Module  1:    Social  Entrepreneurship  –  Defined  

Introduction  –    https://www.youtube.com/watch?v=DttTSJEO47g  (Ashoka:  Innovators  for  the  Public)    Social  entrepreneurship  is  a  hot  topic.    If  you  Google  the  words,  you  will  find  a  wealth  of  information  from  articles,  academic  papers,  and  more.    But  what  is  it  exactly?        Not  everyone  agrees  on  the  definition.    There  is  no  textbook  answer.    In  basic  terms,  everyone  agrees  that  it  involves  applying  business  principles  to  solve  a  social  problem  in  a  sustainable  way.    It  may  involve  innovation  –  a  new  product  or  a  new  process  that  solves  the  problem  in  a  new  and  better  way.    It  may  be  a  non-­‐profit  that  applies  business  principles  in  order  to  more  effectively  achieve  its  mission.        Entrepreneurs,  by  nature,  are  problem  solvers.    They  find  a  way  to  solve  a  customer  problem  in  a  unique  and  innovative  way  by  identifying  and  clearly  defining  the  problem.    The  social  entrepreneur  is  simply  solving  a  different  kind  of  problem.    Michael  Bornstein,  in  “How  to  Change  the  World”  says  “Where  government  and  traditional  organizations  look  at  a  problem  from  the  outside,  social  entrepreneurs  come  to  understand  them  intimately,  from  within.”  1  Bornstein  also  quotes  Peter  Drucker,  author  of  “Disruptive  Innovation”,  who  said  “The  social  entrepreneur  changes  the  performance  capacity  of  society.”2    In  this  module,  we  will  explore  the  nature  and  motivations  of  the  social  entrepreneur,  various  perspectives  on  how  to  define  social  entrepreneurship  and  related  terms,  and  the  role  that  social  entrepreneurship  plays  in  society.        Section  1  -­‐  What  makes  a  Social  Entrepreneur?    When  you  think  of  what  kind  of  person  wants  to  be  a  social  entrepreneur,  you  might  assume  that  they  are  all  enthusiastic  young  people,  ready  to  conquer  the  world  and  make  their  mark.    While  the  number  of  college  graduates  who  are  seeking  jobs  or  opportunities  in  some  kind  of  social  pursuit  is  definitely  growing,  there  is  also  a  growing  movement  toward  social  service  in  people  who  are  retired  or  nearing  retirement.    Bornstein  sites  one  survey  in  which  almost  60%  of  responders  claimed  interest  in  “reordering  their  priorities  to  put  social  impact  front  and  center.”3    So,  eliminating  age  as  a  factor,  what  makes  a  social  entrepreneur?    Who  are  these  people?    In  Bornstein’s  view,  social  entrepreneurs  are  “transformative  forces:    people  with  new  ideas  to  address  major  problems  who  are  relentless  in  the  pursuit  of  their  visions,  people  who  simply  will  not  take  “no”  for  an  answer,  who  will  not  give  up  until  they  have  spread  their  ideas  as  far  as  they  possibly  can.”4    

If  you  change  a  few  words,  you  could  be  describing  any  entrepreneur,  not  just  a  social  entrepreneur.      Entrepreneurs  have  new  ideas,  are  relentless  in  pursuing  them,  and  will  not  give  up  until  they  have  achieved  their  vision.    So  what  is  the  difference?    Bornstein’s  book  tells  the  stories  of  several  social  entrepreneurs,  and  he  describes  them  as  “people  who  cannot  stand  to  watch  others  suffer,  people  who  cannot  stand  to  see  others  missing  opportunities  they  should  have.”        The  difference  between  entrepreneurs  and  social  entrepreneurs  is  in  what  motivates  them.    Entrepreneurs  are  not  necessarily  profit  motivated  –  in  fact  this  is  often  not  the  case.    Entrepreneurs  want  to  build  a  product  that  solves  a  customer  problem,  and  to  build  a  successful  company  by  creating  value.    Social  entrepreneurs  want  to  do  they  same  thing  –  but  they  want  to  solve  a  social  problem,  to  relieve  suffering,  and  to  make  the  world  a  better  place  by  helping  a  specific  group  of  people.    The  Ashoka  Foundation,  founded  by  Bill  Drayton,  supports  social  entrepreneurs  who  the  Foundation  believes  can  be  successful.    They  are  looking  for  people  with  great  ideas,  entrepreneurial  skills,  and  a  passion  for  making  a  difference.      Their  selection  panel  has  four  main  criteria  that  they  use  to  evaluate  potential  candidates:5      

1. Creativity  –  They  must  have  goal-­‐setting  creativity,  meaning  being  able  to  envision  how  to  create  a  long-­‐term  systemic  change  to  solve  the  problem.    They  also  must  have  problem-­‐solving  creativity.    To  reach  the  end  goal,  every  social  entrepreneur  will  have  to  solve  countless  problems  and  overcome  many  obstacles  along  the  way.  

