Social entrepreneurs make a dollar and a difference.
I have often thought that I should write a post that defines what I mean by “social entrepreneur,” and yet I have hesitated. But, since I run a radio program and a podcast called Social Entrepreneur, I should define the term as I understand it.
I want to be clear that I am not the arbiter of who is and is not a social entrepreneur. There are many who have defined the term. Ashoka, Echoing Green, The Schwab Foundation for Entrepreneurship, The Skoll Foundation, the Social Enterprise Alliance, and many others have provided their definition. I would also recommend the book Getting Beyond Better: How Social Entrepreneurship Works and this article by Roger L. Martin and Sally Osberg.
Still, it is important that I land on a definition, if for no other reason than to clarify what I mean when I say “social entrepreneur.” Here is my definition:
A social enterprise is an organization that sells products or services to sustain their social purpose.
The people who run social enterprises are called social entrepreneurs.
The key word and tricky phrase here is “sells.” No selling, no social entrepreneur.
Social entrepreneurs harness the awesome power of markets to create benefits to society. They reduce hunger, produce cleaner energy, increase gender equality, and more. Social entrepreneurs need profit, but profit in service of a purpose. They want to make money, but only to fulfill a mission. They find ways of raising dollars, then use those dollars to make a difference in the world.
No money, no mission.
Four ways social entrepreneurs make a difference:
Note: much of this section is adapted from Present at the Creation by Brad Brown and Jeff Ochs
Organizations can be profitable and make a difference in four ways:
Social by Selling
A social entrepreneur can make an impact by what she sells or to whom she sells it.
For example, d.light provides access to reliable, affordable and clean energy solutions to the two billion people in the developing world without access to reliable energy. Other examples include Lumkani and Mamamoni.
Social by Sourcing
Social enterprises can source ethical, organic, and sustainable materials. They produce products or services in environmentally-friendly ways.
For example, Fair Anita creates opportunities for women and girls, selling affordable and trendy fair trade products made by over 8,000 talented yet marginalized women in 16 countries. Other examples include Peace Coffee and Alter Eco Foods.
Social by Staffing
Social enterprises may employ individuals with barriers to employment through supported workforce development programs.
For example, All Square is a craft grilled cheese restaurant and professional institute that breaks down barriers for those with a criminal record. Other examples include Second Shot Coffee and TechDump.
Social by Sharing
Social entrepreneurs can make an impact by giving some or all of profits to causes.
Questions and Answers About Social Entrepreneurs
The following questions and answers reflect my opinion and are not meant to be definitive. Others may hold different views.
Q: Does a social enterprise need to be a for-profit business?
A: No, a social enterprise can take any legal form from nonprofit to C-Corp. Many states have passed laws allowing companies to legally organize as Benefit Corporations. However, keep in mind that social enterprises exist in many countries around the world and therefore may take any legal form.
Q: Can a nonprofit be a social enterprise?
A: Yes. See the answer above. The key is earned revenue. Social entrepreneurs sell a product or service to sustain their social purpose. Some nonprofits earn all of their revenue through selling. Others produce less than 100% of their revenue through selling and supplement their activities with grants and donations.
Q: Does a company have to be certified as a BCorp in order to be a social enterprise?
A: No. However, BCorp certification provides independent, third-party verification that a company is truly making an impact in every area of their business.
Q: All companies have a social impact. For example, they provide employment, pay taxes, and often donate money. So, isn’t every company a social enterprise?
A: Maybe someday we won’t have to distinguish between a social enterprise and any other enterprise. A purpose will just be built into every business. Until then, we distinguish social enterprises from all other forms of business. A social enterprise bakes their social impact into their core business. By simply carrying out their business mission, they are accomplishing their social mission.
Q: What kinds of social entrepreneurs do you feature on Social Entrepreneur?
A: You can see the description of our perfect guest here.