The business world has expanded its mission beyond profit. Today, many companies engage in corporate social responsibility activities like corporate volunteering initiatives, cash contributions to charitable organizations, and diversity, equity, and inclusion (DEI) efforts.
But what if solving a social issue isn’t just a side project—what if it’s your primary business goal? That’s exactly what defines social ventures. These businesses harness entrepreneurial skills and strategies to tackle some of the world’s most pressing social problems while still generating revenue.
This guide breaks down the different types of social ventures, how to start one, and the unique benefits they offer beyond traditional business models. You’ll discover how social entrepreneurs balance profit with purpose, secure funding, and measure their impact on communities worldwide.
What is a social venture?
A social venture is a business that addresses social, cultural, or environmental challenges while generating profit. These initiatives balance social objectives with business goals to drive meaningful change and improve quality of life for communities.
Traditional companies may participate in socially beneficial activities, but that doesn’t make them social ventures. Take a bicycle manufacturer that donates 20% of its profits to reforestation and maintains a robust environmental, social, and governance (ESG) strategy. If its primary goal is making and selling bikes, it’s still a traditional business—not a social venture.
A business like TOMS, however, which operates a “one for one” program, donating a pair of shoes for every pair purchased, is an example of a social venture. The company uses its sales to provide shoes to people in need worldwide, prioritizing the brand’s mission and social impact.
Social venture vs. traditional business
The fundamental difference between social ventures and traditional businesses lies in their North Star and success metrics. While traditional businesses measure success primarily through financial indicators like revenue growth and profit margins, social ventures track dual bottom lines—financial goals and social impact.
Traditional businesses may donate profits or volunteer time, but these activities support rather than define their operations. Social ventures flip this relationship. Their social mission isn’t a nice-to-have or marketing strategy—it’s the entire reason they exist. Every business decision, from product development to pricing strategy, flows from their commitment to solving a specific social problem.
The social enterprise ecosystem
The social enterprise landscape has exploded into a global economic force, generating $2 trillion in revenue across 10 million social enterprises. This ecosystem spans everything from tech startups building accessible education platforms to local cooperatives revitalizing underserved communities.
Major corporations increasingly recognize social ventures as partners in innovation rather than charity cases. For example, the insurance corporation AXA has adopted social innovation practices by developing affordable insurance products for 14 million people in low- and middle-income countries. This shift signals a fundamental change in how businesses approach social problems—not as PR opportunities but as legitimate markets that demand entrepreneurial solutions.
Types of social ventures: choosing your structure
Social ventures aren’t hobbies or volunteer projects—many earn substantial profits. They can be structured as nonprofits, for-profits, or hybrid business models that combine both approaches. Your choice of business structure shapes everything from funding options to tax implications, so understanding each model’s strengths and limitations is crucial for the long-term success of your social venture.
For-profit social ventures
A for-profit social venture solves a social problem while generating profit that gets distributed to its owners. Ventures that sell equity must protect shareholder value and pay dividends to investors. The for-profit classification opens doors—it allows social entrepreneurs to raise money from investors and provides flexibility in how they allocate profits.
An organization that works to increase educational opportunities for women and girls by making and distributing low-cost menstrual products, for example, can be a for-profit if they turn a profit on sales and distribute those funds to owners or investors.
Nonprofit social ventures
The fundamental difference between nonprofit and for-profit social ventures comes down to legal and financial structure. Unlike their for-profit counterparts, nonprofit social ventures have no obligation to provide a return on investment (ROI) to investors. They can’t raise money by selling equity or distributing profits to individuals, but they can still pay social entrepreneurs and employees salaries for their work.
Just like for-profit businesses, nonprofit social ventures must generate or raise enough money to fund continued operations. They accomplish this through selling goods or services, or by raising charitable donations. Nonprofit social ventures must channel profits back into their missions and often benefit from federal, state, and local tax exemptions.
Hybrid social ventures
Organizations that leverage aspects of both for-profit and nonprofit structures are known as hybrid social ventures. These ventures consist of at least two distinct legal entities—one for-profit and one nonprofit—linked through a parent-subsidiary relationship or operating independently. Picture a nonprofit committed to reducing food waste that owns and operates a for-profit business diverting overstocked goods to consumers—that’s a parent-subsidiary relationship in action.
Setting up a hybrid social venture is more complicated than establishing only a singular nonprofit or for-profit organization. But once established, this structure lets social entrepreneurs tap into the benefits of both entity types—accessing grants and donations while also attracting investors.
