"Social enterprise" is an umbrella term that refers to two business models. The models, charity and Profit-for-Purpose (PFP), are different beasts. They might be cousins but they are not siblings.
Both charity and PFP aim to make the world a better place by doing social good, and during the first phases of development both require funding from supporters. (Successful PFPs do not require external funding past the first phase of development.)
When it comes to business sustainability, charity and PFPs diverge. Profit is what sets PFPs apart from non-profit organizations or charities. Below are the key differences. They are simple but important.
1. PFP derives its income from selling a service or product, whereas charities depend on grants and other types of donations to operate.
2. You don’t get tax credits when you invest in PFP models. This is key. Because they are not registered charities and instead operate like a regular businesses, you don't receive tax returns when you donate money for things like start up costs.
3. Because non-profits rely almost solely on donations, their income is controlled in part by the amount of money donors are willing to give. Social enterprises instead, like Project Get Reel, have a business model that is self-sustaining. Once we receive start up funds for our social enterprise Project Get Reel, we will be able to start a profitable and sustainable business.
Point Taken: While social enterprise and non-profit organizations do have some similarities, they are fundamentally different when it comes to collecting funds and sustaining impact.