Social Entrepreneurship

Social EntrepreneurshipSocial entrepreneurship is the engagement of entrepreneurial and business practices to promote the greater good of the community. These endeavors have social welfare as an explicit goal rather than solely profit. Areas of focus include microfinance, environmental sustainability and health. Unlike most traditional charity efforts, social entrepreneurship seeks to empower the most needy members of the world community to help themselves. It also backs environmental and other initiatives with fiscally responsible action that yields measurable results. In this way, a social entrepreneur is as much an MBA wizard as a philanthropist.

Social Entrepreneurship and Its Impact on Today’s Economy

The economic downturn has led to both greater social need and shrinking social resources. Millions of Americans are still out of work, and the nation is faced with making tough decisions about financial resource allocation. Government cutbacks seem imminent, and nonprofit organizations are doing more with fewer endowments and donations. Social entrepreneurship is one solution to bridging the gap between need and finite resources. These endeavors combine business acumen with social goals to create financially viable organizations and projects. A successful social enterprise becomes self-sustaining through realizing returns on investment and reinvesting in its social initiatives. Ventures can take many forms from capital investment firms to nonprofits providing direct social benefits that promote client independence. Governments are recognizing the unique contribution that social enterprises make to the economy, and 10 U.S. states already give these hybrid entities special status. Washington State is poised to pass legislation that will create the social purpose corporation. Other state-sanctioned legal names for entities that combine entrepreneurial and philanthropic objectives are the low profit limited liability company and the benefit corporation.

Social Entrepreneurship Success Stories

The Acumen Fund makes socially responsible investments in some of the world’s poorest areas. The firm moves the development paradigm away from short-term capital investments driven by quarterly profit to a model of patient capital that makes investments yielding sound financial and social returns. Patient capital invests in early ventures that provide necessities to low income people and communities. Typical investments range from $300,000 to $2.5 million, and debt resolution occurs in seven to 10 years. The Acumen Fund was founded in 2001 with backing from the Rockefeller Foundation, the Cisco Systems Foundation and private philanthropists. To better serve their markets, they have offices in the United States, India, Kenya and Pakistan.

The 2008 venture ClearlySo is an online marketplace that brings socially conscious investors and corporations together with social businesses. Formerly socialinvestments.com, their goal is to help social entrepreneurs raise capital. Entrepreneurs must apply to the program, and those accepted work with ClearlySo advisers to create a viable business proposal to present to social investors.

Delancey Street Foundation, founded in 1971, is one of the oldest residential self-help enterprises for recovering substance abusers, convicts and others who have hit bottom. The organization is still the leading one of its kind, training people with nowhere else to turn how to help themselves. Over 10,000 illiterate clients have obtained an education, 18,000 have become self-supporting, and 12,000 former gang members have moved into non-violent lives and positive activism.

Additional Social Entrepreneurship Resources

SocialEarth provides news and information about social entrepreneurship. In addition to news stories and events, the Web site maintains a directory of companies engaged in social entrepreneurship around the world. The Harvard Business School offers resources on social enterprise including articles and case studies. The Schwab Foundation for Social Entrepreneurship identifies the most promising social entrepreneurs and engages in a variety of educational and community initiatives. The foundation partners with Harvard, Stanford and other top universities and participates in global economic forums. The National Venture Capital Association offers a resource section dedicated to venture philanthropy. The Social Enterprise Alliance provides support for individuals and companies through membership and networking, regional chapters, and public advocacy. The breadth of resources demonstrates the continued growth of social entrepreneurship and its value to the U.S. economy and the world.

Additional resource: Voluntary Sector