Entrepreneurial thinking in the social sector has been in practice in one form or another for years. It dates back hundreds of years to farmer cooperatives and decades back to when Muhammad Yunus introduced microcredit to help the poorest of the poor in Bangledesh lift themselves out of extreme poverty.
So what exactly does it mean to embrace entrepreneurial thinking in the social sector? The traditional understanding of entrepreneurship evokes images of disruptive innovation, creatively meeting needs of others and efficiently using scarce resources. With this in mind, we can look at entrepreneurship through a social lens—as opposed to an economic one—to see its vast potential for creating change in our world.
I am continually drawn to the definition of social entrepreneurship from Sally Osberg and Roger Martin’s 2007 discussion in the Stanford Social Innovation Review. They propose that organizations and individuals practicing social entrepreneurship:
- Identify a stable but unjust equilibrium in society that causes suffering (or exclusion, marginalization) of a population that lacks the resources to lift itself out of the suffering on its own;
- Develop an innovative social value proposition to disrupt this unjust status quo;
- Forge a brand new stable equilibrium for this population that stops the suffering and improves the lives of this population and society at large.
In other words, social entrepreneurship creates wide-scale, lasting systems change for the greater benefit of society. These individuals and organizations can be for-profit or nonprofit—and could even be funded entirely by donations and grants.
Bill Drayton, the founder of Ashoka, has spent more than 30 years identifying and supporting hundreds of social entrepreneurs around the world. He sums up the idea well, saying, “Social entrepreneurs are not content just to give a fish or teach how to fish. They will not rest until they have revolutionized the fishing industry.”
Social sector “changemakers” (a term coined by Bill Drayton himself) have been embracing entrepreneurship in a variety of inspiring ways.
In addition to wide-scale systems change, entrepreneurial thinking can be showcased simply through the practice of selling goods or services to offset expenses. This tactic diversifies funding streams that support a nonprofit’s social mission, providing both mitigation against funding losses as well as the additional resources needed to scale impact.
Along the continuum of social enterprise models, we can look at the level of integration between the social and economic activities. At one end of the spectrum, it is possible for both the social and economic activities to be essential in achieving the social mission of an organization, where they act in tandem and symbiosis. On the other end of the spectrum, where the economic activity is not intrinsic in achieving the social mission, the value of a social enterprise can simply be its ability to fund the social mission.
There are several great examples of fully integrated social enterprise models, one of which is an employment social enterprise. A great example of the employment social enterprise model is Sweet Beginnings LLC. At first glance, this appears to be just another company that makes all-natural body care products from raw honey and honey-infused ingredients. But at its core, this Chicago-based social enterprise provides full-time transitional jobs for formerly incarcerated individuals. Employees of Sweet Beginnings do everything from taking care of the bees and hives, harvesting the honey and making the all natural skin and beauty products, to shipping, tracking and managing inventory. These skills are transferrable to many industries for future long-term employment. The most impressive and significant thing to note about this organization is that recidivism for former employees is below 4 percent, versus Illinois State’s average of 55 percent.
Employment-based social enterprises are truly socially driven—but also need to embrace an entrepreneurial mindset and approach to management in order to be financially sustainable. The economic value is secondary to the social mission, but it is still essential to generate sustainable income and fulfill the social mission through provision of living wages, skills development and job training. The populations in need, such as formerly incarcerated individuals in the case above, would likely not have had the same employment opportunity had the social enterprise not existed. Where a traditional enterprise’s goals would be to generate surplus revenue, in this case surplus funds also cover the cost of delivering social value (specialized training, livable wages and higher-cost production).
On the other end of the spectrum we can look at an innovative charitable funding strategy developed by Craig and Marc Kielburger, brothers who founded Free The Children in 1995. Free The Children encourages youth to give back to their communities locally and abroad with programs engaging over 1 million young people worldwide.
Over the years the Kielburger brothers were shocked to see how traditional international development funding flowed through foreign communities as quickly as news stories came and left media channels with the next crisis. Seeing how this resulted in unsustainable and inefficient funding for charitable causes, they were inspired to design a new way to fund Free The Children programs.
The Kielburgers turned to entrepreneurial endeavors to generate income to fund the overhead costs of Free the Children. “Me to We” is the group of companies that sell market-driven products and services to the public. The “Me to We” companies generate profits from these companies the same way a traditional for-profit company would. The difference is that 50 percent of net profits generated by “Me to We” sales are donated directly to Free The Children charity. The remaining 50 percent is reinvested into “Me to We” initiatives to fund innovation and growth. “Me to We” companies range among volunteer travel services, ethically made gifts and clothing, a speaking bureau and leadership camps. Since 2009, “Me to We” has donated more than $6.5 million to Free The Children through cash and in-kind donations.
It is clear that fostering entrepreneurial thinking in the social sector has the potential to generate significant changes in the way social issues are addressed. We can achieve this in a variety of ways, from tackling the root cause of issues with critical interventions, to simply generating diversified revenue streams to support “traditional” non-profit work. As terms like “social entrepreneurship” and “social enterprise” become common vocabulary in the field, it is crucial that social entrepreneurship enthusiasts, champions and practitioners take a step back and keep the most important message in the forefront: Entrepreneurship and enterprise in the social sector serve as means to an end—not as the end itself. Entrepreneurial initiatives in the social sector are another tool in our toolbox that can be used to accelerate social change for the betterment of our society.
In growing the social sector’s ability to think entrepreneurially, we have a huge opportunity to accelerate social impact and help eliminate our most intractable social issues. Addressing social change with an entrepreneurial perspective allows us to transform the way we run our society by forging new and better norms. These fundamental changes allow us to move past addressing social issues with “Band-Aid” solutions.
This blog post first appeared as a guest post by Danielle Carruthers for 1776. You can view it here.