Some people look at society's problems such as poverty, and the effects it has on lives, futures and entire communities, and shrug their shoulders. "What can I do? I'm just one person," they believe. Social entrepreneurs look at the same societal problems and ask, "What can I do?" Their answer is that if they join forces with other innovative people interested in social entrepreneurship, they can do plenty to make positive differences in solving such problems.
Social Entrepreneurship Definition
A social entrepreneur is someone who works to make changes for the good of society. Unlike individual activists or protesters, however, social entrepreneurs effect change through their businesses, by developing innovative programs and products with the goal of making a positive difference using business methodology.
Social enterprises are a blend of profit and nonprofit, or businesses and charities. Where it used to be that an organization was either one or the other, social enterprises combine the best attributes and practices of both.
Characteristics of Social Entrepreneurship
Of course, social entrepreneurs are a diverse group that can't be defined precisely and accurately because each is an individual. But by nature of what they set out to accomplish, they share certain characteristics with other social entrepreneurs.
Creative change makers. Social entrepreneurs are creative innovators who bring fresh, bold ideas and methods to solve what are often familiar social problems like poverty, hunger and lack of health care. Instead of saying a problem cannot be solved because others have tried and failed, social entrepreneurs say it can be solved, but doing so requires new ideas and innovations.
Business savvy. Many social entrepreneurs have business backgrounds and can bring their knowledge to the task of running their social enterprise successfully. If they don't have this knowledge, they partner with someone who does. Successful businesses have systems and processes for getting things done, and for efficient manufacture and delivery, that was often lacking in the non-profit sector. Applying business practices to solving social problems is the hallmark of social enterprise.
Open eyes and minds. Before starting their social enterprise, social entrepreneurs do a lot of research and ask questions of a huge variety of people. They don't start with their one bold idea and decide "this is it." Social entrepreneurs are doers. They don't want to waste time spinning their wheels on ideas and methods that have already proven to be unwise. They begin with open minds and are eager to learn continuously. Armed with research, they go into their enterprise with their eyes open to the problems and pitfalls they may encounter. Most importantly, they're willing to change approaches if their initial ideas become unworkable.
Value principles over money. It's not that social entrepreneurs don't want to make money. In fact, for many, it's critical that they make money in order to sustain their enterprises. But becoming rich themselves is not their goal. Many had high-paying jobs in business and found themselves unsatisfied, wanting to make a difference in some way. They value principles such as equality, fairness, human rights, human dignity and making a positive difference in the lives of others. When they succeed in making a difference, they feel richly rewarded.
Never say never. Like a dog with a bone, every social entrepreneur has a dogged determination to find a way. This is crucial because if it were easy to accomplish, someone would have done it long ago. They expect to experience problems along the way. So when they hit a stumbling block, they simply look for a way to remove it or work around it. “Looks like this can’t be done” is not part of the social entrepreneur’s vocabulary.
Types of Social Entrepreneurship
There are many ways to tweak social entrepreneurship. But basically, there are two main types that often are called (or call themselves) social enterprises or that practice social entrepreneurship in some way: those that are for-profit companies who want to also benefit society, and those that are designed specifically to make a positive difference of some kind to society.
Pure social enterprises. These are formed by people whose primary mission is to make a positive difference to society by solving one or more of society's problems. They resemble nonprofit organizations more than for-profit businesses, but they differ from traditional nonprofits by deliberately using successful business methods to accomplish their mission. Pure social enterprises would not exist without their mission of creating positive change to make a difference in people's lives.
One of the ways social enterprises differ from traditional nonprofits is that they don't rely on donations for their funding. Using business practices means that very often, they sell products to fund their mission. One example is Toms, the shoe company that donates one pair of shoes to someone who needs them for every pair of shoes someone purchases. The idea for Toms was born when Blake Mycoskie saw children going to school barefoot because they didn't have shoes. To solve that problem, he created the company with the idea of using the profits from the sales of shoes to fund the donated shoes. His mission was to sell shoes today in order to give shoes tomorrow, and Toms is his shortened form of "tomorrow."
Formed for profit. On the other end of the social entrepreneurship spectrum are businesses whose main goal has always been to make a profit. Not just a small profit, but as much money as possible for the owners, upper management and shareholders if they have them. This doesn't mean they favor profits at any cost. They may have a product line designed to make people's lives easier, better or more comfortable in some way. But they're not giving these products away. Many times they charge top dollar for them.
Starbucks coffee company is a good example of one that was created for profits but has made one of its missions to make a difference in the communities it serves and to the environment. The company is sincere in its mission; this isn't a marketing gimmick to gain customers through their good works. Though some people might like it that they're buying from a company with strong social values and actions, they go there primarily to enjoy their favorite beverage.
