Social entrepreneurship applies the principles and guidelines utilized by start-up founders and entrepreneurs to a business that directly causes social change or has an impact on a social purpose. A social entrepreneur is largely driven by the desire to address a systemic social or cultural issue.
In this article, we’ll go deeper into what social entrepreneurship is, how it differs from traditional entrepreneurship, and why it’s important. We’ll also provide case studies that study successful examples of social entrepreneurship.
What is Social Entrepreneurship?
Social entrepreneurship is the formation of a business around certain social and environmental objectives, and it can include nonprofit organizations, charities, and for-profit social businesses.
Social entrepreneurs differ from regular entrepreneurs in that their primary motivation is to make a difference in the world or within their communities. They frequently have personal experience with the causes they support, which influences their company’s aim.
While traditional firms may assess success in terms of market share or year-over-year revenue growth, social entrepreneurs are more likely to focus on metrics such as job creation, tree planting, or donations to a charitable arm that addresses the issue they have invested in.
Some key areas of interest for social entrepreneurs might include:
- Economic development
- Education
- Gender equality
- Health care
- Agriculture
- Environmental sustainability
- Renewable energy
- Community development
Social entrepreneurship can operate as a non-profit, for-profit, or hybrid business (also known as a social enterprise), depending on the business model that you prefer and the availability of funding.
Just as there are nearly unlimited expressions of entrepreneurship, social entrepreneurship can take innumerable shapes. You may establish a nonprofit that provides funding to underrepresented entrepreneurs. Alternatively, you may start a for-profit company that produces environmentally beneficial items.
Regardless of the form of social entrepreneurship you pick, you must be passionate about your cause and dedicated to making a difference. With hard effort and determination, you can have a significant impact on the world.
The different models you can adopt as a social entrepreneur include:
- Nonprofit. A tax-exempt, non-business entity that invests excess funds back into the mission.
- Co-operative. A business organized by and for its members. Credit unions and community grocery stores are some examples of co-ops.
- Social purpose business. These businesses start on the foundation of addressing a social mission.
- Social firm. Social firms employ those in the community who need jobs, such as at-risk youth.
- Socially responsible business. These companies support social missions as a part of their day-to-day business operations.
- For-profit. Perhaps the vaguest category, these businesses are profit-first but donate funds, raise awareness, or otherwise support causes.
Arguably the most common social enterprise model is donating a portion of profits to a charity, but that’s not all there is to building an effective social enterprise.
- Creating jobs within the communities they care about, such as hiring local ex-convicts or ethically outsourcing production to communities in need of fair work and career development opportunities
- Reducing their carbon footprint by planting trees or offsetting carbon emissions throughout their entire supply chain and educating customers about the topic
- Hosting workshops and people-development initiatives to teach skills and empower others to build better lives for themselves and their communities
- Advocating for diversity and inclusion on behalf of underrepresented groups and becoming an engine of inspiration, such as GoldieBlox does by making content and toys that expose young girls to the joys of engineering
Social entrepreneurs, like other entrepreneurs, want to build a long-term business. Unlike an entrepreneur, who seeks to maximize earnings, a social entrepreneur is primarily concerned with effect. The focus point drives the majority of the distinctions between the two types of entrepreneurship.
Here’s a side-by-side comparison of the two:
| Entrepreneur | Social entrepreneur | |
|---|---|---|
| Objective | Build a sustainable business | Build a sustainable and socially impactful business |
| Motive | Financially driven | Mission-driven |
| Focus | Individual consumers | Social groups |
| Link to social issues | Indirect | Direct |
| Competition/collaboration | Competitive with related businesses | Collaborative with related businesses |
| Success | Based on sustainable profits | Based on sustainable social impact |
It’s important to note that a business can be concerned with and contribute to social causes without being a social-entrepreneurial venture. Corporate social responsibility is when a business adopts policies that positively impact society, often guided by ethics. For example, a company may donate to charitable organizations or offset their carbon emissions to mitigate environmental harm.
Example of Social entrepreneurship
Let’s take a deeper look at some for-profit social enterprise examples and their aims, which demonstrate that making positive change and being lucrative as a business are not mutually exclusive.
Cotopaxi
Cotopaxi is a social enterprise that provides durable outdoor gear while simultaneously supporting worldwide poverty alleviation programs. Sustainability is included into its product creation and carbon-neutral supply chain, earning the company its B Corp certification as a social entrepreneur.
Mission: “Create sustainably designed outdoor gear that fuels both adventure and global change, by dedicating a percentage of our revenues to nonprofits working to improve the human condition.”
Impact: Aided 1,255,490 people directly through poverty alleviation programs, provided 67,000 malaria treatments benefitting 403,416 families, and more in 2021.
Blueland
Blueland is a social venture that distributes non-plastic alternatives to household products including cleaning sprays and paper towels. Sustainability is central to its mission and is woven throughout its content marketing, which teaches readers about sustainability and single-use plastics.
Mission: “Make it easy to be eco with innovative products in reusable packaging that are convenient, effective and affordable.”
Impact: Its products helped eliminate one billion single-use plastic bottles from landfills and oceans since 2019.
LSTN
LSTN Sound Co. sells luxury wooden headphones and helps individuals in need get hearing aids through the Starkey Hearing Foundation. It reflects the founders’ love of music and their desire to share that experience with others, particularly those with hearing loss who cannot afford hearing aids.
