Social Entrepreneurs

Social Entrepreneurs are ordinary people who find innovative solutions to society’s social problems.

David Bornstein defines social entrepreneurs as “path breakers with a powerful new idea, who combine
visionary and real-world problem solving creativity, have a strong moral fibre, and who are ‘totally
possessed’ by their vision of change.”

Social entrepreneurs use traditional entrepreneurial models to bring social or community benefits. They
often have a personal experience of the need they are addressing and as such they are uniquely
positioned to address some of our most pressing social challenges. They are passionate, driven and
committed.

A general and common business entrepreneurship means taking a lead to open up a new business or
diversifying the existing business, social entrepreneurship mainly focuses on creating social capital
without measuring the performance in profit or return in monetary terms. The entrepreneurs in this
field are associated with non-profit sectors and organizations. But this does not eliminate the need of
making profit. After all entrepreneurs need capital to carry on with the process and bring a positive
change in the society. Social enterprises tend to operate with a purpose of creating value for the society
and also generate income. As a thumb rule, the solutions they offer are supposed to be innovative,
unique, people and environment friendly; Cost effectiveness is also a huge consideration. All of these are
challenges to the sustainability of social enterprises, but the ones that are able to scale these are the
ones that are able to create a huge impact.

Along with social problems, social entrepreneurship also focuses on environmental problems. Child
Rights foundations, plants for treatment of waste products and women empowerment foundations are
few examples of social ventures. Social entrepreneurs can be those individuals who are associated with
non-profit and non-government organizations that raise funds through community events and activities.

History

Although the terms are relatively new, social entrepreneurs and social entrepreneurship may be found
throughout history. A list of a few noteworthy people whose work exemplifies the modern definition of
"social entrepreneurship" includes Florence Nightingale, founder of the first nursing school and
developer of modern nursing practices; Robert Owen, founder of the cooperative movement; and
Vinoba Bhave, founder of India's Land Gift Movement. During the nineteenth and twentieth centuries
some of the most successful social entrepreneurs straddled the civic, governmental, and business
worlds. These pioneers promoted new ideas that were taken up by mainstream public services in
welfare, schools, and health care.

There were entrepreneurs during nineteenth and twentieth centuries who made efforts to eradicate
social evils. Apart from this, there are many societies and organizations that work for child rights,
women empowerment, save environment, save trees, treatment of waste products, etc. Apart from
addressing the social issues, social entrepreneurship also includes recognition and addressing the
environmental problems and finaniety and academic research, notably after the publication of "The Rise
of the Social Entrepreneur" by Charles Leadbeater. Many activities related to community development
and higher social purpose fall within the modern definition of social entrepreneurship.

The terms social entrepreneur and social entrepreneurship were used first in the literature in 1953 by H.
Bowen on his book "Social Responsibilities of the Businessman". The terms came into widespread use in
the 1980s and 1990s, promoted by Bill Drayton, Charles Leadbeater, and others. From the 1950s to the
1990s, the politician Michael Young was a leading promoter of social entrepreneurship and in the 1980s,
he was described by Professor Daniel Bell at Harvard University as the "world's most successful
entrepreneur of social enterprises". Young created more than sixty new organizations worldwide,
including the School for Social Entrepreneurs (SSE) which exists in the UK, Australia, and Canada and
which supports individuals to realize their potential and to establish, scale, and sustain, social
enterprises and social businesses.
Forms of Social Entrepreneurship:

Clearly, social entrepreneurship is not a one-size-fits-all designation for a specific type of activity. There
are different types of entrepreneurs and entrepreneurship that fall under the umbrella of social
innovation. These different types of social entrepreneurship show just how varied the concept can be.

Community Project:

A community project is a relatively small-scale effort to address an issue within a specific community.
Social, environmental and economic issues are the primary focus of most community projects, but the
interpretations of what this means can be quite broad. Anything from an effort to build a community
garden in an affluent suburb to the organization of a volunteer fire department in a poverty-stricken
rural area can fall under the umbrella of a social entrepreneurship community project.

