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In the past couple of decades, social entrepreneurship has become very popular and a potential career option for youth across the world. Social entrepreneurship is the work of a social entrepreneur. While entrepreneurs in the business sector identify untapped commercial markets, and gather together the resources to break into those markets for profit, social entrepreneurs use the same skills to different effect. For social entrepreneurs, untapped markets are people or communities in need, who haven’t been reached by other initiatives. Though they may have different goals, social and business entrepreneurs have a lot in common. They build something out of nothing. They are ambitious to achieve. They marshal resources to meet their needs. They are constantly creative. And they are not afraid to make mistakes.

“Social entrepreneurs are not content just to give a fish or teach how to fish. They will not rest until they have revolutionized the fishing industry.” – Bill Drayton, CEO, chair and founder of Ashoka

Rather than leaving societal needs to the government or business sectors, social entrepreneurs find what is not working and solve the problem by changing the system, spreading the solution, and persuading entire societies to take new leaps.

One well known contemporary social entrepreneur is Dr. Muhammad Yunus, founder and manager of Grameen Bank and its growing family of social venture businesses; he was awarded a Nobel Peace Prize in 2006. The work of Yunus and Grameen echoes a theme among modern day social entrepreneurs that emphasizes the enormous synergies and benefits when business principles are unified with social ventures.

What Social Entrepreneurship is not:
Nonprofits are primarily reliant on philanthropy, grants, voluntarism, but social entrepreneurs, just like business entrepreneurs rely solely on their business model (and not just on philanthropy, though it could be a source of funding etc). Social activism is not social entrepreneurship. For instance, Mahatma Gandhi was a social activist, but not a social entrepreneur. Social activists create (or attempt to create) change through indirect actions, mostly by influencing others (like NGOs, government, customers etc). However, the main difference is that social activists do not necessarily ‘execute’ – they are mainly influencers.

Wealth is just a means to an end for social entrepreneurs. With business entrepreneurs, wealth creation is a way of measuring value creation.

Social Enterprises
Social enterprises are businesses run by social entrepreneurs. Their aim to accomplish targets that are social and environmental as well as financial is often referred to as having a triple bottom line. Social enterprises are profit-making businesses set up to tackle a social or environmental need. They often use blended value business models that combine a revenue-generating business with a social-value-generating structure or component. Many commercial businesses would consider themselves to have social objectives, but social enterprises are distinct because their social or environmental purpose is central to what they do.

Dr. Yunus, a key proponent of the social business model, argues that capitalism is too narrowly defined. The concept of the individual as being solely focused on profit maximizing ignores other aspects of life, religious, ethical, emotional, and political. Failures of this system to address vital needs, that are commonly regarded as market failures are actually conceptualization failures, i.e. failures to capture the essence of a human being in economic theory.

Example of Social Enterprise:
Grameen Danone Foods, popularly known as “Grameen Danone” is a social business enterprise which, launched in 2006, has been designed to provide children with many of the key nutrients that are typically missing from their diet in rural Bangladesh. This is run on ‘no loss, no dividend’ basis.

Grameen Danone Foods aims to reduce poverty by creating business and employment opportunities for local people since raw materials including milk needed for production, will be sourced locally. The companies that make up Grameen Danone Foods Ltd. have agreed not to take out any of the profits out of the company. Instead they will invest these for creation of new opportunities for the welfare and development of people. Hence it is called ’social business enterprise.’

Grameen Danone Foods Ltd. produces a special yogurt called Shakti Doi from pure full cream milk that contains protein, vitamins, iron, calcium, zinc and other micro nutrients to fulfill the nutritional requirements of children of Bangladesh and contribute in improving their health. While ‘Shakti Doi’ (which means ‘power yogurt’) is primarily intended for children, it is also appropriate for adults. The price of each 80 gram cup of yogurt is $0.05 only. It is an affordable price even for the poor people of Bangladesh.

Social Venture Capital:
Social venture capital is a form of venture capital investing that provides capital to social businesses. These investments are intended to both provide attractive returns to investors and to provide market-based solutions to social and environmental issues. Among the several firms that deploy “social venture capital” are: Acumen Fund and Bill Melinda Gates Foundation. These firms identify innovative social enterprises and support them to become financially sustainable and scalable.

Conclusion:
Social enterprise gives people jobs. It empowers local communities. It builds skills and capacity. It creates mechanisms of ownership. And, perhaps most importantly, it gives people a sense of control over their own destinies. For example, VisionSpring, which recruits local “Vision Entrepreneurs,” who are trained to operate a mini franchise, traveling from village to village and conducting vision camps checking eyesight, has also developed a low-cost pair of reading glasses. One pair, with case and cleaning cloth, costs from $2 to $4. Locals are trained as entrepreneurs, with a steady stream of income, and those with poor eyesight can once again earn a livelihood. Everyone benefits!

If our primary motive is to lift the “bottom billion” out of poverty, social enterprise is a way forward. It is a proven approach through which we can make lasting improvements in the lives of the poor, which is critical for the world, critical for the world economy, and critical for humanity.

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This entry was posted on Tuesday, September 1st, 2009 at 7:14 pm and is filed under Reflections. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.