2. Entrepreneurial  Quality  –  According  to  Bill  Drayton,  this  criterion,  by  Ashoka  standards,  is  the  hardest  one  to  meet.    Someone  with  entrepreneurial  quality  will  be  able  to  change  a  pattern  or  a  system  on  a  large  scale.    They  will  relentlessly  pursue  their  idea  until  it  is  working  in  all  of  society,  not  just  in  one  place.    To  have  this  quality  Drayton  says  they  must  be  1)  possessed  by  an  idea  and  2)  able  to  answer  “how”  they  will  take  their  idea  to  each  level  of  success  on  the  path  to  their  end  goal.  

3. The  Social  Impact  of  the  Idea  –  Will  the  idea  work  and  can  it  be  duplicated  in  other  areas  to  have  a  widespread,  long-­‐term  impact?    The  Foundation  is  looking  for  people  who  can  have  a  profound  effect  on  a  large  number  of  people.  

4. Ethical  Fiber  –  This  criterion  focuses  on  the  person.    The  person  must  have  a  high  level  of  integrity  and  be  completely  trustworthy.    As  Ghandi  believed,  “ethics  should  be  grounded  not  in  rules,  but  in  empathy.”    The  motivation  of  the  social  entrepreneur  comes  from  that  empathy,  and  the  same  empathy  should  be  the  foundation  of  every  ethical  decision  that  the  social  entrepreneur  makes.  

   

Entrepreneurial  Skills    The  similarities  between  the  processes  that  entrepreneurs  and  social  entrepreneurs  follow  are  greater  than  the  differences.    Therefore,  a  social  entrepreneur  needs  to  have  the  same  skills  that  any  entrepreneur  needs  to  have  or  learn.      Communication,  problem  solving,  networking,  negotiation,  and  strong  leadership  skills  are  all  critical,  no  matter  what  the  nature  of  the  business  or  organization.      The  social  entrepreneur  also  must  be  able  to  take  risks,  and  manage  them.    The  same  personal  risks  apply  in  both  types  of  entrepreneurship  –  financial  risk,  career  risk,  and  psychological  risk  are  just  part  of  the  list.  The  social  entrepreneur  also  faces  the  risk  that  their  solution  will  not  work.    They  have  to  be  prepared  to  test  their  assumptions,  learn,  and  change  the  solution  based  on  what  they  learn.    Section  2  –  Social  Entrepreneurship  Is…  Social  entrepreneurship  has  been  around  for  –  well  probably  forever,  in  one  form  or  another,  but  the  emergence  of  it  as  its  own  discipline  is  relatively  new.    And  what  it  really  is,  or  should  be,  is  a  topic  of  great  debate.        First,  lets  clarify  some  terms.    Social  entrepreneurship  in  essence  is  referring  to  the  person  –  the  social  entrepreneur.    The  company  or  organization  is  a  social  enterprise.    Again,  the  definition  of  a  social  enterprise  is  not  fully  agreed  on  by  everyone,  but  its  typical  definition  –  and  the  one  we  will  use  throughout  this  course  -­‐  is  any  organization  that  is  solving  a  social  problem  in  a  sustainable  way,  applying  business  principles  to  do  so,  and  generating  revenue  from  some  of  its  activities.    Sustainable  in  this  context  means  that  the  solution  is  sustainable  –  it  solves  a  problem  for  the  long-­‐term  in  a  way  that  addresses  the  root  of  the  problem.    Providing  temporary  aid  to  people  who  have  a  problem  is  not  what  we  consider  sustainable.        The  financial  sustainability  of  the  social  enterprise  is  something  different.    It  refers  to  the  organizations  financial  ability  to  operate  effectively  for  the  long-­‐term.    We  will  discuss  this  in  greater  depth  later.    So  how  should  a  social  enterprise  be  structured?    Funded?    Is  there  more  than  one  type?    In  a  broad  view,  a  social  enterprise  can  take  many  forms.    It  can  be  a  non-­‐profit  organization,  a  for-­‐profit  company,  or  a  company  that  is  financially  self-­‐sustaining  but  does  not  make  a  profit.    A  for-­‐profit  corporation  can  also  establish  a  non-­‐profit  or  for-­‐profit  arm  with  a  specific  social  purpose.    Social  value  creation  is  the  unifying  principle  among  all  definitions  of  social  enterprise  or  social  entrepreneurship.    In  “Social  Entrepreneurship  –  What  Everyone  Needs  to  Know”  by  David  Bornstein  and  Susan  Davis,  they  define  the  term  as  “a  process  by  which  citizens  build  or  transform  institutions  to  advance  solutions  

to  social  problems,  such  as  poverty,  illness,  illiteracy,  environmental  destruction,  human  rights  abuse,  and  corruption,  in  order  to  make  life  better  for  many.”6    They  also  summarize  the  most  widely  cited  definition,  formulated  by  Greg  Dees,  who  is  often  referred  to  as  the  father  of  social  entrepreneurship  education:7  

