What is Social Entrepreneurship

Social entrepreneurship focuses on solving social and environmental problems using business models as forces for positive social and environmental change. It has been called the Fourth Sector, as it sits at the intersection of the public sector, traditional philanthropy (seeking impact without generating money) and traditional business (mainly focused on maximizing financial profitability).

 

While the creation of a traditional enterprise or business emerges from a market opportunity, a social enterprise is usually born from an impact opportunity, and from the recognition of an unjust reality which it seeks to transform. When a social enterprise seeks to maximize profitability, it does so in order to maximize impact.

Further Defining Social Entrepreneurship

There has been a considerable amount of work attempting to arrive at a single or official definition of social entrepreneurship. One of the most well-known attempts comes from the book, Getting Beyond Better, by Roger Martin and Sally Osberg of the Skoll Foundation. In their book, the authors break down what, for them, is and isn't social entrepreneurship. They propose the following definition, which can also be seen in this article they wrote for the Stanford Social Innovation Review:

We define social entrepreneurship as having the following three components:

(1) identifying a stable but inherently unjust equilibrium that causes the exclusion, marginalization, or suffering of a segment of humanity that lacks the financial means or political clout to achieve any transformative benefit on its own.

(2) identifying an opportunity in this unjust equilibrium, developing a social value proposition, and bringing to bear inspiration, creativity, direct action, courage, and fortitude, thereby challenging the stable state’s hegemony

(3) forging a new, stable equilibrium that releases trapped potential or alleviates the suffering of the targeted group, and through imitation and the creation of a stable ecosystem around the new equilibrium ensuring a better future for the targeted group and even society at large.

The key to this definition is in identifying the unjust equilibrium. In other words, identifying the current status quo that has caused or continues to allow for and/or cause the conditions of vulnerability of a certain population.

 

According to Martin and Osberg, what the social entrepreneur does is identify how to transform that unjust status quo to one that is more just, and do so in a way in which that change will endure.

What is a Social Entrepreneur?

A social entrepreneur seeks to generate a positive change in the world through his or her enterprise. This effort to generate positive impact is what motivates them and what guides their decisions. However, they also seek to make their venture economically viable (like any other venture).

Who Invented Social Entrepreneurship?

While for decades there have been ventures which have sought to create positive social and environmental impact, the history of social entrepreneurship as a more developed concept is traced back most frequently to the 1980s when Bill Drayton, founder of Ashoka, used the term to describe the work of his organization, which supported entrepreneurs around the world who were seeking to solve social and environmental issues through their enterprises.

Over the following decades the term became more and more popular thanks to the work of organizations such as Ashoka and the emergence of others like the the Skoll Foundation, Acumen, and Yunus Social Business.

Bill Dryton.png

The Popularization of Social Business by Muhammad Yunus

The concept of “doing well” by "doing good" in the business sector gained even more visibility and power, thanks to the work of Muhammad Yunus and the Grameen Bank. Yunus founded the Grameen Bank in 1983, focusing its work on making micro loans to economically poor people. This microcredit system for people living in vulnerable conditions was revolutionary at the time. In 2006, the Grameen Bank and Muhammad Yunus won the Nobel Peace Prize for these efforts.

On this concept and his learnings, Yunus wrote various books, including Building Social Business: The New Kind of Capitalism That Serves Humanity’s Most Pressing Needs. With this book and others, and the continued work of the organization he founded to strengthen social businesses around the world, Yunus Social Business, he further catalyzed the growth of social entrepreneurship on a global scale.

Social Entrepreneurship Organizations

Today, there are many organizations all around the world which support the social entrepreneurship sector. Here are some of those organizations:

Characteristics of Social Entrepreneurship

Social enterprises tend to have common characteristics, although it is important to note that each enterprise is different and that these characteristics will be stronger in some enterprises and not so visible in others.

 

In general, a social enterprise:

  • Creates a positive impact in the world.

  • Seeks to unify an impact opportunity with a market opportunity.

  • Identifies a target population it wishes to positively impact.

  • Makes decisions keeping in mind the ramifications to its impact bottom line.

  • Seeks to be profitable/generate economic value. 

  • Prioritizes re-investing earnings back into the enterprise.

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 Laboratorio de Impacto 

The Impact Lab is a hands-on program that will help you transform your frustrations into ideas, your ideas into actions, and your actions into social enterprises. In 3 months you will acquire tools to reinvent yourself and impact your reality.

