Social enterprise and social entrepreneurship emerged as concepts two decades ago but in recent years they have been attracting growing attention. Assessments of their success are mixed. While some question the ability of social enterprise to provide solutions that are sustainable and scaleable, a new generation of businesspeople is demonstrating that inventiveness and commitment can successfully address global problems.
Although the distinction between models is becoming hazier, some still see social entrepreneurs – individuals with innovative ideas that address pressing problems – as distinct from social enterprise, which is categorised as the process by which non-profit organisations become more self-sustaining through revenue generation.
The latter model has recently come under criticism. In June, New York-based Seedco Policy Centre, the research arm of a non-profit group that assists low-wage workers, published a report that questioned the social enterprise model as embraced by non-profit organisations.
While acknowledging the existence of success stories, the authors found that “non-profits driven to meet a ‘double bottom’ line for customers and clients have far more typically led to frustration and failure”. For-profit activities often drew attention and resources away from the core work of these organisations, wrote the authors.
Lack of access to the capital needed to scale up social enterprise projects is another problem identified by Saïd Business School’s Skoll Centre for Social Entrepreneurship.
Nevertheless, the idea of entrepreneurial solutions fixing intractable social and environmental problems is gaining momentum. What gives the movement’s proponents cause for optimism is the fact that entering the social enterprise sector is a new generation of entrepreneurs who come from either a business background or who have been through an MBA or similar programme.
“You only have to look at academic campuses around the world,” says Cheryl Dorsey, president of Echoing Green, a foundation that provides seed money and support to young social entrepreneurs. “In this country, there are more than 80 major schools with courses on social entrepreneurship and the top 10 business schools all have at least one course.”
Emerging from these schools are the dynamic individuals celebrated in awards handed out by institutions from the Skoll Centre for Social Entrepreneurship and New York University’s Stern School of Business to Fast Company magazine and the Guardian newspaper.
These social entrepreneurs can draw upon the funding and resources of a growing number of organisations. They include Echoing Green, Ashoka, which identifies and invests in leading social entrepreneurs, the Acumen Fund, a non-profit venture fund that uses entrepreneurial approaches to address global poverty, and the Schwab Foundation for Social Entrepreneurship, which facilitates connections between investors, academics, companies and social entrepreneurs.
Distinctions between profit-making and charitable organisations are also becoming less important. Google.org, the philanthropic arm of the search engine, invests in and supports for-profit as well as non-profit groups that focus on energy, poverty and the environment.
Perhaps most significantly, a third model is entering the social enterprise arena, further eroding the lines between non-profit organisations and companies. This model includes large corporations determined to play a bigger role in bringing about social and environmental change through their profit-making operations.
Robert Davies, chief executive of the International Business Leaders Forum, which works with corporations to promote responsible business practices, says: “Unilever has distribution systems where they’re relying on networks of social entrepreneurs. SC Johnson has cleaning products they’re trying to sell – it’s a vital part of the development picture.”
The partnering of multinational corporations with social entrepreneurs also addresses the issue highlighted by the Skoll Centre study. “To make money on these social enterprises, you have to have large volumes with low margins – and that means you need a fair amount of working capital up front,” says Geoffrey Heal, professor of public policy and corporate responsibility at Columbia Business School. “These big companies have capital behind them.”
Mr Davies believes that great potential lies in the collaboration of large companies with social entrepreneurs working at the grass-roots level. “Companies need to take risks in meeting and working with people,” he says.
Ms Dorsey agrees. “You’ve got this business sector that’s exceedingly vibrant, confident and is leading the charge on some of the great issues of our day,” she says. “And as you have the blurring of boundaries between for profit and non-for-profit, that’s going to make for some increasingly interesting partnerships and new ways of thinking about social change.”
Case Study: Lions Club International Foundation
It should be no surprise that an organisation funded by business people for business people is highly rated in a poll of business partners. Lions Club International Foundation ranks at the top.
One explanation for its popularity and influence is history. Ever since 1917, Lions clubs have been expanding across the US and around the world, bringing together business men and women committed to change in their communities through fundraising programmes and volunteering.
Another factor is the organisation’s sheer size. Lions clubs claim 1.3m members in 200 countries – outranking Rotary, Kiwanis and other similar associations. That has allowed them to generate $56m in income a year.
“The fact that we have been able to stay around for a long time and continue to progress and raise millions of dollars is testament to what we do,” says Lisa Hellman, development manager for North America and Europe.
She also stresses the importance the organisation gives to regular communication with its members, through magazines and its website, “to showcase where the money has gone”.
Lions Club’s predominant programme focus – the fight against preventable blindness – dates to 1925, when Helen Keller, the early campaigner for the deaf and blind, addressed its convention in Ohio, challenging the Lions to become “knights of the blind in this crusade against darkness”.
In 1968, the year of her death, the Lions formally created the International Foundation, with a remit to help tackle global causes and more local challenges too big for individual clubs to take on alone.
The foundation’s first grant was $5,000 to address the consequences of flooding in 1972, and to date, it has given out $583m, becoming a significant international humanitarian organisation. It is active in work with the elderly, homeless and children in crisis; youth development; disabilities; and disaster relief.
But blindness prevention remains the foundation’s principal focus, boosted by the launch of its SightFirst programme in 1990, which has spent $202m for 841 projects in 90 countries.
The money has provided 7.1m cataract operations, 80.5m treatments for river blindness, upgraded 325 eye centres and trained 305,000 ophthalmologists.
Much has been done in cooperation with corporate partners, including a 15-year link to Merck, the pharmaceutical company which donates its drug Mectizan for river blindness. Other important long-term links have been established with Johnson & Johnson, Eli Lilly and Allergan.
A more recent logistics partnership, the creation of Lions Clubs Lens Finishing Labs, allows Essilor to supply lenses and equipment at cost, train Lions Clubs members to make new glasses, and find customers to purchase recycled glasses.
Now it is in the process of raising $150m for SightFirst II, a new programme designed to help reduce the risk of preventable blindness rising from 37m to 74m people worldwide by 2020.
But Ms Hellman stresses that there is still room for improvement in its partnerships with companies. They have traditionally come to the foundation, which she wants to see taking a more active effort in establishing and fostering long-term links.
“Very often the benefits to our partners have been haphazard,” she says.“ Now we are thinking more about branding and PR. We are looking at recognition events at our annual international convention, and trying to be a better steward and just a little bit more professional.”