Social  entrepreneurs  play  the  role  of  change  agents  in  the  social  sector,  by:  

• Adopting  a  mission  to  create  and  sustain    social  value  (not  just  private  value),    • Recognizing  and  relentlessly  pursuing  new    opportunities  to  serve  that  

mission,    • Engaging  in  a  process  of  continuous    innovation,  adaptation,  and  learning,    • Acting  boldly  without  being  limited  by    resources  currently  in  hand,  and    • Exhibiting  heightened  accountability  to  the    constituencies  served  and  for  the  

outcomes  created.    

Essentially,  the  definition  is  very  similar  to  that  of  a  non-­‐social  entrepreneur  –  the  differences  are  the  purpose  of  the  organization,  and  the  socially  impactful  outcomes  created.  

Virtue  Ventures  LLC,  a  social  enterprise  support  organization,  defined  a  social  enterprise  similarly:8      A  social  enterprise  is  any  business  venture  created  for  a  social  purpose-­‐-­‐mitigating/reducing  a  social  problem  or  a  market  failure-­‐-­‐and  to  generate  social  value  while  operating  with  the  financial  discipline,  innovation  and  determination  of  a  private  sector  business.    Bornstein  and  Davis  discuss  the  recent  evolution  of  social  entrepreneurship  as  movement  in  three  stages:9    

1.  Social  Entrepreneurship  1.0  was  identifying  people  with  innovative  ideas  and  “business”  models,  and  creating  support  systems  to  help  those  people  build  and  grow  their  ideas.    2.  Social  Entrepreneurship  2.0  focused  on  the  entrepreneurial  aspect  –  using  business  and  entrepreneurial  processes  to  help  social  organizations  achieve  success.    3.  Social  Entrepreneurship  3.0  (now)  is  more  holistic,  and  seeks  to  include  all  individuals,  organizations,  institutions,  corporations,  and  governments.    Everyone  has  a  role  in  creating  and  supporting  positive  solutions  to  global  problems.    It  is  an  ecosystem,  and  through  collaboration  and  support,  the  effects  of  social  change  multiply.  

   Social  Innovation  

A  related  concept  that  is,  in  a  sense,  even  broader  than  social  entrepreneurship  is  social  innovation.    Social  innovation  may  be  (and  often  is)  a  key  element  of  a  successful  social  enterprise,  but  social  innovation  does  not  necessarily  only  occur  within  a  social  enterprise.        Social  innovation  is  something  that  solves  a  social  problem  –  in  other  words,  it  creates  social  value.    Social  value  is  the  creation  of  benefits  or  reductions  of  costs  for  society.    The  complete  definition  of  Social  Innovation  developed  by  Phills,  Kriss,  and  Deiglmeir,  is  as  follows:    

“Social  innovation  is  a  novel  solution  to  a  social  problem  that  is  more  effective,  efficient,  sustainable,  or  just  than  existing  solutions  and  for  which  the  value  created  accrues  primarily  to  society  as  a  whole  rather  than  private  individuals.”10    

The  solution  is  not  necessarily  a  product  or  process  –  it  can  be  an  idea,  a  principle,  legislation,  a  social  movement,  an  action,  or  a  combination  of  more  than  one  of  those.    Therefore,  the  innovator  is  not  necessarily  an  entrepreneur,  and  the  vehicle  to  put  the  innovation  into  practice  is  not  necessarily  a  social  enterprise  or  organization.    Often,  social  innovation  requires  the  collaboration  of  several  groups  or  people,  institutions,  or  organizations.        A  few  examples  of  social  innovation  are:    

Charter  schools  are  publicly  funded  schools  that  are  not  as  regulated  as  public  schools;  therefore  innovative  teaching  methods  can  be  used.    Charter  schools  would  not  be  possible  without  collaboration  between  the  government,  school  administrators,  teachers,  and  parents.    Fair  Trade  is  a  movement  that  establishes  trade  standards  for  products.    The  traders  must  meet  certain  social  and  environmental  standards  to  be  certified.    This  is  a  movement  based  on  a  principle,  and  it  requires  the  global  collaboration  of  many  parties  to  set  and  enforce  the  standards.  