Starbucks opened its first store, selling coffee beans, in Seattle in 1971, and its first cafe selling coffee beverages in 1985. They began showing their social consciousness in the way they treat employees in 1988 by giving full health benefits to part-time as well as full-time employees. In 1997, their social entrepreneurship activities began to take off with the establishment of the Starbucks Foundation. In the years since, they've planted coffee trees in developing countries, ethically sourced 99 percent of their coffee, pioneered green building practices in its new stores and proposed ways to reduce the environmental impact of its paper products.
Can Social Entrepreneurs Make Money?
Blake Mycoskie, the founder of Toms shoes, doesn't reveal his net worth. However, it was estimated to be $300 million when he sold 50 percent of the company to Bain Capital in 2014. He has said that, early on, one of the challenges was how to sustain profitability while staying true to their ethical foundation.
A big stumbling block for social enterprises is their distribution channels. If products can't be distributed, they can't be sold. The same is true for donations that a company wants to deliver, whether it's shoes to developing countries that don't have a modern infrastructure or food and water donated by a for-profit company that wants to make a difference through its corporate responsibility actions.
Sometimes, it isn't impassable roads that create roadblocks, but government corruption or politics that pit people against one another instead of working for the common good. These instances are where the characteristics of social entrepreneurs are so valuable. It takes people who refuse to give up, who will find a way in spite of the obstacles. They know that one of the most reliable ways to cut through problems like these is by applying business practices. A for-profit company must find a way to sell its products if it's going to stay in business.; a social enterprise must find a way if it's going to create positive changes and make a difference.
Social entrepreneurs can make money, even those that were founded to create positive social change. On the other hand, companies that were founded to make money, like Starbucks, can have huge success of a non-financial kind, in the riches gained by the knowledge that you're making a difference in the world.
Smaller Social Entrepreneurship Companies
It helps to use famous companies to explain social entrepreneurship because most people have heard of them and therefore have a point of reference. Most of the time, famous companies are well known because they're large enough to make big news splashes. That doesn't mean that size is part of the definition of successful social enterprises, however.
Some examples of companies that are smaller and not as well known include:
- Warby Parker provides eyewear and eye care for the needy by donating the amount a person spends on eyewear to nonprofits that teach people in poor areas to give eye exams and fit eyewear affordably.
- Brandless cuts out the middleman to sell non-branded food, home, personal care and office products that are also free of toxic ingredients and animal testing, for $3 each and donates meals to the needy for every purchase.
- 10 Thousand Villages gives artisans in 30 countries ways to sell their handmade items at fair prices to sustain quality living conditions, through physical stores, items sold in other physical stores and online sales.
Why Is Social Entrepreneurship Important?
Social entrepreneurship isn't for everyone. It takes people with the right inherent characteristics, and the desire to join forces with business-minded folks to solve some of the world's most perplexing social problems.
For them, social entrepreneurship accomplishes more than making someone else's life better. It also gives the entrepreneur a feeling of satisfaction that they're making a difference in the world, something they can't get from for-profit business alone. Some would say it's as important to their well-being as it is to those they are helping.
Even people whose skills lie in other areas entirely, with the desire to become wealthy and possibly famous, can't argue that it's right for some people to be without basic necessities such as food, shelter and health care. Society may always have richer and poorer individuals, but that doesn't mean the problems poorer people encounter should be ignored or accepted.
The fact that many people don't have an interest in helping to provide solutions to societal problems is fine because there are those with the desire and drive to do so.
Some would say social entrepreneurship is important because it's "the right thing to do." But for those who aren't satisfied with that answer, consider its impact worldwide. Children who are nourished, who have shoes to wear to school and get an education, whose families have the means to earn a living wage, will grow up to be able to contribute to society in ways they otherwise might not have been able to do. They, too, then, can make a difference in the world.
- Business Dictionary: Social Entrepreneur
- Forbes: 5 Reasons Why Social Entrepreneurship is the New Business Model
- World Economic Forum: Explainer: What is a Social Entrepreneur?
- Inspire2Enterprise: 6 Characteristics of Brilliant Social Entrepreneurs
- Conscious Company Media: There are Actually 6+ Types of Social Enterprise
- National Post: Founder of the One-for-One Shoe Company Toms Looks Back...
- Starbucks: Newsroom: How Starbucks Plans to Make an Impact by 2020 and Beyond
- Starbucks: Fact Sheet: Starbucks Company Timeline
Barbara Bean-Mellinger is a freelance writer who lives in the Washington, D.C. area. She has written on business topics for afkinsider.com, smallbusiness.chron.com, Harbor Style Magazine, the Charlotte Sun and more, as well as advertising copy and materials. Barbara holds a B.S. from the University of Pittsburgh and has won numerous awards in B2B and B2C marketing.