What is the “Social Impact Sector?”

With the rise of socially and environmentally responsible business, the term “social impact sector” has grown in popularity. More than just trendy jargon, the social impact sector carries depth that many people are unaware of. So, I want to explain it a little more.

The social impact sector became a new phrase to replace the non-profit sector, but it seems it has developed into something all its own. It blurs the lines across all sectors and warps the neat boxes corporate business has placed on organizations for decades.

What characterizes the social impact sector, you may ask?

Humanitarian and Environmental Work

Businesses in the social impact sector typically have a cause that the company is supporting, or is providing a solution to a particular environmental or community problem. This is the company’s reason for being and every corporate strategy and decision is to affect this cause. For example, 4Ocean is a certified B-Corp that sells recycled plastic bracelets which funds their efforts to clean the ocean and remove plastic from the seas across the world. 


We cannot solve the world’s problems alone – it truly takes a village! Social impact sector establishments normally expand their reach and bolster their impact through partnerships with local companies, suppliers, governmental agencies, lobbying groups, and volunteer networks with similar values working together for the same purpose. Organizations should also include the beneficiaries in their collaborative efforts to avoid egocentric approaches or solutions. Forbes mentions collaboration as one of 6 rules for success from the social sector.

For-profit Mindset with Impactful Goals

Though many businesses in the social impact sector are non-profits or non-governmental organizations (NGOs), there is an emerging movement towards start-ups that are social enterprises. Social enterprises operate like for-profit firms but with a unique attribute – they serve impactful goals for humanitarian or environmental causes. This means their purpose to bring transformation is incorporated into the firm’s very DNA; its business model. It goes above and beyond corporate social responsibility (CSR). In fact, McKinsey & Co. have realized that traditional CSR is no longer effective.

Our world is crumbling and the social impact sector works to slow its decay. We need investors, stakeholders, upper-management, boards, and entrepreneurs to recognize the trend of the collective demand and expectations on businesses to utilize their resources to help solve major world concerns.

Will you join the journey?

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