Community projects are one of the best examples of the idea that anyone can be a social entrepreneur.
You don’t need a business degree, power or connections to affect change where you live. All you need is
the entrepreneurial initiative, creativity, tenacity, and commitment to see a project through to
completion.

Non-profit Organization:

The exact structure of a non-profit organization is likely to differ based on legal jurisdiction, but on the
whole, non-profit organizations exist not to generate revenue for shareholders and stakeholders but to
create an enterprise focused on a specific cause. One common misconception is that non-profit
organizations funnel all the donations they receive into their mission, but this isn’t the case. Executive
leadership for large non-profits can often be quite well compensated; their income generally isn’t nearly
as high as that of the leader of a comparably sized organization in the private sector, but nonprofits do
spend money on operational expenses like salaries, marketing, and offices. Any extra revenue is put
back into the organization’s endowment or reinvested in other ways rather than paid out to
shareholders.

Aside from operations, though, nonprofits are bound by duty and often by law to use the income they
generate to address issues relating to their mission. Non-profits may focus on specific issues, such as the
treatment of a rare disease or their missions may be a bit more general and focused on broad categories
such as social impact, early childhood education, women’s health, and cancer research.
Co-operative (Co-op):

People who come together to address a specific need often form co-operative groups, or co-ops. These
member-owned and operated enterprises usually focus on basic needs like housing or groceries.
According to the International Co-operative Alliance, co-ops are “autonomous association[s] of persons
united voluntarily to meet their common economic, social needs and cultural needs and aspirations
through a jointly owned and democratically controlled enterprise.” In most places, co-ops have their
own special legal specifications and requirements, and they can operate on either a non-profit or for-
profit basis. In most cases, non-members cannot participate in the co-op, but a quick application process
is usually all that’s required to join. Members may be required to pay a membership fee to cover
operational expenses and they may also be required to perform certain duties to keep the co-op up and
running.

Social Enterprise:

Businesses that operate according to a specific social or charitable mission are known as social
enterprises. These businesses are often backed by a non-profit organization and may exist to further
that organization’s goal and opportunity. For example, a charity that focuses on the health and well-
being of senior citizens may start a weekly craft fair that allows seniors to sell carpentry projects,
embroidery or baked goods as a way of generating some income.

Social enterprises typically focus on providing a job skills training opportunity program for marginalized
or vulnerable people and may use proceeds from the business to pay salaries to populations supported
by the non-profit organization or to fund the non-profit’s efforts as a means of supplementing income
through donations. Social enterprises can also address inequality or injustice; one example of this is the
casinos operated by indigenous tribes in North American communities who have been displaced from
their ancestral lands by colonial governments.

Social Purpose Business:

Some businesses founded to both generate profit and affect some sort of change for the good of the
general public or a specific group of people in need of assistance. An organization that strives to strike
an ideal balance between for-profit organizations and non-profit programs is known as a social purpose
business. Social entrepreneurs who follow this route believe that the pursuit of financial gain doesn’t
have to be at odds with ethical, conscience-focused action. These kinds of businesses tend to attract
impact investors. Impact investing operates much like any traditional business investment or venture
capital effort, only with the added concern of generating social good. An impact investor will want to
ensure that their investment goes toward a business model that’s not only likely to succeed but also
likely to succeed in its mission of affecting positive change.

There are advantages of a social enterprise that are entrepreneur specific.

Social entrepreneurs find it easier to raise capital. There are huge incentives and schemes from the
government for the same. since the investment industry here is ethical, it is easier to raise capital at
below market rates.

Marketing and promotion for these organisations is also very easy. Since a social problem is being
tackled with a solution, it is easier to attract attention of the people and media. The degree of publicity
often depends on the degree of uniqueness of the solution.

It is easier to garner support from likeminded individuals since there is a social side to the enterprise. It
is also easier to get people onboard at lower salaries than compared to other industry.

