If you have not heard of social enterprises in today's welfare circles, you are definitely “out of the loop.” However, by viewing the activities related to social enterprises, the questions repeatedly asked seem to be the same old ones. However active it is, radical reformation work is needed. This also commonly happens when many new things are popularized. Next, the author tries to address something I've been asking many times: how to promote social enterprises to “do more and talk less.”

1. What is a social enterprise?

Let us not concern ourselves with the definition (which has hundreds of definitions). The very nature of social enterprises is to solve social problems innovatively in a commercial manner. The initial aim in founding a social enterprise is to “solve social problems,” which differentiates it from a traditional “commercial enterprises;” A successful social enterprise can realize financial security through its operations, which differentiates it from a traditional “commonwealth organization.”

Social enterprises have, in fact, existed for a long time. Cooperatives started in 1850's were kinds of typical social enterprises. In the movie, “A Better Tomorrow,” the staff in the taxi company from which brother Xiao Ma seeks refuge all had criminal records. I have always considered this to be the first appearance of social enterprises in Chinese media. Chinese Welfare Factories, which are more “nurturing” and “merciful,” cannot be regarded as social enterprises, nor are they helpful in solving social problems. This does not need much explanation.

2. Do we have a legal form of social enterprises as in China?

No. Not only China, but most countries in the world do not have this. This is a typical example of how legislation develops slower than practice. You can register as an enterprise as well as a charity institution. Both have pros and cons, which I will not discuss here. Whether it is a social enterprise depends not on what is registered, but whether it is in line with the characteristics we mentioned earlier.

3. Can enterprises charge its service target when it transforms into a social enterprise?

This has always been one of the most frequently asked questions. We do not have a legal form of social enterprises, I can tell you clearly that you do not have to take on so much work if you aim to charge the service targets. No matter if it is a direct charge, cross subsidization or government procurement, you do not have to label yourself as a social enterprise. Instead, NGOs can help you. More importantly, the aim of founding a social enterprise is not to “make profit by the institution itself,” but to “serve and benefit” and “solve social problems more efficiently.” Thus, this is a totally wrong question!

4. Can social enterprises share bonuses?

This is an appropriate question but difficult to answer. Nobel Peace Prize winner Professor Yunus, who created Micro Credit, insists that when social enterprises have regained its initial capitalization, it must not give out bonuses. Xie Jiaju, president of Hong Kong Social Entrepreneurship Forum, argues that when sharing bonuses is feasible, share no more than 33 percent. The English Community Interest Company's bonuses do not exceed 35 percent. Whether to share bonuses or not both make sense. Considering China's current stage, although you may register as a charity institution, you are not legally obliged to publish financial data. Hence, to share or not to share depends on your support groups and you regard this matter.

5. What's the salary level of employees in social enterprises?

I guess what you are actually asking is not the fixed number but a relative amount. The absolute quantity is relative to your ability and willingness to pay. It is surely also relative to the acceptance level of employees. Relative level implies another question: since social enterprises are of a nonprofit nature, should we not be concerned about salary – that the money is too much? I can answer it unequivocally: no matter whether it is in the industry of traditional charity or in the area of social enterprises, such a consideration is wrong and harmful. Salary is a demonstration of value, which should not be “hijacked” by arguments of morality.

6. I want to transform into a social enterprise. Do you have any suggestions?

I cannot say much because I do not know the specific circumstances of your institution. But I would like to make the following four points:

1) Not all social problems can be solved through social enterprises.

2) Not all institutions have to operate in a social enterprise model to accomplish its missions.

3) Not everyone has the ability to do business operations.

4) Do not transform the nature of your organization during the process of operating social enterprises, or in other words, experience mission drift. It is often a difficult balance between social targets and economic targets.

Editor's note: The article is authorized by the author and selected from his book, “When Talking About Social Enterprises, What Are We Talking About.”