In a world where profit often reigns supreme, a growing movement is emerging — one that blends business acumen with a passionate commitment to societal change. The movement is social entrepreneurship, and similarly to impact and ESG investing, the traditional models of profit-driven enterprises are no longer the sole focus of entrepreneurs and investors. Social entrepreneurs also seek to create meaningful social change while still turning a profit.

What is Social Entrepreneurship?

“[Social entrepreneurs are] the bridge between the efficiency and scale of market-based approaches and the social impact of pure philanthropy.” ~Rockefeller Philanthropy Advisors

At its core, social entrepreneurship is about harnessing the innovative spirit of business to tackle pressing social and environmental challenges. It's a mindset that refuses to accept the status quo and instead seeks to create positive change through sustainable business models. The Skoll Foundation has been supporting endeavours of social entrepreneurs since 1999 and defines them as “society’s change agents, creators of innovations that disrupt the status quo and transform our world for the better.”

Diverging from conventional profit-centric enterprises, social ventures prioritize their influence on society and the environment just as much as their financial prosperity. Whether tackling poverty, environmental degradation, educational disparities, or healthcare accessibility, social entrepreneurs are propelled by this dual bottom line of profit and purpose. (Graham, 2023)

The people behind these endeavours go beyond merely conceiving innovative ideas. Social entrepreneurs serve as catalysts, motivators, managers, fundraisers, role models, and decision-makers. Above all, they are accountable for outcomes, answering to colleagues, clients, communities, investors, and donors alike. (Rockefeller Philanthropy Advisors, n.d.)

Through pioneering solutions to societal challenges, these enterprises and their leaders not only address pressing issues but also cultivate new markets, industries, and employment opportunities, fostering economic growth in the process. (Graham, 2023)

Examples of Social Entrepreneurship in Action

Social entrepreneurship has gained significant traction in recent decades. The rise of globalization, technological advancement, and heightened awareness of social issues have all contributed to its burgeoning popularity.

One prevalent example is TOMS Shoes, founded by Blake Mycoskie in 2006. For every pair of shoes sold, TOMS donates a pair to a child in need.

"I could start my own shoe-based charity, but instead of soliciting shoe donations, I would ask friends and family to donate money to buy the right type of shoes for these children on a regular basis. But, of course, this arrangement would last only as long as I could find donors. That was the traditional model of philanthropy: identify a cause and initiate a never-ending hunt for donors. I wanted something more sustainable." ~Blake Mycoskie

Warby Parker employs a similar model with eyeglasses. A graphic from their website (below) shows that not only do glasses improve the quality of the person's life, but they also provide economic gains. This simple yet powerful model has transformed the lives of millions around the world.

Source: VisionSpring

Another classic story is that of Grameen Bank, founded by Nobel laureate Muhammad Yunus. By providing microloans to impoverished individuals, particularly women, Grameen Bank has empowered countless entrepreneurs to lift themselves out of poverty and build brighter futures for their families.

Patagonia is another company that demonstrates how even established businesses can embrace social entrepreneurship. Through initiatives like 1% for the Planet and the Worn Wear programs, Patagonia is leading the charge in environmental conservation and ethical business practices.

Critiques of Social Entrepreneurship

Critiques of social entrepreneurship often centre on its ability to effectively address systemic issues, sparking discussions about its impact and efficacy. One common argument is that while social entrepreneurship may offer localized solutions to social problems, it can fall short in addressing underlying systemic causes or effecting widespread change. Moreover, there's a pervasive skepticism regarding the potential of social enterprises to inadvertently perpetuate existing power dynamics or contribute to social inequality through their activities. (Huybrechts & Nicholls, 2012)

Critics also raise concerns about the prioritization of profitability within the social entrepreneurship model, fearing that this emphasis may sometimes lead to a shift away from genuine social impact in favour of financial gains. This can result in "mission drift," where the original social goals become diluted or compromised. Furthermore, there's a notable absence of robust regulation and accountability mechanisms within the sector, leaving it susceptible to instances of greenwashing or the exploitation of social causes for personal benefit. (Huybrechts & Nicholls, 2012)

These critiques underscore the necessity for nuanced consideration of the broader societal implications and systemic challenges inherent in the pursuit of social entrepreneurship. Addressing these concerns demands a concerted effort to balance financial viability with genuine social impact, all while maintaining transparency, accountability, and a steadfast commitment to positive change. (Huybrechts & Nicholls, 2012)

The Future of Social Entrepreneurship

As we examine the current economic landscape and look to the future, we see that “[m]illennials and Gen Z, the largest consumer segments today, are increasingly demanding that businesses take responsibility for their social and environmental impact. They are more likely to support brands that align with their values and actively contribute to society." This new generation of purpose-driven consumers and innovators enter the fray with a growing recognition of the interconnectedness of global issues, paving the way for more instances of profit and purpose as equal bottom lines. By addressing social and environmental challenges, attracting socially conscious consumers, fostering collaboration, and driving innovation, social entrepreneurs are helping to shape the future of business. (Why philanthropic startups are the future of business, 2024)

Social entrepreneurship embodies the fusion of profit-driven innovation with compassionate social impact. Through its dynamic approach, social entrepreneurs tackle some of society's most pressing challenges with creativity and resilience. As we navigate the complexities of the 21st century, the transformative power of social entrepreneurship becomes increasingly evident. However, next month, we will dive into these complexities and how they and the other critiques mentioned above have caused dilemmas for today's ethical consumer.

Bibliography

Graham, D. (2023). The catalyst for change: The role of social entrepreneurship in economic development. Retrieved from https://economicimpactcatalyst.com/social-entrepreneurship/

Huybrechts, B., & Nicholls, A. (2012). Social entrepreneurship: Definitions, drivers and challenges. Social entrepreneurship and social business: An introduction and discussion with case studies, 31-48.

Rockefeller Philanthropy Advisors. (n.d.). Supporting Social Entrepreneurship – Rockefeller Philanthropy Advisors Philanthropy Roadmap. Retrieved from https://www.rockpa.org/guide/supporting-social-entrepreneurship/

Why philanthropic startups are the future of business. (2024). Retrieved from https://fastercapital.com/content/Why-Philanthropic-Startups-are-the-Future-of-Business.html