Key terms
This resource provides key terms used in the Australian social enterprise sector. It explains technical language and helps people use the same words to mean the same things.
Elder
A respected member of an Indigenous community who has gained recognition as a custodian of knowledge and wisdom. Elders are responsible for passing down cultural knowledge, traditions, and practices to younger generations.
Entrepreneur
An individual who identifies a need or opportunity in the market and starts a business venture to address it, taking on financial risks in the hope of profit. Entrepreneurs are innovative, proactive, and willing to embrace uncertainty.
Environmental, Social, and Governance (ESG)
It refers to a set of criteria used to evaluate how a company or organisation performs in terms of its environmental impact, social responsibilities, and governance practices. These criteria help assess the sustainability and ethical impact of a business on the broader community and the environment.
Equity investment
Investment in exchange for a stake in an organisation, usually in the form of shares, representing ownership of a portion of the company's value. Non-profit organisations are unable to access equity investment because they are not privately owned.
Ethical investing
A strategy focused on selecting investments that avoid negative impacts on society and the environment, prioritising companies and projects that align with positive social and environmental values.
Ethical leadership
This is the practice of leading by doing what is morally right, fair, and honest. Ethical leaders make decisions that respect the rights and dignity of others, set a positive example, and prioritise integrity and ethical behaviour in their actions and decisions.
Feasibility study
A researched assessment to gauge the potential for a project’s or enterprise’s success, considering costs, personnel, risks, and context.
Federal Government
National-level government agencies and departments that determine social enterprise policy and funding.
Financial intermediaries
An institution or entity that facilitates the channelling of finance between the supply and demand-sides of a capital market. Includes banks, credit unions, crowdfunding platforms, and specialised financial organisations that offer tailored products and services for social enterprises. Higher education institutions: Universities and institutes that offer courses, research, and incubation programs related to social innovation, entrepreneurship, and enterprise.
(Financial) Sustainability
The ability of an organisation to continue its operations and impact over the long term, by balancing social, environmental, and financial considerations in its decision-making and resource allocation.
Financing
The process of providing funds for business activities, making purchases, or investing. Financing can come from a variety of sources, such as banks, investors, or personal savings, and can take different forms, such as loans, credit, grants, or equity investments.
First Nations
A respectful term used to refer to Aboriginal and Torres Strait Islander peoples as the original inhabitants and sovereign nations of Australia.
Fixed costs
Regular, unchanging expenses a business must pay, such as rent, salaries, and insurance.
Founder
The individual or group of individuals who start a new organisation or enterprise, often serving as its initial leaders and visionaries.
Funding
Money given by individuals, organisations, or governments for a specific purpose.
Governance
The rules, practices, and processes by which an organisation is run, including its policies. Critically, governance includes an explicit articulation of how decisions are made. Usually enacted through a governing group or board.
Grant
A conditional or unconditional gift of money with no expectation of financial return.
Higher education institutions
Universities and institutes that offer courses, research, and incubation programs related to social innovation, entrepreneurship, and enterprise.
Impact
The significant, positive change that results from an action, enterprise, project, program, or policy. In the context of social impact work, impact refers to the measurable improvements in the lives of individuals, communities, or the environment that can be attributed to a particular intervention or initiative.
Impact Economy
An economic system that prioritises the creation of positive social and environmental impact. In an impact economy, businesses, investments, and economic activities are designed and evaluated based on their ability to generate measurable benefits for people and the planet, while also being financially sustainable. The impact economy seeks to redirect the flow of capital, resources, and talent towards solving pressing social and environmental challenges, and to create a more equitable, resilient, and regenerative economic system.
Impact investing
A strategy that expands the pool of funds available for social and environmental purposes, encouraging innovative approaches to persistent problems. It recognises that the challenges facing society are too large and complex to be solved by government, philanthropy, and not-for-profit organisations alone.
Impact investment
Investments made into organisations, projects or funds with the intention of generating measurable social and environmental outcomes, alongside a financial return.
Impact investors
Individuals and institutions that invest in social enterprises with the intention of generating both social and financial returns.
Impact measurement
The process of quantifying the social, economic, and environmental effects of an organisation's activities, often in relation to specific goals and the influence of other factors.
