review policy and process in place, and where questions or issues are raised about a certified social enterprise we will undertake a thorough review, considering the facts and evidence from all parties involved. If supported by evidence, Social Traders will revoke certification.
Certification supporters and funders
- We appreciate the support of our partners, network supporters and funders in helping to create a thriving social enterprise sector.