Similarly there are advantages that are specific to the environment, society and the people concerned.
Services in whichever section they may be offered are customized better to suit the needs of the
individual or the problem. This is also designed in harmony with all other systems like the environment,
society or the people.

Cost effectiveness is another advantage of a social enterprise. The solutions offered by these
organisations in the form of either products or services are reasonable than compared to the same
service provided by a profit making organisation. No wonder basc amenities like healthcare, education
etc have become very affordable to people world over with the help of these institutions.

Because the world of social entrepreneurship is relatively new, there are many challenges facing those
who delve into the field. First, social entrepreneurs are trying to predict, address, and creatively respond
to future problems. Unlike most business entrepreneurs, who address current market deficiencies,
social entrepreneurs tackle hypothetical, unseen or often less-researched issues, such as
overpopulation, unsustainable energy sources, food shortages. Founding successful social businesses on
merely potential solutions can be nearly impossible as investors are much less willing to support risky
ventures.

The lack of eager investors leads to the second problem in social entrepreneurship: the pay gap.
Elkington and Hartigan note that “the salary gap between commercial and social enterprises… remains
the elephant in the room, curtailing the capacity of [social enterprises] to achieve long-term success and
viability.” Social entrepreneurs and their employees are often given diminutive or non-existent salaries,
especially at the onset of their ventures. Thus, their enterprises struggle to maintain qualified,
committed employees. Though social entrepreneurs are tackling the world’s most pressing issues, they
must also confront skepticism and stinginess from the very society they seek to serve.

Another reason social entrepreneurs are often unsuccessful is because they typically offer help to those
least able to pay for it. Capitalism is founded upon the exchange of capital (most obviously, money) for
goods and services. However, social entrepreneurs must find new business models that don’t rely on
standard exchange of capital in order to make their organizations sustainable. This self-sustainability is
what distinguishes social businesses from charities, who rely almost entirely on donations and outside
funding.

The Internet, social networking websites and social media have been pivotal resources for the success
and collaboration of many social entrepreneurs.[46] In the 2000s, the Internet has become especially
useful in disseminating information to a wide range of like-minded supporters in short amounts of time,
even if these individuals are geographically dispersed. In addition, the Internet allows for the pooling of
design resources using open source principles. Using wiki models or crowdsourcing approaches, for
example, a social entrepreneur organization can get hundreds of people from across a country (or from
multiple countries) to collaborate on joint online projects (e.g., developing a business plan or a
marketing strategy for a social entrepreneurship venture). These websites help social entrepreneurs to
disseminate their ideas to broader audiences, help with the formation and maintenance of networks of
like-minded people and help to link up potential investors, donors or volunteers with the organization.
This enables social entrepreneurs to achieve their goals with little or no start-up capital and little or no
"bricks and mortar" facilities (e.g., rented office space). For example, the rise of open-source appropriate
technology as a sustainable development paradigm enables people all over the world to collaborate on
solving local problems, just as open source software development leverages collaboration from software
experts from around the world.

Many initiatives carried out with social entrepreneurs while innovative, have had problems becoming
sustainable and effective initiatives that ultimately were able to branch out and reach the larger society
as a whole (versus a small community or group of people). Compromises in social initiatives were
developed, which often did not reach large audiences or help larger communities. Since the concept of
social entrepreneurship has been popularized in the 2000s, some advocates suggest that there needs to
be some standardization of the process in scaling up social endeavors to increase the impact of these
ventures across the globe.

Policymakers around the globe may need to learn more about social initiatives, to increase the
sustainability, effectiveness, and efficiency of these projects. Involvement and collaboration between
private corporations and government agencies allows for increased support for carrying out social
entrepreneurship initiatives, increased accountability on both ends, and increased connections with
communities, individuals, or agencies in need. For example, private organizations or nonprofit
organizations have tackled unemployment issues in communities. One challenge is that in some cases,
social entrepreneurs may only propose short-term solutions, or that they are unable to scale up their
virtual, online organization to a larger degree to maximize the number of people who are helped.
Government program are able to tackle large issues; however, there is often little collaboration between
governments and social entrepreneurs, which may have limited the effectiveness of social
entrepreneurship. Those in policy-making and the development of delivery of government programs
tend to have different priorities than social entrepreneurs, resulting in slow growth and expansion of
social initiatives.

