The paper focuses on the new phenomenon of social businesses and analyzes their unique attributes and their variegated contributions to those working in them and to society. Organizationally and conceptually, these hybrid entities can be placed between the non-profit and the business organization form as they are allowed to distribute profits but not to the owner/investor of the firm. The paper places such entities within the larger context of social enterprise and presents findings of a study conducted in Israel in 2009 on that phenomenon. The paper ends by analyzing the policy implications of these new developments and suggests that in order to promote social businesses and social enterprise in society, simultaneous intervention is needed on three aspects: the legal, the funding and the organizational support.