Being a Social Entrepreneur

 

The term“social entrepreneur” is used with increasing frequency. While used often, it can mean different things to different people. Wikipedia defines“a social entrepreneur as someone who recognizes a social problem and uses entrepreneurial principles to organize, create, and manage a venture to make social change”. Here at the SiG@MaRS program, we refer to the ventures we support as Social Ventures .

So how does a social entrepreneur differ from an entrepreneur operating a technology business or in a traditional industry? Wikipedia continues“whereas a business entrepreneur typically measures performance in profit and return, a social entrepreneur assesses success in terms of the impact s/he has on society”.

Generally speaking, in terms of passion, drive, problem-identification and problem-solving capabilities, leadership skills and perseverance, the founders of social ventures and traditional entrepreneurial businesses are very much the same type of people. The difference is really what you are looking to maximize as the primary motivation for building your venture.

If you are a social entrepreneur, you:

• are primarily motivated by the social, ethical and/or environmental benefits that your organization will generate;
•  respond to urgent needs and act as a change agent to solve problems;
• hope to achieve scale for your organization, in terms of impact, if not size; and
•  want create some level of financial sustainability to ensure your organization’s future, but those are likely secondary to the reason why your organization exists.

 

Muhammad Yunus, founder of the Grameen Bank (a microfinance industry leader), won the Nobel Peace Prize in 2006 for his vision of a new business model (social entrepreneurship) that combines the power of free markets with quest for social benefit. This social entrepreneur hoped to“create a world without poverty” by founding Grameen Bank.

 

Traditional entrepreneurs are also change agents. They make disruptive improvements to the status quo. However, they are motivated to create a market opportunity for the profitable sale of their products or services, resulting in increased shareholder value rather than by a fundamental social principle for why their organization exists.

There are several types of Social Venture organizations in which the social entrepreneurs we support at MaRS, thrive:

• Social Enterprises (SEs)

Social entrepreneurs from the non-profit and voluntary sector are setting up this type of organization to become more self-sufficient and financially sustainable, but also to enhance their social mission and increase their impact. Social enterprises are revenue-generating entities generally owned and operated by a non-profit organization (which may or may not also have charitable status). Since there are no shareholders, any profits from the operation are re-invested into the work of the organization.

In order to distinguish SEs from traditional non-profit fundraising or revenue-generation activities, the BC Centre for Social Enterprise suggests that the SE must have a goal or mission beyond simply generating funds for its parent organization (selling chocolate bars or raffle tickets). It must demonstrate, through its business model, some activities that benefit the community in which it operates.

The ReStore retail outlets of Habitat for Humanity provide an excellent example of a social enterprise. Quality used and new surplus building materials are sold for a fraction of market prices. The proceeds from the retail outlets fund the construction of new Habitat for Humanity homes within the local community. In addition, the ReStores are recycling valuable construction materials for benefit of both the environment and the consumer.

Since social entrepreneurship is an emerging field, you will find some definitions for social enterprises that include for-profit businesses, but here at MaRS, we reserve the term to describe our non-profit social ventures.

• Social Purpose Businesses (SPBs)

Social purpose businesses are commercial for-profit entities, created by social entrepreneurs to address social issues. SPBs maintain their social purpose at the core of their operations, while existing in the market economy and delivering shareholder value. Many successful examples can be found internationally focused on a range of societal challenges, ranging from environmental impacts through clean technology organizations to poverty reduction through microfinance initiatives like the Grameen Bank.

SPBs are also often referred to as having double or triple-bottom-lines referring to social and/or environmental benefits, in addition to traditional profits.

•   “Traditional” organizations doing social or environmental“good”

Wikipedia notes that while social entrepreneurs often work through non-profits (including charities) and citizen groups, many work in the private and governmental sector. These individuals are often referred to as“intrapreneurs”, defined as those practicing entrepreneurial skills within a larger organization, to bring about significant change. For social intrapreneurs, it is system changing solutions for urgent social problems that they seek to deliver.

Additional Reading:

Martin, R.L.& Osberg, S. (2007).Social entrepreneurship– the case for definition
Stanford Social Innovation Review, Spring 2007. Retrieved July 29, 2009 from Stanford Social Innovation Review Website: www.ssireview.org/

 Dees, G.J. (1998)The Meaning of Social Entrepreneurship, Retrieved from Partnership.org Web site September 22, 2009

References

Kawasaki, G. (2007, September 17).Social Entrepreneurship: Ten Questions with David Bornstein.Retrieved July 29, 2009, from  blog.guykawasaki.com/2007/09/social-entrepre.html

BC Centre for Social Enterprise. Retrieved November 10, 2009, from www.centreforsocialenterprise.com/index.html

Lewis, M. (2006).Building Community Wealth: A Resource for Social Enterprise Development.Centre for Community Enterprise.

enp.The Canadian Social Enterprise Guide.Retrieved November 10, 2009, from www.enterprisingnonprofits.ca/projects/the_guide

MaRS Discovery District. Social Venture Finance, Enabling Solutions to Complex Social Problems [ white paper ]. Retrieved November 10, 2009

Tags: social-entrepreneurship, social-innovation