Since social entrepreneurship has only started to gain momentum in the 2000s, current social
entrepreneurs are encouraging social advocates and activists to develop into innovative social
entrepreneurs. Increasing the scope and scale of social entrepreneurship may increase the likelihood of
an efficient, sustainable, and effective initiative; although it may also render social entrepreneurship
more challenging. Increased participation draws more attention to social entrepreneurship ventures
from policymakers and privately owned corporations. The increased involvement from corporations and
governments may help to strengthen social entrepreneurship, as it may lead to policy changes and to
the development of training programs and leadership development programs for social entrepreneurs.
Simultaneously, research shows that as social entrepreneurs attempt to widen their impact and scale
their efforts, external institutions will have a key role to play in their success.

The Importance of Social Entrepreneurship

As a human there is meaning to really taking care of people, helping others, and doing good by providing
low-cost services.

In the 1960s, Milton Friedman published “Capitalism and Freedom: A Leading Economist’s View of the
Proper Role of Competitive Capitalism”. A very well renowned book that set the tone to business theory
for decades to come.

''…there is one and only one social responsibility of business–to use it resources and engage in activities
designed to increase its profits so long as it stays within the rules of the game, which is to say, engages
in open and free competition without deception or fraud.”
Essentially, Friedman stated that the only concern of a corporation’s shareholders should be for
themselves. Under this system, the profit incentive would steer businesses in ways that would maximize
welfare for everyone, through lower prices and high-quality goods.

But if an individual acts like this today then he/she is described by people as a sociopath. Otherwise
someone who continuously consumes and takes from their environments only so that they can grow
and grow: parasites.

So organizing the business around the combination of social good and profit maximization, rather than
just the latter, can help one to avoid the pitfalls of profit tunnel-zoning that has given modern-day
business such a bad reputation. When shareholders think only of themselves and their desires for more
and more profits, they often forget the affects that their business practices have on a humanitarian
level. Then, business activity can become unethical at best.

Companies are conduits that direct wealth to many different stakeholders while also generating value
and profits for the shareholders. In short, companies that want to contribute actively to society need to
focus more on all the stakeholders – the employees, the community, the government, and others who
have a stake in whether the company succeeds – and not only on the shareholders.

In today’s globalized world, the definition of “stakeholder” now has been enlarged to include millions of
people throughout the planet through social entrepreneurship.

Social entrepreneurship is important because it provides a framework for businesses to find their own
success in the pursuit of helping others. It’s a constant source of motivation for employees, especially
for Generation Y, which is increasingly skeptical about the traditional corporate work environment.

In fact, Deloitte’s global 2014 Millennial Survey found:

While most Millennials (74 percent) believe business is having a positive impact on society by generating
jobs (48 percent) and increasing prosperity (71 percent), they think business can do much more to
address society’s challenges in the areas of most concern: resource scarcity (68 percent), climate change
(65 percent) and income equality (64 percent). Additionally, 50 percent of Millennials surveyed want to
work for a business with ethical practices…
Millennials believe the success of a business should be measured in terms of more than just its financial
performance, with a focus on improving society among the most important things it should seek to
achieve. Millennials are also charitable and keen to participate in ‘public life’: 63 percent of Millennials
donate to charities, 43 percent actively volunteer or are a member of a community organization, and 52
percent have signed petitions.

Generation Y has a global perspective, understanding that their responsibilities extend past just the
business they work for. Thus, business should aim to generate profits and help society. Millennials want
no part of the stereotypical “greedy” business world—they want to be a part of a company that actively
seeks to improve the world. To attract the future leaders of Generation Y, businesses leaders must
become social entrepreneurs that serve altruistic purposes in addition to creating profits.