 Section  3  -­‐  Breaking  It  Down  –  Types  of  Social  Entrepreneurship  As  we  stated  before,  we  will  use  the  term  “Social  Enterprise”  broadly  to  refer  to  a  socially  focused  organization  that  applies  business  principles  to  achieve  success.    Generally,  this  involves  also  generating  revenue  from  some  of  its  activities.    The  social  entrepreneur  is  the  person  that  launches  the  enterprise.    Note  that  not  everyone  agrees  that  all  types  of  organizations  that  fall  under  the  heading  of  social  entrepreneurship  must  generate  revenue.        

The  following  are  types  of  organizations  that  are  or  may  be  considered  forms  of  social  entrepreneurship    Social  Firms  are  a  social  enterprise  founded  specifically  to  employ  a  target  population.    Typically,  the  target  population  is  one  that  has  some  barrier  to  employment  such  as  a  disability,  homelessness,  or  ex-­‐offender  status.    A  Social  Business  is  a  specific  type  of  social  enterprise,  the  concept  of  which  was  developed  by  Muhammad  Yunus,  founder  of  the  Grameen  Bank,  a  pioneer  in  the  field  of  microfinance.    In  his  book,  “Building  a  Social  Business”,  he  defines  a  social  business  as  a  “non-­‐loss,  non-­‐dividend  company  dedicated  entirely  to  achieving  a  social  goal.”      A  social  business  generates  revenue  to  cover  all  of  its  costs,  and  is  therefore  self-­‐sustaining.    Yunus  describes  seven  characteristics  of  a  social  business:11    

1. The objective is to solve a social problem, not to maximize profit 2. The company will become financially sustainable 3. Investors get back only what they invested – no dividends or other returns 4. All profit is re-invested for growth 5. The company must be environmentally conscious 6. Employees are paid market wage and have better-than-standard working

conditions. 7. Do it with joy

 The  Grameen  Bank  is  a  social  business.    It  provides  small  loans  (microcredit)  to  poor  people,  mostly  women,  so  they  can  start  or  improve  their  own  businesses.    Grameen  Bank  is  financially  self-­‐sustaining.    All  funds  loaned  come  from  deposits,  and  operating  costs  are  paid  with  the  interest  earned  from  the  loans  (which  have  a  repayment  rate  of  98%).    The  bank  is  owned  by  the  borrowers,  and  has  over  2500  branches.    All  profits  are  used  for  growth  or  to  subsidize  other  Grameen  social  businesses.        Microcredit  has  grown  tremendously  since  the  Grameen  Bank  was  founded  in  1983.    There  are  many  microcredit  lenders  that  are  not  social  businesses,  however,  by  Yunus’s  definition.    Many  microcredit  lenders  make  a  profit  and  pay  dividends  to  shareholders.    By  loaning  to  poor  people,  they  are  considered  social  ventures  or  enterprises  if  their  primary  objective  is  to  help  the  poor  people,  rather  than  to  make  money.  As  you  can  see,  this  distinction  may  be  hard  to  make  –  when  decisions  must  be  made,  who’s  best  interests  come  first?    The  beneficiaries,  or  the  shareholders?        In  a  social  business,  the  only  responsibility  is  to  the  beneficiaries.        Social  Intrapreneurship  is  the  process  of  innovating  with  a  social  purpose  within  an  organization.    Employees  may  be  empowered  to  improve  processes  to  be  more  environmentally  responsible,  or  to  create  new  products  related  to  their  current  products  that  have  a  social  purpose.    Many  large  companies  have  specific  initiatives,  

