Social entrepreneurship involves either businesses serving social ends, or social programs run in the manner of businesses.
"Social entrepreneurship involves either businesses serving social ends, or social programs run in the manner of businesses. The idea is to leverage business' unparalleled ability to get things done in order to serve needs which have traditionally been addressed solely through charity and governmental entitlements. Critics charge that this blurring of the boundary between profit- and change-making enterprises leads many funders and investors to commit category errors when judging social enterprises, often demeaning the true goals (poverty reduction, public health, etc.) when those goals prove resistant to business-modeled fixes, but such approaches have also, quite clearly, worked in a number of cases." (http://www.worldchanging.com/archives/006704.html)
"There has been precipitous growth in ventures identifying as social enterprises. A database search from sources including mainstream newspapers, journals and broadcast transcripts shows mentions of social enterprise growing from fewer than 100 per year in 2000 to over 10,000 every year since 2014. Non-profits, community businesses and co-operatives, as well as more mainstream businesses that have social impact as a core purpose, are all often gathered under the heading of social enterprise. You also hear about impact businesses, social ventures, social businesses and B corps; the result is that the seemingly simple question of whether social enterprises are non-profit organisations or not is met with a caveated response."
Critique of social entrepreneurship:
“Some critics seemed to have missed my strong acknowledgment that philanthrocapitalism should be able to expand important markets for socially- and environmentally-useful goods and services, perhaps strengthening non-profit service providers in the process. But by themselves these successes would have little impact on the forces that drive social transformation - namely politics, government and social movements strong enough to achieve broad-based changes in the distribution of power, resources and opportunities.
"You don't put band-aids on sucking chest wounds" as "Retired Marine" put it on the Wall Street Journal's blog. "Social enterprises do best when they identify one concrete need and meet it well", said another; "they are much less effective in tackling complicated issues where people disagree on what to do, or when the problem simply isn't fixable in the conventional sense of the word."
Other respondents questioned whether the philanthrocapitalists had ever intended to achieve deep-rooted structural changes in society, so it was unfair to judge them by this criterion. To "expect them to fund the loss of their own power is almost tragi-comic," a leading Indian fundraiser wrote in a confidential email.
Should philanthropy make up for the shortfalls of a system that is basically sound, or change that system in ways that enable the majority of the population to share in the fruits of success and become philanthropists themselves? Are "larger crumbs from the rich man's table" the best we can hope for in these enervated times? Is philanthrocapitalism really just trickle-down economics in a new and friendlier disguise?
After all, if business and the super-rich are serious about their social responsibilities there is plenty of work to be done in changing the way that wealth is produced and distributed without the smokescreen of philanthropy. Taking the right steps on wages, working conditions, benefits, consumer standards, tax obligations, political lobbying, monopolies and competition at the heart of business would have a huge social impact. As Daniel Lubetzky (a leading social entrepreneur himself) put it: "what most resonates with me about the unexamined ‘noise' surrounding philanthrocapitalism is that it is often used to mask dishonest or noxious behavior from corporations." (http://www.opendemocracy.net/article/philanthrocapitalism-the-myths-and-realities-of-the-myths-and-realities)
Neoliberal at heart
"Much of the work undertaken by social enterprises in the education and health sector would not be needed if adequate public services were in place. This is an argument long levelled at charities, and social enterprises are no different; the challenge should also be made to them. When an organisation patches up such problems downstream, there is less incentive for the problems to be eliminated at source. If the only tools in our box are social enterprise or charity, then we are missing the opportunity to use other properly different levers, such as addressing disadvantage by reforming the benefit system or introducing innovations such as a universal basic income.
Similarly, an entrepreneur motivated to consider making changes to the fashion industry is likely to be thinking of the impact of cotton farming on water usage and the exploitation of workers in garment factories. But they may not focus on the fashion industry’s systemic problems. The industry exists within an economy that systemically exploits people (particularly women) in service of fashion cycles and consumer spending. Now that is a problem worth addressing, but the tools to address it are not in the shape of a social enterprise but, for instance, in educating our children differently, in campaigning and in consuming less. In general, social enterprises undertake little campaigning, as it is not a revenue-generating activity. It is therefore more frequently the domain of charities.