B Corps and benefit corporations
Certified B Corporations represent another powerful structure for social ventures. These for-profit companies meet rigorous standards of social and environmental performance, accountability, and transparency. Unlike traditional corporations legally bound to maximize shareholder value, B Corps balance profit and purpose by considering the impact of their decisions on workers, customers, suppliers, community, and the environment.
Warby Parker is an example of a B Corp: it’s a for-profit, publicly traded company that is nevertheless driven by its mission of vision for all. This mission is highlighted through its Buy a Pair, Give a Pair program, which has donated millions of pairs of glasses to people in need.
Benefit corporations, on the other hand, take this concept further, through legal structure. Available in 37 U.S. states and several countries, benefit corporation status embeds social and environmental goals directly into a company’s legal DNA. This structure protects mission-driven leaders from shareholder lawsuits when they prioritize social impact over short-term profits, creating legal space for decisions that traditional corporate law might discourage.
How to start a social venture: 5 key steps
Starting a social venture requires the same entrepreneurial skills as launching any business, plus the added challenge of balancing social impact with financial sustainability. These five steps provide a road map for turning your passion for change into a viable social enterprise that creates lasting impact while maintaining operational stability.
1. Define your mission and theory of change
Your mission statement captures why your social venture exists, while your theory of change maps how you’ll create impact.
Start by identifying the specific problem you’re solving and who benefits from your solution. Then articulate your approach: What activities will you undertake? What outputs will those activities produce? How will those outputs lead to your desired outcomes?
A clear theory of change helps you stay focused when opportunities arise that might dilute your mission. It also proves invaluable when communicating with stakeholders—from potential funders who need to understand your impact model to employees who need to connect their daily work to meaningful change.
2. Choose your legal structure
Your legal structure determines everything from tax obligations to funding options, so it’s important to understand the difference between a nonprofit, a not-for-profit, and a for-profit business structure. Nonprofits access grants and donations but can’t distribute profits. For-profits attract investors and retain operational flexibility but face different tax implications. Hybrid models combine both but require managing multiple entities.
Consider your funding needs, growth plans, and impact goals when choosing your structure. If you need venture capital to scale quickly, a for-profit or B Corp structure might work best. If your model depends on charitable donations and volunteer support, nonprofit status offers advantages. Consult legal and tax advisers familiar with social ventures to understand the implications of each choice.
3. Develop your business model
Social ventures need sustainable revenue streams just like any business. Your business model must generate enough income to cover operations while advancing your social mission. Common revenue models include selling products or services directly to beneficiaries, charging third parties who benefit from your social impact, or creating premium offerings that subsidize free or low-cost options for underserved populations.
Test your assumptions early and often. Run pilot programs to validate that customers will pay for your solution and that you can deliver it cost-effectively. Build financial projections that account for both startup costs and the longer timeline social ventures often need to reach profitability.
4. Secure funding and investment
Social ventures access unique funding sources beyond traditional business loans and investments. Impact investors specifically seek ventures creating measurable social returns alongside financial returns. Philanthropic foundations offer grants for mission-aligned initiatives. Government programs support social enterprises through contracts, grants, and tax incentives.
Keep in mind: Different funders expect different returns. For example, grant makers want maximum social impact, impact investors seek both financial returns and social outcomes, and traditional investors might fund social ventures but typically prioritize financial performance. Match your funding strategy to your structure and growth plans, and be prepared to report on both financial and social metrics.
5. Measure and communicate impact
Unlike traditional businesses that focus primarily on financial metrics, social ventures must track and communicate their social impact. Develop key performance indicators (KPIs) that capture both your activities (outputs) and their effects (outcomes). If you provide job training, track not just participants trained but also employment rates and wage increases six months later.
Data-driven decision-making helps you refine your model and prove your impact to stakeholders. Create systems to collect impact data from day one, since retrofitting measurement systems later can be difficult and expensive. Use this data to tell compelling stories about your impact, combining statistics with human narratives that bring your mission to life.
Benefits of starting a social venture
Social entrepreneurship delivers many of the same rewards as traditional entrepreneurship—independence, earning potential, and the satisfaction of building something from scratch. But social entrepreneurship goes further, offering unique advantages through its compassion-centered business model.
Making an impact
Starting a social venture transforms your passion for change into tangible results. Take Merit, a for-profit apparel company with a core mission of increasing educational access and opportunity for young people in Detroit with through its FATE program.
Merit channels 20% of each apparel sale into a college tuition fund for Detroit youth. The company’s key performance indicator (KPI) isn’t revenue or profit margins—it’s the number of students it helps successfully graduate from college.
Earning money through work that matters
Social ventures use a business framework to address social problems. Many social entrepreneurs discover that socially responsible business practices actually boost revenue generation. These practices deliver reputational benefits that increase sales, attract investors, encourage environmentally friendly operations that reduce long-term energy costs, and minimize risks from unsustainable or harmful sourcing and labor practices.