often  in  the  form  of  a  separate  business  entity,  to  develop  innovative  solutions  to  social  problems.    That  entity  may  be  in  the  form  of  a  non-­‐profit,  but  it  can  also  be  set  up  as  a  for-­‐profit.    Google.org,  for  example,  was  established  as  a  for-­‐profit  entity  so  that  it  could  make  grants  and  investments,  and  so  that  it  could  lobby  the  government.12    Venture  Philanthropy  is  a  term  applied  to  wealthy  investors  (often  entrepreneurs)  who  invest  in  social  entrepreneurs  using  the  same  market  principles  as  venture  capital  investment.    Rather  than  just  giving  to  charity,  they  make  a  social  investment  in  an  organization  that  will  create  some  kind  of  social  return,  and  often  a  financial  return.    The  social  return  is  something  that  benefits  everyone  –  lower  crime,  lower  unemployment  rates,  smaller  prison  populations,  etc.    Non-­‐profits  that  perform  income-­‐generating  activities  unrelated  to  their  mission  may  still  fall  under  the  umbrella  of  social  entrepreneurship,  but  are  not  generally  considered  a  social  enterprise.    To  be  considered  a  social  enterprise,  the  revenue  generating  activities  must  be  central  to  the  mission  itself.    For  example,  an  enterprise  that  produces  an  affordable  product  –  say  a  health  care  product  –  in  order  to  make  it  accessible  to  a  poor  population  is  generating  revenue  from  its  core  activities.    Its  purpose  is  to  provide  access  to  the  affordable  health  care  product  to  poor  people.      On  the  other  hand,  a  non-­‐profit  organization  that  provides  educational  services  to  a  target  population  for  free,  and  sells  t-­‐shirts  or  some  other  product  to  cover  its  costs,  is  not  a  social  enterprise.    Other  types  of  organizations  that  may  fall  under  the  heading  of  social  entrepreneurship  are  (this  is  not  all-­‐inclusive):    Cooperatives  –  An  organization  owned  collectively  by  individuals  or  businesses,  sharing  resources  and  services  for  the  benefit  of  all  members.      Traditional  non-­‐profits  –  If  they  provide  a  sustainable  social  solution,  but  receive  their  funds  from  donations  or  grants,  they  may  still  fall  under  the  heading  of  social  entrepreneurship  if  they  apply  traditional  business  principles  to  operate.    (This  one  is  up  for  debate).      What  Social  Entrepreneurship  or  Enterprise  is  Not  Again,  most  definitions  of  social  entrepreneurship  include  a  unique,  innovative  solution  to  a  social  problem.    By  this  definition,  some  types  of  social  initiatives  –  which  are  still  very  valuable  –  are  not  considered  forms  of  social  entrepreneurship.    Social  Activism  is  trying  to  initiate  social  change  by  influencing  decision  makers,  such  as  government  or  corporate  leaders,  or  by  changing  social  attitudes.    While  social  activism  can  be  of  great  value  to  society,  it  is  generally  not  considered  a  form  of  social  entrepreneurship.    Activists  are  not  creating  or  implementing  specific  solutions  to  specific  problems.  

 Social  Services  can  come  from  government  agencies  or  from  non-­‐governmental  agencies,  and  can  also  be  very  important  and  valuable  to  society.      Providing  food  and  clothing  and  temporary  shelter  to  homeless  people,  for  example,  is  a  valuable  service,  but  it  does  not  solve  the  problem  of  homelessness.    The  impact  of  these  services  is  limited  and  requires  ongoing  donated  resources  to  continue.    Is  All  Entrepreneurship  is  Social?  This  topic  should  make  a  great  class  discussion!  Entrepreneurs  solve  a  problem  for  some  group  of  customers,  they  help  create  wealth,  and  they  create  jobs.    Therefore  entrepreneurship  is  good  for  society  –  all  entrepreneurs  create  positive  social  change.        This  assumes  that  all  entrepreneurs  are  socially  responsible  (they  don’t  discriminate,  hurt  the  environment,  etc.)  and  that  their  product  or  service  does  not  create  new  social  problems.    But  what  if  all  entrepreneurs  practiced  “conscious  capitalism”?    We  will  define  this  further  in  another  module,  but  to  summarize,  conscious  capitalism  means  that  business  owners  must  manage  their  businesses  with  the  well-­‐being  of  all  stakeholders  in  mind,  including  society  as  a  whole.        And  can  we  not  say  that  all  progress,  development,  medicine,  technology,  and  the  general  progress  of  mankind  did  not  come  from  innovators  and  entrepreneurs  –  those  people  with  ideas  and  vision  who  would  not  stop  until  their  vision  was  reality?        So,  if  all  innovators  and  entrepreneurs  followed  the  principles  of  conscious  capitalism,  they  are  all  serving  a  social  purpose.    Josh  Sparks,  author  of  “If  Men  Were  Free  to  Try”,  wrote:    “Private  ownership,  private  initiative,  the  hope  of  reward,  and  the  expectation  of  achievement  have  always  been  primarily  responsible  for  the  advancement  of  mankind.”13    Yale  University  economist  William  Nordhaus  asserted  in  his  writings  that  entrepreneurs  typically  generate  a  surplus  benefit  above  and  beyond  the  profits  they  earn.  He  calculated  that  entrepreneurs  capture  only  about  2  percent  of  the  surplus  that  they  create  for  all  of  society  -­‐  jobs,  wages,  and  value.14    So  is  all  entrepreneurship  social?    Discuss!    Section  4  –  The  History  and  Emergence  of  Social  Entrepreneurship    