Social Entrepreneurship and Innovation

Social innovation is the creation of new practices, services, products, etc. who seek to improve society. Social innovation doesn't always take the form of social entrepreneurship. 

For example, many large companies have departments dedicated to innovation with only some initiatives focused on the generating positive social outcomes. For the social entrepreneur, social innovation is a key tool to be utilized on the path towards generating impact he or she seeks to generate.

The financial models of social innovation projects vary greatly, depending on the context of the initiative. Some models will seek to make the initiative financially self-sustaining, and others will not.

Types of Social Entrepreneurship Models

A social entrepreneur has all types of business and organizational models at his or her disposal. The most appropriate form will depend on the type of activity that is being carried out, the target beneficiary population, the context where the enterprise operates, and many other variables. Considering that there are many possible variations, here are some general ways social entrepreneurs structure their enterprises:

Generate impact and re-invest earnings

  • Creating positive impact is the principle purpose and guides every decision. The enterprise seeks to generate income through its activities and invest any profit back into the organization.

Generating impact and distributing the earnings

  • Creating positive impact is the principle purpose and guides every decision. The enterprise seeks to generate revenues through its activities and may pay dividends to its shareholders.

Non profit organization

  • Creating positive impact is the principle purpose and guides every decision. Nonprofits can include NGOs, foundations, and other entities that receive donations as a principal source of income. All money is invested in the organization.

Hybrid organization

  •  Creating positive impact is the principle purpose and guides every decision. It may seek donations and at the same time sell products or services to generate revenue.

Examples of Social Enterprises

The following categories demonstrate the different ways in which a social enterprise can structure its business to generate positive impact, with specific examples for each category:

One for one:

Impact through hiring practices:

One for Others/ One for Impact:

Cross-Subsidy

Impact through use or production of materials

Direct impact through product or service offering

Certified B Corporations

A Certified B Corporation has met a base set of characteristics which demonstrates its commitment as a company that seeks to positively impact the world, is environmentally responsible, takes care of the communities where it operates, and treats its employees in a just manner.

 

According to the official website for B Corps:


Certified B Corporations are a new kind of business that balances purpose and profit. They are legally required to consider the impact of their decisions on their workers, customers, suppliers, community, and the environment. This is a community of leaders, driving a global movement of people using business as a force for good.


Companies in Latin America can turn to B Corp partner organization, Sistema B, for support in becoming certified.

Social Entrepreneurship in Colombia

The social entrepreneurship sector in Colombia is still in early stages of development. However, in recent years the number of social enterprises, organizations that support the sector, and public initiatives has grown considerably.

 

The following list includes some of the most well known organizations that support the social entrepreneurship sector in the country:

Examples of Colombian Social Enterprises

Social Entrepreneurship Training in Colombia

In recent years, the training of social entrepreneurs in Colombia has become an increasing priority, although it still has a ways to go to in developing a wide offering of quality training programs on par with other countries in the world such as Canada and several countries in Europe.

 

Still, the capacity-building ecosystem is growing and the following list includes some of the most important players in Colombia today:

  • In 2018, Quántica launched its principal program for training social entrepreneurs, the Impact Lab. To date, more than 100 entrepreneurs have graduated from the program.

Impact Hub Bogotá and Impact Hub Medellín

  • They launch various programs with differing themes each year. All of their workshops are focused on strengthening social entrepreneurs and the sector in general.

  • They open a nationwide call each year for their social entrepreneurs training program. In 2019, 40 Colombian entrepreneurs participated in the program.

  • Offers a program for leaders of for-profit social enterprises in early stages.

Investment for Social Enterprises

The global impact investing sector is valued at $502 billion dollars, according to the Global Impact Investing Network. Impact investing seeks create positive impact along with financial returns.

In Colombia, the number of impact investors and impact funds has grown steadily in recent years although it remains considerably less developed than markets in other regions of the world.

Social Project Financing in Colombia

In the following list are some of the actors in Colombia that invest in Colombian social projects:

Social entrepreneurship books

The following books include stories of social entreprepreneurs, theory of social entrepreneurship, the history of various social enterprises, and more.

Other resources (in Spanish)

Tools for Entrepreneurs (in Spanish)

Suggested TED Talks

Social Entrepreneurship

Definition, examples, resources.