Take the ecommerce brand Oceanfoam, for instance: The brand works with manufacturers to produce foam rollers that are more eco-friendly and sustainable than similar products on the market, due to their 15% algae content. “It’s really important to me that we have an impact, that it’s not just running a business to make money,” Oceanfoam founder Zachary Quinn shared on an episode of Shopify Masters. “I wanted Oceanfoam to be a sustainable brand, I wanted it to be tied to the ocean and our planet and make the world better.” Within a year of launching its Shopify store, Oceanfoam sold at least 4,000 foam rollers, thanks to this ingenuity and focus on environmental and social impact.
Building community
Social ventures unite diverse groups of people around a shared commitment to change. Building community becomes both a method and an outcome—you need community support to succeed, and your success strengthens that community in return.
International Sanctuary, a nonprofit organization supporting survivors of human trafficking, demonstrates this power through its social venture, PURPOSE Jewelry. By providing survivors with a safe workplace, the venture helps them gain economic freedom, access to education, and quality health care. During the early days of the COVID-19 pandemic, PURPOSE Jewelry strengthened its community bonds by mobilizing its network to share messages of hope on social media through its Spark of Hope campaign while checking in on volunteers.
Raising awareness
The impact of a social enterprise extends far beyond dollars raised or houses built—social ventures amplify awareness of critical issues and inspire others to take action.
The North Lawndale Employment Network, a nonprofit serving residents of its small Westside Chicago community, shows how awareness spreads through its social venture, Sweet Beginnings. The venture sells raw honey and skin care products while providing employment opportunities to formerly incarcerated individuals.
“Sweet Beginnings’s ecommerce store has been instrumental for us to reach people with our message and our work, and continue to communicate with them around the impact of the work that we’re doing here in this particular community,” said Daphne Williams when she was chief growth officer, explaining the growth and purpose of a social enterprise. The company’s ecommerce presence has cultivated followings in Washington, DC, Los Angeles, New York, and the San Francisco Bay Area—spreading its message far beyond Chicago’s borders.
Attracting mission-aligned talent and investors
Social ventures possess a unique advantage in today’s purpose-driven economy: They attract people who want their work and investments to create meaningful change. Talented professionals increasingly seek employers whose values align with their own, particularly among younger generations who prioritize purpose alongside paychecks.
This mission alignment extends to investors. The impact investing market has grown substantially, with investors actively seeking ventures that deliver both financial returns and measurable social outcomes. These mission-aligned investors often provide more than capital—they bring networks, expertise, and patience for the longer timelines social ventures sometimes require to achieve profitability. Your social mission becomes a competitive advantage, helping you access talent and capital that purely profit-focused businesses might struggle to attract.
Common pitfalls of social enterprises
Social ventures face unique challenges beyond those confronting traditional startups. Understanding these pitfalls helps you navigate around them and build a more resilient organization.
Some common pitfalls of social ventures include the following:
- Mission drift, whichthreatens social ventures when financial pressures mount. The temptation to chase revenue opportunities that compromise your social mission can derail your entire purpose. Successful social ventures build mission alignment into their governance structures, ensuring board members and investors share commitment to social impact alongside financial sustainability.
- Inadequate impact measurement, which undermines credibility and funding opportunities. Social ventures that can’t demonstrate measurable outcomes struggle to attract grants, impact investors, and customers who care about results. Invest in robust measurement systems early, even if they seem expensive relative to your budget.
- Underestimating operational complexity, which causes many social ventures to stumble. Balancing dual bottom lines, managing diverse stakeholder expectations, and operating with limited resources requires exceptional organizational skills. Build strong operational systems and consider bringing in experienced advisers who understand the unique challenges of mission-driven organizations.
Social venture examples and case studies
Social ventures span every industry and tackle challenges from education access to environmental protection. These examples demonstrate how different organizations structure themselves to create both impact and income.
Technology for good
Technology social ventures leverage digital tools to solve social problems at scale. These organizations often achieve rapid growth by eliminating geographical barriers and reducing delivery costs through automation and digital distribution.
Khan Academy exemplifies this model, providing free educational content to millions worldwide while funding operations through donations and partnerships. Its nonprofit structure allows it to prioritize universal access over revenue maximization, yet it maintains financial sustainability through diversified funding sources.
Sustainable products and services
Product-based social ventures embed their mission directly into what they sell. Every purchase becomes an act of social impact, creating a virtuous cycle where business growth directly correlates with positive change.
