- Social entrepreneurship is, at its most basic level, doing business for a social cause. It might also be referred to as altruistic entrepreneurship.
- Social entrepreneurs combine commerce and social issues in a way that improves the lives of people connected to the cause. They don’t measure their success in terms of profit alone – success to social entrepreneurs means that they have improved the world, however they define that.
What is a Social Entrepreneur?
A social entrepreneur is someone who recognizes a social problem and uses
entrepreneurial principles to organize, create, and manage a venture to make social
change (a social venture).
Whereas a business entrepreneur typically measures performance in profit and return, a
social entrepreneur focuses on creating social capital. Thus, the main aim of social
entrepreneurship is to further social and environmental goals.
However, whilst social entrepreneurs are most commonly associated with the voluntary
and not-for-profit sectors, this need not necessarily be incompatible with making a profit.
Beyond that, however, there are differing opinions about what constitutes social
entrepreneurship. Some believe the definition applies only to businesses that make
money and work toward improving a designated problem by selling something to
consumers. Others say business owners who work to solve a social problem using
grant or government money are also social entrepreneurs.
Social Entrepreneurship Examples
- TOMS: When the company was founded, it applied its “one for one” concept to shoes. For every pair of TOMS shoes purchased, the company donated a pair to a needy child. The company has since expanded the one for one concept to eye wear, coffee, and tote bags.
- Grameen Bank: Founder Muhammad Yunus provides micro-loans to those in need to help them develop financial self-sufficiency. Yunus received a Nobel Prize for his work in 2006.
- Badala.org: Founded by Joelle McNamara while she was still in high school, Badala.org is an e-commerce site that creates jobs for African women by selling the products they make. Products range from jewelry to wooden kitchen utensils.
- Ashoka : Bill Drayton founded Ashoka in 1980 based on the idea that the most powerful force for good in the world is a social entrepreneur: a person driven by an innovative idea that can help correct an entrenched global problem. The world’s leading social entrepreneurs pursue system-changing solutions that permanently alter existing patterns of activity. Beginning in India in 1981, Ashoka started identifying and supporting the world’s leading social entrepreneurs who have ideas for far-reaching social change. It started by first distilling their unique qualities and pioneering a rigorous global system for vetting and electing them to the Ashoka Fellowship. Four years later, Bill Drayton was awarded a MacArthur Fellowship (“genius” award), and began to work full-time on building the Ashoka organization.
- Seventh Generation: Jeffrey Hollender founded Seventh Generation, a company specializing in the production of eco-friendly household cleaning products and personal hygiene products, in the late 80’s. Along with developing products that were free of harsh chemicals, the company also decided to donate 10 percent of its profits to non-profit organizations and businesses that are dedicated to social and environmental causes.
- Jacqueline Novogratz: Jacqueline Novogratz is one of the few social entrepreneurs who has successfully managed to integrate traditional investment methods with entrepreneurial investment techniques. Novogratz created her company Acumen in 2001 with the help of funding provided by the Rockefeller Foundation, the Cisco Systems Foundation, and several other philanthropists. Acumen, which was previously named the Acumen Fund, uses patient, or long-term capital to helps fund businesses who have a focus on providing solutions to social issues.
Characteristics
According to the Schwab Foundation for Social Entrepreneurship, social entrepreneurs
share several characteristics. They:
- Achieve large scale social change.
- Focus on the social or ecological change they want to make while earning money to support the change.
- Innovate when looking for a solution to a social problem.
- Use feedback to adapt and refine.
While popularized by Gen X, social entrepreneurs have long existed in history. 19th
century innovators Florence Nightingale and landscape architect Frederick Law
Olmsted are considered social entrepreneurs.
social enterprise has taken off as a new formula for success, combining capitalism with
a do-gooder mentality. These self-funding, for-profit businesses also have a mission to
tackle global issues such as alleviating hunger, improving education, and combatting
climate change. To achieve their high-minded goals, the companies might fund specific
programs, partner with governments or existing philanthropic entities, or follow a one-
for-one donation model, and work on either the local or international level.
Here are five reasons why Entrepreneurs believe social
entrepreneurship is the new business model:
- It connects you to your life purpose.
Honeycomb is a social impact SaaS platform bringing businesses and philanthropy
together to make the world a better place. The company has facilitated over $2.4 million
in social impact to over 500 non-profits in less than four years.