Social  entrepreneurship  in  various  forms  is  not  a  new  phenomenon,  but  the  term  and  discussions  of  what  it  is  and  what  it  should  be  have  gained  traction,  especially  in  the  last  three  decades.    Lets  start  with  some  history.    You  know  that  Florence  Nightingale  was  a  nurse  who  tended  to  wounded  soldiers,  right?    But  did  you  know  that  she  also  built  the  first  professional  school  for  nurses?    She  also  played  a  huge  part  in  improving  the  quality  of  and  access  to  healthcare,  including  the  creation  of  the  innovative  concept  of  medical  tourism  –  traveling  to  other  countries  to  access  better  quality  health  care  at  lower  costs.  15    Dr.  Maria  Montessori  developed  the  Montessori  approach  to  early  childhood  education.  Her  methods  spread  internationally  and  changed  the  course  of  the  evolution  of  educational  methods.    Mahatma  Ghandi,  who  is  generally  characterized  as  an  activist,  actually  built  a  powerful  political  movement  that  led  India  to  independence.        All  of  these  people  had  a  specific  social  goal  that  they  were  trying  to  achieve,  and  they  built  innovative  solutions  to  achieve  their  goals,  as  well  as  efficient  systems  and  processes  around  those  solutions.    (We  will  add  many  more  examples)    Emergence  In  the  last  three  decades,  the  world  has  seen  an  explosion  of  non-­‐governmental  organizations  –  organizations  founded  and  managed  by  citizens.    These  organizations  have  come  to  be  known  as  a  new  “sector”,  often  called  the  nonprofit  sector,  or  the  “citizen  sector.”        Peter  Drucker,  author  of  “Disruptive  Innovation”  has  called  this  sector  America’s  leading  growth  industry.    Just  one  of  many  indicators  is  that  during  the  1990s  in  New  York  City,  overall  employment  grew  by  4%  while  employment  in  the  citizen  sector  grew  by  25%.16    But  the  emergence  is  not  just  happening  in  the  United  States.    Bornstein  cites  many  examples  in  “How  to  Change  the  World”.  Here  are  just  a  few:17    

• Between  1987  and  2002,  the  number  of  citizen  groups  in  Canada  grew  by  50%  

• 20  years  ago  Indonesia  had  one  independent  environmental  organization  –  by  2007  it  had  over  2000.  

• During  the  1990s  in  France,  an  average  of  70,000  new  citizen  groups  were  established  per  year.  

 In  2004  and  2006,  social  entrepreneurs  won  the  Nobel  Peace  prize  –  Wangari  Maathai  who  founded  the  Green  Belt  Movement  and  Muhammad  Yunus,  founder  of  the  Grameen  Bank.18  

 So  why  is  this  happening  now?    What  happened  to  spur  such  a  movement?    Why  do  so  many  people  feel  called  to  action?    The  nature  of  social  action  is  also  changing  –  hence  the  term  social  entrepreneurship  and  the  struggle  to  define  it.        First,  lets  look  at  how  –  aside  from  growth  -­‐  the  citizen  movement  has  changed:19  

• Social organizations are more globally dispersed • Systemic  solutions  to  social  problems  are  being  sought  –  to  solve  problems  in  

a  sustainable  way.  • More  organizations  are  independent,  not  subject  to  the  rules  of  church  or  

government  • Organizations  and  other  institutions,  including  businesses,  universities,  and  

governments  are  working  together  to  solve  social  problems.  • Attention  is  focused  more  on  creating  and  measuring  specific  and  relevant  

outcomes,  largely  because  more  organizations  mean  more  competition  for  resources.      

 So  now,  lets  talk  about  why  –  why  now?    While  there  is  no  way  to  directly  link  any  particular  force  or  phenomenon  to  the  social  movement,  Bornstein  discusses  many  things  that  have  occurred  that  we  can  naturally  assume  played  some  role  in  it:20    

• More  democracies  have  emerged,  allowing  people  more  freedom  to  participate  in  social  reform.  

• Increased  wealth  in  the  later  part  of  the  last  century  has  made  more  resources  available.  

• Increased  health  and  life  spans  have  given  people  more  time  to  do  things  they  choose  to  do.  

• Increased  access  to  higher  education  has  increased  the  number  of  people  with  the  knowledge  to  solve  problems,  as  well  as  the  financial  means.  

• Decreased  racial  and  gender  barriers  have  allowed  more  people  the  freedom  to  act.  

 Another  factor  that  almost  certainly  plays  a  major  role  is  technology  and  our  increased  access  to  news  and  information.    People  can  see  what  is  happening  in  other  parts  of  the  world  –  they  see  war,  disease,  poor  living  conditions,  suffering  of  all  kinds  –  and  they  see  it  every  day  in  living  color.    Also,  the  people  who  live  in  poverty  or  in  impoverished  areas  are  no  longer  isolated.    They  can  see  on  television  or  via  other  technology  how  more  fortunate  people  are  living,  and  they  are  organizing  to  find  solutions  to  their  problems  and  to  seek  opportunities  for  a  better  way  of  life.    Finally,  people  are  losing  confidence  in  governments’  abilities  to  effectively  solve  problems.    Failed  policies  and  inaction,  often  caused  by  corporate  power  and  influence,  have  motivated  the  citizen  sector  to  take  matters  into  their  own  hands.    