In practice, endeavours that appear to be radical often serve to maintain the status quo. This is the case with social enterprise. The focus on markets, scale and investment is telling: social enterprise is neoliberal at its core.
The implicit and explicit focus on markets reinforces the hegemony of market-based approaches and an assumption that markets will produce optimal outcomes. This construction is firmly open for debate. There are many ways to get things done that are not market dependent: the UK’s response to the pandemic, for example, has included both massive, non-market-based public interventions and an extraordinary galvanising of community-based mutual aid.
According to Social Enterprise UK, around three in 10 social enterprises have a turnover of under £50,000, and the lack of scale of much of the sector has been recognised as a concern for some time. Yet scale is a normative business concept and so it is worth interrogating. To take one example, the Body Shop was a venture with a deeply ethical founder at its core who was unable to retain control of the business – or its impact – when it was sold on to a larger organisation. The evidence is clear: bad things happen literally every time organisations become very large. We must challenge the presumption that scale is inherently positive in any organisation – regular business, social enterprise or charity.
And then there is impact investing. Any critique of the social enterprise sector reaches its apogee in this arena. The topic deserves a full airing in its own right, but, in summary, those who seek social equity should question the process that leads to such uneven distribution of resources that a class of investors exists in the first place. And we need to face up to the fact that the underlying facilitating condition – a growth economy – is unsustainable for the planet.
Social enterprise has taught us that there is huge appetite for a different way of doing business: from entrepreneurs, from customers and yes, even from investors. I draw some hope from the fringes of the movement; a pocket of activity in which there may be an antidote to the anomie and isolation of modern commerce. This radical transformation of our economies and communities rarely calls itself social enterprise. It is taking place in organisations such as co-operatives and community land trusts that have a clear ideological and governance framework and an intentional approach to creating fair forms of work and sustaining communities. This is how social enterprise could have been and, perhaps, still could be.
But, for the most part, social enterprise has been unable to demonstrate that it is really possible to make more things count in capitalism than just the bottom line. To be truly radical it is necessary to go to the root causes of things. Those involved in social enterprise – funders, practitioners, policymakers –should perhaps refocus on the systems and context and consider how that broader environment can be adapted, improved or dismantled. For me, it is time to go back to the drawing board. "
Key Books to Read
- How to Change the World: Social Entrepreneurs and the Power of New Ideas (2004). David Bornstein
The book that helped launch “social entrepreneurship” into the mainstream, “How to Change the World” provides fundamental background on the evolution of the field by profiling a number of innovative social entrepreneurs and the organizations like Ashoka that support them.
- The Power of Unreasonable People: How Social Entrepreneurs Create Markets that Change the World (2008). Pamela Hartigan and John Elkington
In some ways a natural evolution from the earlier How to Change the World, this work focuses more on the way that social entrepreneurs are tapping into the financial potential of the worlds poorest to create both economic and social value.
- The Blended Value Map: Tracking the Intersects and Opportunities of Economic, Social and Environmental Value Creation (2004). Jed Emerson and Sheila Bonini
This essential and indispensable work situates social entrepreneurship and enterprise in the larger context of a growing conversation and collaboration between the traditional for-profit and nonprofit sectors.
- Just Another Emperor? The Myths and Realities of Philanthrocapitalism (2008). Michael Edwards
Even the most ardent supporters of social entrepreneurship shouldn’t be intimidated by critique, and Edwards’ work – particularly on the potential negative consequences of viewing social
- Video: PBS New Heroes series on Social Entrepreneurs
- Socialedge.org and Changemakers.net are online communities dedicated to social entrepreneurship with interactive discussions, written features, and more.
- social enterprise/entrepreneurship organizations:
- social enterprise/entrepreneurship resources: