Dissecting Social Enterprise

Credit: Tanveer Islam/Wikimedia Commons

Contrary to popular belief, saving the world doesn’t have to be at odds with making a buck. Particularly after Muhammad Yunus started the Grameen Bank in 1983, there are more and more examples, in the US and beyond, offering support for the idea that achieving social aims can be good for business.

The what

The concepts of social enterprise, social capitalism and social entrepreneurship all function by adopting market-driven strategies or business models in order achieve a social aim. While profit is often an important concern, the predominant aim remains pursuing a social goal. Non-profits and for-profits can both function as social enterprises. 

The why

Particularly after the economic downturn, non-profits have seen donations and grants decline. Social enterprise is important because it fosters self-sufficiency and the ability to scale operations to an extent that functioning as a charity would never allow.

While the mainstream media does cover this topic (Fast Company used to run its annual SoCap awards, the Economist produces some great coverage on social innovation, Inc magazine writes resource centric articles for social entrepreneurs, the Wall Street Journal writes about micro-finance, etc.) it isn’t enough. Due to the largely unorganized nature of this sector, and of course the number of small unheard of startups that dabble in this field, there are always ideas, individuals, issues, and businesses that should be talked about but are overshadowed by their more well-known counterparts.

Who’s doing this?

Bill Drayton, founder of Ashoka, is one of the most obvious names that comes to mind. Another household name is Kiva, the website that puts micro-loan givers in touch with people in developing countries who need loans. Ebay’s World of Good, an online marketplace offering fair-trade goods. Then there are universities like Stanford, which aims to foster innovative approaches to social problems at its Center for Social Innovation, and MIT, which encourages the development of technology for development aims at its D-Lab.

There are other examples, some of which I’ve covered in the past. A company called LifeStraw, which is developing a straw to combat diarrhea. The Acumen Fund, which helps fund the delivery of basic goods and services in developing countries. India based Aravind eye care, which offers low-cost or free eye surgery by adopting what they call an “air-plane” business model. Incidentally Aravind is also the world’s largest eye care provider.  

So what’s next…

Good things I hope. New social applications for existing technology, or new and developing technology aimed at addressing social problems, are exciting areas to explore. Mobile phones in particular are being used for everything from agriculture research, to primary health checkups, to setting up bank accounts for the rural poor in developing countries. 

Then there’s the question of whether existing non-profits can refine their business models or adopt new business models to achieve scale and sustainability. Are there non-profits out there doing this successfully? Could others follow suit? 

Micro-finance is another particularly interesting (but complicated) area. Is this form of lending fueling a bubble, as a Wall Street Journal reporter once claimed in her article about micro-lending in a remote Indian village? Is it propagating dependence and creating a vicious cycle by sinking borrowers further into debt? Or do the majority of women who take loans from banks like Grameen in fact go on to create self-sustaining businesses? 

Then of course there’s green technology. Solar heating and electric cars are good for the environment of course, but they’re also big money.  

Over the course of the next few months, this blog will aim to act a resource on social entrepreneurship and enterprise, track news in that sector, analyze policy aimed at fostering social innovation (and policy that, by extension, could retard innovation), interview the ones who seem to be getting it right – and hopefully drive awareness regarding this idea of social capitalism.