Section  5  –  Exponential  Social  Impact  Social  entrepreneurship  has  come  to  be  considered  a  discipline,  a  field  of  study,  and  a  movement  –  one  that  is  becoming  more  organized.    The  leaders  of  thought  in  the  movement  and  the  organizations  that  support  it  do  not  envision  social  entrepreneurs  seeking  small-­‐scale  changes;  they  want  innovators  who  build  systemic,  real  solutions  to  problems,  and  those  solutions  should  also  be  replicable.        The  social  entrepreneur  begins  with  the  idea  for  a  solution  and  a  model  to  implement  that  solution  in  a  sustainable  way.    Just  like  any  entrepreneur,  he  will  launch  that  solution  for  a  certain  group  of  beneficiaries  (customers)  to  test  the  solution.    Then  he  will  refine  the  solution  and  the  business  model  over  and  over  again  until  the  solution  solves  the  problem  in  a  sustainable  way.    That  model  can  then  be  repeated  again  and  again  in  different  locations,  similar  to  a  franchise!    (In  fact,  some  social  enterprises  have  been  franchised)    New  managers  around  the  world  can  replicate  the  business  model,  making  modifications  to  meet  the  needs  of  the  people  in  that  location.          The  Big  Picture  David  Bornstein  states  that  “one  of  the  most  important  things  that  can  be  done  to  improve  the  state  of  the  world  is  to  build  a  framework  of  social  and  economic  supports  to  multiply  the  number  and  the  effectiveness  of  the  world’s  social  entrepreneurs.”21    That  is  exactly  what  Bill  Drayton  was  seeking  to  do  when  he  founded  Ashoka  –  he  wanted  to  find  entrepreneurs  with  big  ideas  that  could  spread.    It’s  one  of  the  main  criteria  that  Ashoka  looks  when  they  are  evaluating  applicants  –  are  the  idea  and  the  model  good  enough  to  be  replicated  once  the  model  has  been  validated  and  demonstrated?    In  later  modules,  we  will  discuss  business  models,  financial  structures,  and  funding  sources  for  social  entrepreneurs.    But  lets  ask  the  question  now  –  how  can  funding  from  any  source,  including  government  funding,  be  directed  toward  entrepreneurs  and  organizations  that  are  building  systemic,  sustainable,  replicable  solutions?    How  can  we  build  a  framework  to  support  social  entrepreneurs  who  can  change  the  world  in  drastic  ways?        It  would  be  great  if  we  had  a  clear  answer  to  that  question  –  now  that  would  be  a  great  course  for  everyone  to  take  at  any  age!    Let’s  call  it  “How  to  Save  the  World.”    But  since  no  one  has  found  the  magic  formula  yet,  lets  just  talk  about  some  ideas.    College  Summit  is  an  organization  that  brings  students  to  college  campuses  for  a  workshop  at  which  they  receive  hands  on  help  with  the  college  application  process  from  writing  professionals,  counselors,  and  other  mentors.    It  is  targeted  at  low-­‐income  students  who  have  more  potential  than  their  test  scores  might  show,  and  who  need  guidance  through  the  college  application  process.    They  typically  do  not  

come  from  families  with  college  experience,  so  they  have  difficulty  navigating  the  process  and  the  transition  to  the  college  experience.    The  workshops  have  been  very  successful  –  the  college  enrollment  rate  of  students  who  attended  the  workshops  was  79%  (as  of  2002)  which  is  roughly  the  same  enrollment  rate  for  students  in  the  top  20%  income  earning  families.  22    But  is  the  rate  of  college  enrollment  the  best  outcome  to  measure?    Is  the  rate  of  success  of  those  students  the  best  measurement?    Instead,  perhaps  it’s  better  to  look  at  the  ROI  –  the  return  on  investment  of  each  student.    Perhaps  it’s  better  to  look  at  the  ROI  of  any  social  organization.      Dean  Furbush,  the  board  chair  of  College  Summit,  says  that  the  failure  of  society  to  do  more  to  help  low-­‐income  students  go  to  college  is  a  “failure  of  markets”.  23  There  are  a  broad  range  of  economic  benefits  to  society  that  come  from  sending  one  student  to  college,  including  the  tuition  that  the  college  receives,  higher  taxes  on  the  higher  income  the  student  will  earn,  the  lack  of  government  assistance  that  the  student  might  need  without  a  college  education,  and  the  additional  benefits  that  may  come  from  that  student’s  positive  effect  on  peers  and  future  generations.    If  it  costs  $1000  to  send  that  student  to  the  workshop  that  helps  them  get  into  college,  what  is  the  ROI  to  society?        There  is  no  single  mechanism  to  measure  that.    So  if  the  “market”  of  potential  donors,  which  could  be  local  businesses,  individuals,  or  the  government  don’t  know  the  ROI  –  which  could  be  enormous  based  on  the  factors  above  –  how  does  the  market  know  what  a  great  investment  they  would  be  making?    The  ROI  in  terms  of  real  outcomes  should  be  measured  by  the  organizations.    All  organizations  report  outcomes  –  after  all,  donors  and  investors  want  to  see  results.    Steve  Rothschild  in  The  Non  Non-­‐Profit  discusses  “measuring  what  counts.”24.    You  can  measure  inputs,  outputs,  and  outcomes.    Outcomes  are  the  actual  results  –  the  numbers  that  actually  indicate  that  you  are  achieving  social  change.    For  the  student  who  graduates  from  college,  their  personal  benefits  are  certainly  important  outcomes  and  should  be  measured.    The  other  outcomes  to  measure  are  the  returns  on  investment  to  any  stakeholders  –  donors,  the  government,  or  any  other  party  that  participates  and  benefits.        The  outcomes  of  social  organizations  could  also  be  measured  by  centralized  firms  or  reporting  agencies.    Some  groups  exist  now  that  monitor  the  performance  of  charities  or  other  social  organizations,  but  there  are  no  standards  or  rules  for  measuring  real  outcomes.    Most  experts  agree  on  the  need  for  some  system  of  global  standard  setting  and  measurement.    Some  have  proposed  a  “social  stock  market”  that  would  help  donors  or  investors  find  and  connect  with  organizations  that  are  achieving  outcomes  that  are  desirable  to  the  investor.    With  global  standards  for  measuring  and  reporting  outcomes  (KPIs  