Honeycomb cofonder Melissa Levick said, “ Having social impact built into your
business model allows you to live your life on purpose. It’s about connecting your
brand’s why with how it can be used authentically to serve the world. It’s not a gimmick
or a marketing tool. It’s a genuine mechanism to solve social problems while feeling
connected to a higher purpose.”
- It keeps you motivated.
Ido Leffler had tremendous success with one of his first businesses, the natural beauty
brand Yes To (Carrots, Cucumbers, etc). When thinking about what to do next, he and
his business partner Lance Kalish decided to build their company on three key pillars:
working with incredible people, making great products, and benefiting an impactful
cause.
Leffler created Yoobi to make school supplies fun again and solve a big problem along
the way: Teachers in the U.S. spend an average of $500 out of their own pockets every
year on school supplies, and millions of kids don’t have the tools they need to realize
their potential in the classroom. For every Yoobi item sold, the company donates
supplies such as colored pencils, staplers, and notebooks to schools in disadvantaged
neighborhoods.
Why found a social enterprise? “I think the biggest question once you’ve reached
success is one of motivation,” Leffler said. “What keeps you going? For us, it was this
idea that we didn’t want to just be ‘widget guys.’ We wanted to make a real and lasting
impact on people’s lives. It’s that simple. At the end of the day, giving back in the way
that we are is much more rewarding than any business success I can think of.”
- It brings you lasting happiness.
Corporate360 is a multi-million dollar outbound marketing data software start-up that
founder Varun Chandran created without external funding. The company also runs
an NGO in Chandran’s hometown of Padam, in Kerala, India.
The social enterprise’s main programs include improving sanitation, drinking water, and
housing for the villagers. The company has gifted a school bus and an ambulance to the
local government. Every academic year, the Corporate360 team distributes school kits
consisting of bags, books, umbrellas, and lunch boxes to the local students. In addition,
through its SmartWorker software, Corporate360 hires women, youth and physically
challenged individuals from low-income families, training them to perform simple digital
data tasks and connecting them to a life-changing source of income.
Chandran himself grew up in Padam extremely poor, the son of a farmer. This is a big
reason why, for him, the definition of success includes making a difference in other
people’s lives. “I have discovered a larger purpose,” Chandran said. “My biggest
happiness so far in life is being able to go back to the village where I was born and
‘adopt’ it. When I first made money, I traveled to 32 different countries and bought
everything that I had ever wanted, but I realized that I still wasn’t happy. I found real,
lasting happiness through my social impact work. At the same time, it makes me feel
more responsible for working hard to build the business so that I can contribute even
more. It’s a win-win situation, and I enjoy it to the fullest.”
- It helps you help others discover their life purpose.
NEWaukee, based in Milwaukee, is the only social architecture firm in the country that
operates on a social enterprise business model. “We believe that the place in which a
company is located and how invested that company is in the local community have a
direct correlation to the ease with which it sources the talent needed to make its
products and the customers needed to buy its products,” explained NEWaukee co-
founder and CEO Angela Damiani.
The social enterprise model allows NEWaukee to offer hundreds of events and
programs annually to the public for free, build public parks and works of public art
without the need for taxpayer or philanthropic investment, and support twenty-four
different non-profit organizations at no charge. “We’ve developed a mechanism for
corporations to put the human back into human resources while simultaneously making
the Milwaukee community a more equitable, accessible and vibrant place for all to
enjoy,” Damiani said.
On a personal level, Damiani feels honored to “live and breathe this work every day.”
She said, “Not only have I found my own passion through creating this business model,
but also I am delighted to help others find their own life purpose through our projects
and programs. We are serving our clients while shedding light on their potential to be
their best and brightest.”
- It is what today’s consumers want.
WE’VE provides hand-selected, skilled artisans from Cambodia, India and the U.S. with
a global online marketplace for their goods. All the eco-friendly products are sustainably
created. In addition, WE’VE collaborates with the artists to support their families and
local communities.
WE’VE Founder and CEO Eve Blossom said, “As consumers, we have redefined
ourselves as citizens of the world. More and more people are interested in products and
services that align with their values. We are considering our purchases in a holistic
sense, examining the price of products not only in terms of the amount paid at the
register, but also the total cost of production along the way, including pesticides and
poisons used, sweatshops employed, and other, broader human consequences. A
whole industry has grown around this revelation, as businesses are being built on a
smarter framework of ecological, economic and social sustainability. The most fulfilling
goods and services are those that connect us in relevant ways to other people and help
us live in concert with our values
“Climb mountains not so the world can see you, but so you can see the world.”
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