There’s a quiet revolution going on in the world of business. A 2005 survey by the U.S. Chamber of Commerce reported that 81% of business executives believe that “corporate citizenship” should be a priority, and 75% report their businesses are actively involved in bettering their communities. In a 2006 survey of MBA students by Net Impact, 81% thought businesses should work toward the betterment of society.
But isn’t the purpose of business to make a profit? Aren’t businesses supposed to be focused on the bottom line? It appears that the very definition of these terms is changing. Increasingly, businesses are choosing to pursue what many are calling the “triple bottom line” of people, planet, and profits. They are judging their own success or failure not just on financial performance, but on how well they address social and environmental issues.
In pursuit of this triple bottom line, many businesses have adopted social responsibility practices. They work to reduce their carbon footprint, source their products from manufacturers that treat workers fairly, and commit to provide a higher quality of life for their employees. Others go beyond making their own operations socially responsible and contribute to the world around them. They donate a portion of profits to charities, engage in cause marketing partnerships, or sponsor volunteering programs for their employees.
But there is a new breed of enterprise making its appearance. An increasing number of businesses are not merely socially responsible; they have adopted a social mission at their core. For these enterprises, their reason for existence is not to turn a profit, it’s to make the world a better place. They have joined the ranks of social entrepreneurs.
Social entrepreneurship is an innovative blend of social action and entrepreneurial strategies. These new enterprises take a variety of forms, and come in all sizes. Some are organized as for-profit businesses dedicated to social change. Others are nonprofit organizations paying their own way with income-earning enterprises.
A third approach is used by professionals in private practice who offer their services pro bono to people and communities in need. And some social entrepreneurs are individuals working as full-time activists, educators, or organizers for their cause.
The uniqueness of the social entrepreneurship approach becomes more apparent when seeing it in action. Here are three typical models for social entrepreneurship ventures and examples of some of the people and organizations engaged in them.
Social Business – A for-profit business with a social agenda that holds a higher priority than maximizing profits. Its core product or service line is designed to directly address a social need. Also called “not just for profit (NJFP)” businesses, these enterprises use earned income to finance their good works.
Perhaps the most dramatic example of this model in practice is the Grameen Bank. Founded by Muhammad Yunus in 1983, Grameen Bank was established in order to provide microloans to the poorest of the poor in rural Bangladesh, without any collateral. As of December 2007, Grameen has over 7 million borrowers, and a 95% percent repayment rate. In 2006, Grameen earned a profit of $20 million U.S. It is the first and only business to ever be awarded the Nobel Peace Prize.
Earned Income Nonprofit – A nonprofit organization addressing social problems that derives a substantial portion of its income from products and services it sells to those who can pay, rather than relying solely on grants and donations. Organizations like these and their initiatives are often referred to as “social enterprises.”
A thriving organization using this model is the Delancey Street Foundation. Founded by Mimi Silbert and John Maher in 1971 to help substance abusers, ex-convicts, and the homeless get back on their feet, Delancey Street accepts no government funding. Up to 65% of their funds come from businesses run by the clients themselves: a moving company, restaurants, a print shop, and more. The businesses serve as vocational schools, teaching marketable job skills to the clients. Over 14,000 people have turned their lives around through Delancey Street’s programs.
Pro Bono Practice – A professional services group of one or more lawyers, health practitioners, consultants, or other professionals designed primarily to serve people unable to pay. The group earns its income by charging full fees to other clients, selling additional products and services to those who can pay, or finding sponsors for their work. It’s a simple model that allows even the smallest business to have an impact.
For example, San Francisco chiropractor Dr. Juan Campos began in 1988 to make an annual trip to El Salvador to offer pro bono chiropractic services. He soon asked other chiropractors to join him, all of whom paid their own expenses for the trip from their private practice income. Dr. Campos’ Chiropractic Mission to El Salvador has continued for 19 years. In 2005, 17 chiropractors and 34 students provided chiropractic care to 24,000 Salvadorians. Every volunteer paid his or her own way to participate.
What these models have in common is that they apply business principles and entrepreneurial skills to address social issues. They use the spirit, creativity, and drive of motivated individuals to make a positive difference in the world.
Because social entrepreneurs cross traditional boundaries between the worlds of government, nonprofit, and business, there is no way — yet — to accurately count how many social entrepreneurship ventures there actually are. Charles Leadbeater, author of The Rise of the Social Entrepreneur, estimates that the social entrepreneurship sector employs around 40 million people globally, with 200 million more as volunteers.
Another reason it’s difficult to count social entrepreneurs is that a standard definition for the term has yet to emerge. In this article, the focus is on enterprises that earn income or are driven by business entrepreneurs. But many believe the scope of social entrepreneurship is even wider, encompassing any innovative venture with the aim of creating social change, regardless of its funding sources or business model.
Regardless of what truly defines social entrepreneurship, one telling indicator of its tremendous growth is the number of organizations and programs that have been established to serve social entrepreneurs.
Ashoka and Echoing Green sponsor fellowships for social entrepreneurs. The Skoll Foundation and Schwab Foundation for Social Entrepreneurship offer grants. Social entrepreneurs gather in associations such as Social Enterprise Alliance, Social Venture Network, and the International Network of Social Entrepreneurs. There are conferences like the Skoll World Forum on Social Entrepreneurship and the Social Enterprise Summit.
At least thirty universities around the world have social entrepreneurship programs, including Columbia, Harvard, Stanford, and Oxford. Fast Company magazine recognizes leading social entrepreneurs annually with its Social Capitalist Awards.
Social entrepreneurship is not just an appealing idea, it’s a growing, worldwide movement. In the words of Ashoka founder Bill Drayton, “Right now we have one of the rare instances where we can really impact the long-term architecture of half of society — for generations going forward. Every leading social entrepreneur is a role model. The result is that in community after community, each entrepreneur is encouraging someone, or several people, to become local changemakers. And that leads to everyone being a changemaker.”
Copyright © 2008, C.J. Hayden. All rights reserved.
This article was first published in the Feb 2008 issue of the Get Slightly Famous Webzine, and has not been printed elsewhere. If you would like to print it in your publication, please contact me for details and permission.