-­‐  Key  Performance  Indicators),  investors  would  have  a  way  to  identify  successful  organizations  and  choose  which  to  invest  in.    There  are  some  specific  investment  vehicles  currently  in  place  already  that  provide  investor  returns  based  on  the  social  value  that  is  created  by  an  organization.    This  has  been  termed  “impact  investing”,  meaning  investing  to  create  social  return  as  well  as  to  generate  a  profit.    Social  impact  bonds  –  bonds  that  pay  a  return  to  investors  if  a  social  goal  is  met  -­‐  are  being  issued  in  the  U.K  and  are  aimed  at  developing  programs  to  reduce  recidivism  rates  at  prisons.      Developing  any  kind  of  comprehensive,  long-­‐term  financial  framework  to  support  social  organizations,  however,  will  be  a  very  complicated  and  arduous  process  that  could  take  decades.    In  the  short-­‐term,  social  organizations  can  begin  to  measure  their  own  real  outcomes,  and  not  only  report  them  –  but  market  them  in  order  to  attract  resources  that  will  help  them  to  scale  their  business  model  and  to  spread  their  impact.        1  Bornstein,  David.      How  to  Change  the  World-­‐  Social  Entrepreneurs  and  the  Power  of  New  Ideas.  2007,  Oxford  University  Press,  New  York,  NY.    p.  xii    

2Bornstin,  p.  2    3Bornstein,  p.  xiv    4Bornstein,  p.  1    5Bornstein,  p.  124-­‐128    6Bornstein,  David  and  Davis,  Susan.    Social  Entrepreneurship  –  What  Everyone  Needs  to  Know.    2010,  Oxford  University  Press,  New  York,  NY,  p.  1    7  Dees,  J.  Gregory,  The  Meaning  of  Social  Entrepreneurship,    Original  Draft:  October  31,  1998  Reformatted  and  revised:  May  30,  2001)  

8  http://www.4lenses.org/setypology/definition    9Bornstein  and  Davis,  p.  xx    10  Phills  Jr,  James  A.,  Deiglmeir,  Kriss,  &  Miller,  Dale  T.  Rediscovering  Social  Innovation,  ,  Stanford  Social  Innovation  Review,  Fall  2008  11Yunus,  Muhammad.    Building  a  Social  Business.    2010.    United  States  by  Public  Affairs,  New  York,  NY.  P.  1-­‐3    12  Bornstein,  p.  x    

13Strong,  Michael.    Be  the  Solutions  –  How  Entrepreneurs  and  Conscious  Capitalists  Can  Solve  All  the  World’s  Problems.    2009.    John  Wiley  &  Sons,  Inc.  Hoboken,  NJ.    P.  58    14  Schramm,  Carl  “All  Entrepreneurship  is  Social”,  Stanford  Innovation  Review    15  Bornstein  and  Davis,  p.  2    16  Bornstein,  p.  5    17Bornstein,  p.  4    18Bornstein,  p.  x    19  Bornstein,  p.  5    20  Bornstein,  p.  5-­‐10    21  Bornstein,  p.  3    22  Bornstein,  p.  173    23  Bornstein,  p.  174    24  Rothschild,  Steve.  The  Non  Non-­‐Profit,  2012.    Jossey-­‐Bass.  San  Francisco,  CA.  p.  49-­‐51