Mission: “After seeing a viral video of someone hearing her own voice for the first time, co-founders Bridget Hilton and Joe Huff decided to focus their efforts on creating change through the power of sound & music, and make this incredible moment a reality for others around the globe.”
Impact: The company has helped provide hearing aids to more than 50,000 people who would not have had access to them otherwise.
Social entrepreneurship works within the structures of the business world to influence social change. It’s largely associated with progress, development, and innovation. Much like start-up entrepreneurs are disruptors, social entrepreneurs disrupt the status quo of systemic inequality.
Read Also: Who is a Tech Entrepreneur?
As a concept, social entrepreneurship is not new. For example, some experts may consider Florence Nightingale, who created the first nursing school in 1860 and thus reformed the healthcare industry, to be a social entrepreneur.
However, the term “social entrepreneurship” is very new. As people and experts continue to investigate social entrepreneurship, we’ll learn more about how various approaches affect society and establish best practices. Meanwhile, social entrepreneurs are continually revising their business models to achieve their primary goal of influencing social change.
Types of Social Entrepreneurs
There are various definitions for driving change through social entrepreneurship. These individuals and firms reflect a wide range of what they are attempting to accomplish with their operations. They also differ in terms of their strategies and objectives for achieving social change.
Dr. Joe Johnson is an entrepreneur who has been studying the subject for more than 25 years. He founded Welfont, which has sponsored and launched more than a dozen start-ups. Dr. Johnson has identified four common types of social entrepreneurs.
1. The Community Social Entrepreneur
This entrepreneur wants to meet the social needs of a community in a narrow geographic area. These entrepreneurial endeavors could range from providing job opportunities for underrepresented citizens to constructing a community facility. Social entrepreneurs on this size are typically individuals or small groups. Microfinance loans are one example of a financial solution provided to locals who do not have access to traditional banking.
These entrepreneurs collaborate closely with people of the community. This results in more vested interests and a slower decision-making process, but it has the advantage of providing long-term solutions. Even without the entrepreneur’s direct involvement, community people and local organizations are likely to support the project over time.
This is where most individuals begin because a difference in your local neighborhood is immediately noticeable. You can observe the impact of such social entrepreneurship very instantly and speak with the individuals you are assisting firsthand. To begin this type of initiative, simply identify a local isolated social problem and devote your efforts to resolving it.
2. The Non-Profit Social Entrepreneur
These entrepreneurs are concerned with social well-being rather than money gain, which means they prioritize it over typical commercial needs. They reinvest any revenues into the firm to support the further expansion of services.
Non-profit social entrepreneurs are typically businesses or groups that choose to use their influence for social benefit. The background of Goodwill Industries is an excellent example: in 1902, the company began employing low-income locals to work with donated products, reinvesting all proceeds in job training programs.
Because of the easy access to capital, these entrepreneurs are more likely to achieve their stated objectives. However, they rely on its successful generation for social benefit.
This path is typically followed by more business-savvy entrepreneurs who wish to use their expertise to effect change. While the effects are often delayed, they can have a significant impact. Joining a local non-profit or training program is usually a good way to get started.
3. The Transformational Social Entrepreneur
These folks are interested in starting a business that can address the societal demands that governments and other corporations are not currently meeting. Non-profits frequently shift into the transformational category over time and with adequate growth. They expand into larger groups with rules and laws, sometimes even collaborating with or integrating with government agencies.
Accelerators such as The Social Innovation Warehouse are excellent examples of this form of social entrepreneurship. They specifically help other impact-driven entrepreneurs generate positive change. This results in a network of interrelated enterprises centered on social benefits.
Transformational entrepreneurs have an easier difficulty attracting top personnel for these projects. However, they are also subject to a complex web of rules and regulations that larger corporations must develop.
These organizations typically recruit and develop talent in-house. If you apply for a job or volunteer role and demonstrate social entrepreneurship skills, they are likely to assist you enroll in a mentorship program and advance your career from there.
4. The Global Social Entrepreneur
These entrepreneurs want to totally transform societal processes in order to address huge global demands. It is frequently where large corporations end up when they recognize their social responsibilities and start focusing on good change rather than just profits. It also houses the largest charitable organizations, such as the Bill & Melinda Gates Foundation.
The worldwide need in question can range from free access to education to clean water. This is typically a high goal that crosses continents and brings together a wide range of groups and interests. However, the trade-off is being scrutinized: if global social entrepreneurs fail to meet the demands and garner adequate support, their failure will have a greater impact than that of smaller organizations.
These groups are usually dedicated to a specific cause and collaborate with other social entrepreneurs to make it happen. As a result, connecting with other social entrepreneurs and building a global network focused on solving social challenges increases your chances of reaching these heights.
Furthermore, there is an increasing number of organizations that combine the best for-profit methods with non-profit goals. They come into all of the categories listed above, with varying phases of growth and scalability. We recommend identifying the most appropriate cause for you and then charting a course of action from there.
Bottomline
As people become more aware of the value of social entrepreneurship, the demand for it increases. By creating a more inclusive and sustainable economy, certified B firms are speeding a global cultural revolution and redefining what success means.
For those who are truly committed to making a difference in the world, there are numerous opportunities to join other established social enterprises and peers who are looking for like-minded individuals to carry out their personal entrepreneurial spirits of making a true change for social good.
