When you think of social enterprises, the first things that probably come to mind are words like “impact” and “purpose”. These organisations have the unique advantage of being businesses with a cause—they exist to make the world a better place while still needing to thrive financially – which begs the question: should social enterprises prioritise profit to sustain their purpose?
Balancing profit and purpose isn’t just some abstract concept; it’s the foundation of what makes a social enterprise work. On one hand, profit is essential to survive and scale impact. On the other, steering too far towards financial gain can sometimes jeopardise the ethical backbone of the mission. It’s a tightrope walk, where each step—too far in one direction or the other—risks tipping the balance.
Why Profit Matters
Here’s the cold, hard truth. Without financial sustainability, a social enterprise is just an idea on paper. To create long-lasting change, social enterprises need the resources to fund their projects, pay their teams, and invest in growth. Profitability is often the engine that makes this possible.
Profit isn’t necessarily the enemy of purpose—it can be an enabler. With more financial resources comes the ability to expand initiatives, reach more communities, and take on bigger challenges. A well-run social enterprise with a solid revenue model often has far greater capacity to effect change than one that’s scraping to get by.
The Risks of “Cause-Washing”
When profit becomes the primary focus, it’s frighteningly easy to lose the soul of the mission altogether. This is sometimes called “cause-washing,” where businesses wear the cloak of a social enterprise, but their commitment to effecting real change is superficial at best.
Think of a company that slaps an “eco-friendly” label on its product line, donates a percentage of sales to a charity, and suddenly markets itself as a social enterprise. Are they genuinely invested in their purpose, or just using it as clever branding to drive sales? The risk here is that genuine social enterprises get overshadowed, and their movement is diluted by organisations prioritising image over action.
For social enterprises, focus creep is a very real danger. The pressure to perform financially and compete with traditional businesses or startups can sometimes lead to compromises on purpose. For instance, scaling too quickly to boost revenue might mean overlooking the needs of the very communities they set out to serve.
Finding That Sweet Spot
But here’s the good news—it doesn’t have to be an either/or choice. Many social enterprises are doing an excellent job of integrating financial success with their ethical goals. They view profit as a means to an end, not the end itself.
The key lies in transparency and accountability. Social enterprises should consistently measure both their social impact and financial performance, ensuring that neither comes at the cost of the other. Communicating these metrics to their stakeholders—whether that’s customers, investors, or beneficiaries—helps build trust and reinforces their commitment to purpose-driven profit.
Another tool lies in adopting decision-making frameworks that place impact at the centre. For example, the B Corp certification process requires businesses to meet rigorous social and environmental standards alongside demonstrating financial health. This serves as a reminder that profitability must coexist with purpose, not replace it.
Creating a New Narrative
Rather than framing the debate as “profit vs purpose,” social enterprises can instead champion a new narrative—profit for purpose. This doesn’t mean putting profits first but recognising them as a vital element of achieving big, bold, world-changing goals.
For Australian social enterprises, this balance is especially relevant. With our unique social challenges, from supporting First Nations communities to addressing rural and urban inequities, social enterprises hold tremendous potential to lead change locally. But that change requires sustainability—and yes, a good dose of profitability—to stay on track.
The bottom line? Being a trailblazer for social good doesn’t mean leaving money on the table, nor does financial success give a licence to compromise your values. It’s about walking that tightrope confidently, knowing every step brings you closer to a future where profit and purpose go hand in hand.
