Social Entepeneurship

What is Social Entepeneurship

The concept is defined differently by different people and organizations. SBIG defines social entrepreneurship as an emerging business paradigm that bridges the non profit and for profit business models with principles that historically have defined what entrepreneurs do. This hybrid model of doing business matches social vision with sustainable profit in a business plan with two bottom line objectives; financial viability apart from reliance on external support, and a clear social mission that can be quantified and measured in financial terms. We focus on the earned income aspects of what constitutes social entrepreneurship.

Many people use the word “entrepreneur” to mean someone who owns or starts a business, but entrepreneurs are more than business owners or people who start businesses. Being an entrepreneur indicates that a need in the market is being serviced through some combination of innovation, the introduction of new technologies or the application of old technology in a different way not being done previously. It means new ways of thinking about and solving old problems through a variety of means; manufacturing, marketing, sales, merging networks and resources etc… Entrepreneurs not only develop new ways of doing things to solve market needs, they also take advantage of change and use it as a means to develop opportunity. Entrepreneurs leverage change to create opportunities for profit. Social entrepreneurs do so with a social mission in mind as well as a financial one.

Entrepreneurs are known for taking risks. But successful entrepreneurs are people who are good at managing risk downward. In other words, they accept risk but they do so by trying to minimize it as much as possible. Taken together, these characteristics of entrepreneurship and the creation of business models that generate earned income in support of a social objective, forms the basis for what we now refer to as “social entrepreneurship”.

What’s the difference between social entrepreneurship and social enterprise?

“Social enterprise” is a term often used in connection with social entrepreneurship and sometimes used interchangeably with it. The term describes a broader market than that made up by social entrepreneurs however. Social enterprise can be used to describe any kind of business entity or activity that includes a social mission. However social enterprise businesses do not have to be entrepreneurial in nature, meaning they don’t have to be innovative or involve new applications of old methods or technologies. Social enterprise businesses also don’t have to generate their own earned income. They can rely on grants or other forms of outside financial support. All social entrepreneurs are engaged in social enterprise, but not all social enterprise business ventures involve entrepreneurship.

Why is it important to differentiate between social entrepreneurs and other forms of social enterprise business such as traditional non profit organizations?

Non profit organizations have traditionally been supported by outside financial partners such as philanthropic foundations, government programs or corporate sponsors. Social entrepreneurship emphasizes a financially autonomous business model that makes revenue dependent on the organization itself rather than outside financiers. There are multiple reasons why SBIG believes this is a vital distinction. Non profit organizations that depend on external revenue are frequently unable to maintain their organization’s autonomy in terms of their ability to control their own mission functions because funding partners often define how that mission is to be interpreted and supported. Fund raising has become the primary activity for many non profits, distracting organizational directors from their core mission and causing boards of directors to increasingly be built with an eye towards gaining access to potential financial partners rather than establishing expertise in the field.

SBIG believes that the traditional non profit business model cannot survive the changes our society is undergoing in the long term. Shrinking resource availability do to the aging and downsizing of the American workforce, increasing competition for those resources and an expanding need growing in direct response to the effects of changing demographics and the effects of globalization make social entrepreneurship the most strategically promising answer to these problems.
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