A Publication of WTVP

You may have heard the saying, “Give a man a fish, and he can eat for a day; teach a man to fish and he will eat for a lifetime.” I would argue, “Give a man the tools and resources to create a fishing business, and his whole village can thrive for generations.” That is the main idea behind social entrepreneurship.

I define social entrepreneurship as “using systematic entrepreneurial models to create and manage organizations with a mission for social change.” In fact, many social organizations face the same challenges as entrepreneurial organizations that are motivated by profit: the ability to recognize and evaluate opportunities, a lack of resources, difficulty in finding good people, the need to establish networks, and the importance of finding key investors. In this article, I intend to focus on the main characteristics of social entrepreneurs and their organizations, both for-profit and not-for-profit.

Creative and innovative solutions to existing problems. Social entrepreneurs believe that the current methods for enacting social change have not been effective. They are seeking new ideas, opportunities and technologies to help solve long-standing social problems. For example, social entrepreneurs in South America have developed solar panels that provide isolated villages with power, thus bypassing the need to bring a power infrastructure out to remote areas. This power allows them to work, study and play at night without the use of kerosene lamps, which contain pollutants that cause asthma problems and fire risks. Organizations have found ways to get cell phones into the hands of farmers in India. This helps them to not only communicate with other farmers, but learn about the prices they can get on their crops from multiple buyers. With this information, farmers can get the best price for their crops, and buyers must, for the first time, compete with each other.

Treat clients as customers and active participants. Clients are no longer merely the recipients of products and services. They are treated as active participants who give feedback and ideas into how to better solve problems, and they make up the largest percentage of volunteers and employees. They often make the most of the energy of young people who have the desire, ability and local knowledge to assist in their own community. Tateni, an organization in South Africa that provides home health care to people living with HIV/AIDS, uses young people in the community to provide care. These individuals get training in home care, which they can use later to get a job outside of the program. In addition, social entrepreneurs no longer try to be all things to all people. They identify which clients will most benefit from their services and market to them what they most value. This best utilizes their resources to produce the most social change.

Increased accountability and measurability. Social entrepreneurs are accountable to their clients, employees, volunteers, investors and donors. Thus, their practices must be transparent to all stakeholders. Organizations measure social value using both quantitative metrics and qualitative data. Methods such as the social return on investment demonstrate the social value that is created for every dollar invested or donated to the organization. Thus, a back-to-work organization can measure dollars saved in welfare or Medicaid costs for each person who receives full-time employment, or a group that works with at-risk youth can measure the number of people who likely would have dropped out of high school but graduated because of the program, and the average difference in income made by high school graduates versus high school dropouts. Donors are acting more like investors and want to see how their dollars are spent and what change they have made.

Sustainability. Organizations often use a triple bottom line that measures the impact of the organization on people, the planet and profit. Using my initial example of creating a fishing company for a village, which can help both profits and the people in the village, a social entrepreneur would have to be careful that the venture did not overfish the area. Even nonprofit organizations benefit from financial sustainability, as they can fund new programs with profits from the venture and spend less time and resources on fundraising activities.

Reflection and correction. Good social entrepreneurs dedicate resources, both time and money, to constant evaluation of their programs. This gives them an opportunity to determine what is going well and not so well, and correct any errors made. Eventually, this circles back to my original characteristic of innovation. I was recently at an entrepreneur educators’ conference and had the good fortune to meet Susan Davis, a social entrepreneur who is currently president and CEO of BRAC USA, this country’s arm of an organization that has served millions of households worldwide. I was surprised to see how excited she was to meet members of direct sales associations. She could see how learning from people who sell products door-to-door could help her organizational members who go door-to-door to determine the needs of people living in poverty.

Most social entrepreneurial organizations are not charities. Many develop products and services that their customers value and can afford. A farmer in Africa may take out a loan to pay for a new irrigation pump that does not require electricity because the farmer can see the value in increased crop yields. There are also social entrepreneurs who assist in creating other entrepreneurs, people who can sustain their families and create jobs in their new ventures. Microfinancing organizations like the Grameen Bank and lend relatively small amounts of money to assist entrepreneurs in gaining access to credit. Ben Hafele, founder of the Peoria-based social entrepreneurial organization Haute, assists entrepreneurs in Guinea, Africa to learn better business skills, increasing the likelihood they will stay in business and create more jobs. Venture philanthropists are creating investment funds in organizations with the greatest chance to create social value.

Some see social entrepreneurship as the next big social movement. It creates sustainable value for all of its stakeholders—clients, entrepreneurs, employees, investors and the community. It finds effective and efficient solutions to problems such as poverty, education and energy. This model may be the best way to solve problems that have existed for centuries. iBi

Dr. Eden S. Blair is an assistant professor of entrepreneurship at Bradley University. She teaches courses in business planning, entrepreneurial creativity and social entrepreneurship.