Patagonia operates as a for-profit company that donates profits to environmental causes and actively encourages customers to buy less through repair programs and used gear sales. Their commitment to environmental protection shapes every business decision, from supply chain choices to political advocacy, proving that mission-driven companies can compete with traditional businesses on quality and price.
Community development initiatives
Community-focused social ventures address local challenges through place-based solutions. These organizations often combine multiple revenue streams—from product sales to service delivery—to support comprehensive community development.
Greyston Bakery in New York practices “open hiring,” offering jobs to anyone who wants to work, regardless of background, including those with criminal records or histories of homelessness. The for-profit bakery supplies major brands like Ben & Jerry’s while providing employment, training, and support services that help employees build stable lives.
Funding your social venture
Social ventures access diverse funding sources unavailable to traditional businesses. Understanding this funding landscape helps you identify the right capital for your stage and structure.
Impact investing landscape
Impact investors specifically target ventures creating measurable social and environmental benefits alongside financial returns. This market has matured significantly, with dedicated impact funds managing billions in assets and established metrics for evaluating both financial and social performance.
The US remains the global leader in venture capital, accounting for 57% of the total worldwide deal value, with US VC firms closing 14,320 deals worth $215.4 billion in 2024. While not all venture capital targets social ventures, the growing emphasis on environmental, social, and governance (ESG) criteria means more traditional investors now consider social impact in their decisions.
Grants and philanthropic funding
Foundations and government agencies offer grants specifically for social ventures, particularly those structured as nonprofits or addressing priority social issues. These non-dilutive funds don’t require giving up equity or paying interest, making them attractive for early-stage ventures.
Competition for grants remains fierce, and the application process demands significant time and expertise. Successful grant seekers align their missions closely with funder priorities, demonstrate clear theories of change, and provide robust impact measurement. Consider hiring grant writers or consultants if this funding source aligns with your model.
Traditional venture capital
Some social ventures attract traditional venture capital, particularly those with scalable technology platforms or innovative business models. Total global venture capital investment for 2025 is forecast to be around $400 billion, and social ventures increasingly compete for this capital.
However, with $307.8 billion in capital ready to be deployed, investors have been holding off due to market uncertainty, geopolitical instability, and valuation concerns. Social ventures seeking traditional VC must demonstrate clear paths to significant financial returns while maintaining their social missions—a balance that requires careful structuring and governance.
Social venture FAQ
What are the main challenges social ventures face?
Operating a social venture means juggling two sets of metrics: impact-related key performance indicators (like scholarships funded or trees planted) and financial KPIs (like gross profit and revenue per employee). Social entrepreneurs also navigate political challenges from groups or individuals who oppose their missions, while for-profit social ventures might face skepticism from advocacy groups and the general public regarding their revenue-generating activities.
How do social ventures balance profit and purpose?
Successful social ventures embed their mission into their business model, ensuring that revenue generation directly advances their social goals. They establish clear impact metrics alongside financial targets, make decisions through a dual-bottom-line lens, and often adopt legal structures like B Corp certification that formally protect their mission. The key lies in designing operations where profit and purpose reinforce rather than compete with each other.
What metrics should social ventures track?
Social ventures track both operational metrics and impact indicators. Operational metrics include traditional business KPIs like customer acquisition cost, lifetime value, and burn rate. Impact metrics vary by mission but might include people served, environmental benefits created, or systemic changes achieved. The most effective social ventures also track the relationship between these metrics, understanding how operational efficiency drives greater impact.
How do social ventures differ from CSR initiatives?
Corporate social responsibility represents how traditional businesses give back through volunteering, donations, or sustainable practices. Social ventures flip this model—the social mission isn’t an add-on but the core reason for existence. While CSR programs operate alongside a company’s main business, social ventures integrate impact into every aspect of operations, from product development to performance measurement.
What legal structures work best for social ventures?
The best legal structure depends on your funding needs, tax considerations, and impact model. Nonprofits work well for donation-dependent models serving populations who can’t pay market rates. For-profit structures suit ventures needing investment capital or operational flexibility. B Corps and benefit corporations offer middle ground, providing for-profit flexibility with mission protection. Many successful social ventures evolve their structures as they grow, starting simple and adding complexity when needed.
What is the difference between a social venture and a nonprofit?
While all nonprofits pursue social missions, not all social ventures are nonprofits. Social ventures encompass any business model—for-profit, nonprofit, or hybrid—that prioritizes social impact alongside financial sustainability. Nonprofits represent one legal structure option for social ventures, with specific restrictions on profit distribution and requirements for governance. Many social ventures choose for-profit structures to access investment capital and maintain operational flexibility while still pursuing social impact missions.