Impact model
A framework that describes how an organisation's activities lead to positive social or environmental changes. It outlines the resources and actions needed, the outputs and outcomes expected, and the ultimate impact the organisation aims to achieve in addressing a specific problem or need. ‘Impact model’ is often used interchangeably with ‘theory of change’.
Income streams
The different sources of revenue for a business, such as grants, sales, or fees.
Incorporated Association
A legal structure commonly used by not-for-profit organisations in Australia. Incorporated associations are registered under state or territory legislation, which varies across jurisdictions.
Incorporation
The legal process of creating an organisation as a separate legal entity from its owners or founders. When an organisation is incorporated, it becomes a distinct legal "person" with its own rights, responsibilities, and liabilities, separate from those of its shareholders or members. Incorporation offers several benefits, such as limited personal liability for owners, the ability to raise capital through the sale of shares, and potential tax advantages.
Indigenous Corporation
A corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (CATSI Act). It is a structure designed for Indigenous organisations and takes into account Indigenous customs and traditions.
Indigenous procurement
The practice of organisations, businesses, and governments purchasing goods and services from Indigenous-owned businesses, as a means of supporting Indigenous economic development and self-determination.
Innovation
The process of creating, developing, and implementing new ideas, products, services, or methods that provide value or solve problems in original and improved ways. Innovation can involve entirely new inventions or significant enhancements to existing ones, and it often requires creative thinking, experimentation, and a willingness to take risks.
Innovation ecosystem
The network of organisations, institutions, and individuals that support the development and growth of enterprise, including government agencies, funders, intermediaries, accelerators, incubators, and educational institutions.
Innovation hubs
Centres that foster creativity, collaboration, and experimentation to develop new social enterprise ideas and solutions.
Intermediary
An organisation or individual that acts as a bridge between different parties, helping to facilitate communication, coordination, collaboration, and the exchange of information, knowledge, and resources. In the context of social enterprise, intermediaries often play a crucial role in connecting funders, investors, service providers, communities, sellers, and buyers to support the development and implementation of effective solutions.
Intrapreneur
An employee within a company who takes on the role of an entrepreneur by developing new ideas, products, or processes as if they were running their own business. They drive innovation and help the company grow by acting creatively and proactively from within the organisation.
Kinship
The complex system of social relationships and responsibilities that govern Indigenous societies, based on family ties, shared experiences, and cultural obligations.
Legal structure
The legal framework that determines the rules and regulations for how an organisation will operate. For social enterprises, there are various types available, each with pros and cons
Local Governments
City or local-level authorities that have a specific influence on community-based social enterprises and localised initiatives.
Loss
When an organisation's expenses exceed its income.
Management accounts
Summarised accounting data (balance sheet, cash flow, and income statement) prepared for a charity's management and Board.
Managing Director
A senior executive responsible for the day-to-day operations of an organisation, often reporting to the CEO or board of directors.
Market connectors
Brokers that link social enterprises with customers to facilitate and grow trade. They may use a variety of platforms and means of intermediation, and specialise in different customer segments including retail, business-to-business, public sector procurement, or outcome purchasers.
Marketing
The way an organisation communicates with stakeholders, concluding promotions, advertising, building brand loyalty, and market research.
Marketing channels
The different methods used to make products and services available and accessible to customers, such as wholesalers, retail agents, or catalogues.
Market research
The process of gathering information to test market demand and tailor goods and services to customer needs, using surveys, interviews, focus groups, and competitor research.
Memorandum of Association
A legal document prepared in the formation and registration process of an organisation.
Mentor
An experienced and trusted advisor who provides guidance, support, and encouragement. They can also act as a role model, sounding board, and source of constructive feedback.
Mindsets
The established set of attitudes, beliefs, and assumptions held by an individual or group that shape their perspective, decision-making, and actions. Mindsets influence how people interpret and respond to situations, and they can be positive, negative, or neutral.
Mission statement
A concise explanation of an organisation's reason for existence, describing what it does and for whom.
Monitoring and evaluation
Monitoring and Evaluation (M&E) is a systematic process of collecting and analysing data to assess the effectiveness and impact of any given intervention. M&E is often based on an intervention’s impact model. The role of learning is increasingly being elevated in M&E practice (often changing the acronym to MEL, with the ‘L’ being for ‘learning’) to reflect the idea that M&E should be developmental alongside enabling accountability.