Social entrepreneurship is an economic idea that plays off of the best elements of a few economic theories.
The overall goal is to use capitalist business practices and socialist humanitarianism and environmentalism together, all mixed with a healthy dose of innovation. Generally, the aim is to work towards social change or solving social problems, especially as they extend to the status quo.
What Is Social Entrepreneurship?
Social entrepreneurs are somewhere near the middle of the economic spectrum by striving for a profit while also contributing to the community for the good of the whole. They use capitalist mechanisms for social benefit on a more systemic level than regular philanthropy and donations.
Characteristics of social entrepreneurs often include creativity, determination, a strong sense of ethics and empathy, and much more. They’re looking to implement solutions with their social business ventures, not to gain political clout or make a load of money.
Where Social Entrepreneurs Fit In
With the economic system we have, where does social entrepreneurship fit? The goal is to simply start a profitable company and then invest those profits into the employees and community, often while being ecologically sustainable.
Instead of taking the profits from your business and buying yourself a second house, you invest those funds into things that actively improve your community as a whole. It’s more than just simple philanthropy.
Social entrepreneurs and their ventures self-regulate by taking profits and lifting others up. The definition of a social entrepreneur is so broad because there is a wide spectrum of them and their practices. For example, some may recruit investors and donors and raise money for a new venture, while others attempt to build from the ground up on their own.
Some of them reinvest into their own employees by creating programs that use company profits to pay for college tuition and healthcare. Others may create low-cost clinics for impoverished communities that financially break even. These types of business owners are not driven by excess but by social, economic, and ecological advancement. The social entrepreneur aims to make a positive impact.
They are basically philanthropists that use their business skills to create positive change with an intelligent and thoughtful approach. These social activists focus on social innovation and social ventures that target problems they see in the world around them.
Where Do Non-Profit Companies Fit?
Non-profit organizations and companies are on the other end of the spectrum, opposite to standard entrepreneurs. They exist solely to benefit communities through charitable donations, memberships, and other forms of income like branded merchandise.
These organizations are not out to profit from anyone. They make just enough revenue to break even. The owners receive nothing extra on top of normal fixed income. Amnesty International is a non-profit based in the UK.
Their goals heavily revolve around human rights and generating campaigns for its advocacy around the world. The goals of these social enterprises are strikingly similar to a social entrepreneur’s goals.
The key difference is that one strives for a profit by producing a product and or service that isn’t necessarily related to their social and environmental goals, while the other solely exists to serve social and environmental goals and only uses profits for expenses and not bonuses.
Societal Changes Needed Today
America has some serious, deep-seated problems with its social fabric. Things like the environment and the ripples of past discrimination of people of color are major issues, and many social entrepreneurs are trying to solve these issues. Each has its own specific social mission.
That said, the United States isn’t the only country where social entrepreneurs work to add social value. For example, Muhammad Yunus, founder of the Grameen Bank and a Nobel Peace Prize laureate, helps women in Bangladesh break out of poverty through microloans. TOMs shoes are another example of social entrepreneurship in recent years, donating a pair of shoes to children in need across the world, often in developing countries.
Marginalized groups, like African Americans, have been left behind socially and economically. Not only have they been denied access to housing and adequate policing, but they have also had difficulties starting and maintaining businesses.
Recently, Target has been actively practicing a form of social entrepreneurship by stocking and promoting black-owned brands like Mented Cosmetics, a makeup brand co-founded and owned by Amanda Johnson.
This is a clever but simple symbiotic relationship between Target and Mented Cosmetics. Target gets to profit from a brand while economically promoting a brand owned by someone from a marginalized group. Everybody wins.
Mo’s Burgers is a food cart located in Harlem, New York, and is owned and operated by Mo Robinson Jr. The founder sells fruity drinks, burgers, and hotdogs. Mo only sells the burgers for $2 and the hotdogs for $1.50. He specifically states that he keeps his prices down so that the young black kids can afford it.
Mo probably doesn’t even realize that he is partaking in social entrepreneurial practices, but he is aware of the social benefits of his business model. Hotdogs usually go up to $3 in the city, so it’s important that lesser-advantaged youth have access to affordable food vendors.
You may be thinking that $1.50 isn’t a significant price difference, but that could mean the difference between a kid eating lunch twice a week and four times a week.
Systemic Healthcare Problems
You know there is a systemic problem when a third of GoFundMes are for medical care costs. Based on 2015-2017 data, over 39% of Americans will be diagnosed with cancer in their lifetimes. According to the Journal of American Medical Association, out-of-pocket costs for newly diagnosed patients frequently represent 23% to 63% of their household incomes.
And that’s just cancer. These numbers don’t include the flurry of other medical challenges Americans face on a daily basis. Two-thirds of Americans filing for bankruptcy cite medical debt as a key element as to why they file.
One of the biggest criticisms of health insurance in America is that it is often attached to our employers. The original concept and intentions behind this were well-meaning but unfortunately had unintended consequences.
Because people’s insurance companies are tied to their employers, there is basically no competition, thus allowing for unregulated price hikes.
Some companies, like Boston Consulting Group, are attempting to remedy this issue by covering employee health insurance completely.
Health insurance is expensive—really expensive. By completely covering these costs, they are bolstering their employees’ financial positions.
The field of social entrepreneurship is usually very conscientious of the environment and sustainability. Companies like Allbirds concentrate heavily on sustainability and dampening the environmental issues caused by the fashion industry.
Fast fashion is responsible for dumping billions of tons of carbon dioxide into the atmosphere every year. Allbirds and other such organizations rely on sustainable materials like wool, trees that rely on natural rainfall as a water source, and even sugar.
Leaving a positive impact on the world is a key component of the concept of social entrepreneurship. Economically speaking, being environmentally friendly isn’t just good for nature and marketing; it’s good for the business. Companies that rely on finite resources typically have a hard time surviving in the long run.
Oil companies constantly have to find new locations and underground reservoirs to get oil out from. Once their wells are dry, that particular operation is over. This results in entire operations, including equipment and employees, completely uprooting the worksite.
Operations like these are not sustainable. They end up costing the oil companies millions and billions of dollars just to grab a resource that will not replenish for literally millions of years. Solar panel technology has seen some huge strides in just the last few years.
Future generations will likely rely on natural resources like solar, wind, and other renewables for energy because the oil will eventually disappear. It’s going to take characters like Elon Musk, who are driving us towards socially beneficial things like satellite internet available to everyone from almost anywhere.
You may not think of Musk as a social entrepreneur because he definitely strives for personal gain but you can’t deny the positive societal impacts his company’s products and services produce.
Social Entrepreneurs and Business
What is the point of high profits if the world and its people are set on fire anyway?
After all, you need people with disposable income and a healthy planet to maintain any business model. If you’re going to make a profit, you might as well invest in the future of our world.
Social entrepreneurs can look to places like Bill Drayton’s Ashoka, The Skoll Foundation, and The Schwab Foundation for help getting started, too, so they don’t have to do the whole business venture all on their own.