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>> NARRATOR: What Is Social Entrepreneurship? An Emerging Tool for
Successful Societal Improvement. A presentation by IndependencePartners
-- A Catalyst for Independent-Living Solutions.
Social entrepreneurship is a relatively new concept globally.
However, it is quickly gaining acceptance and respect in many societies.
Although there are slight variations in common definitions of social
entrepreneurship, most definitions share two primary components.
First, social entrepreneurship addresses a social problem or need
using a highly-innovative approach -- generating something new
based on acquired knowledge and informed risk -- to organize, create,
and manage a project that contributes positively to society.
Second, social entrepreneurship is a process involving significant
awareness and effort toward balancing responsibility, risk, and
reward among stakeholders in a way that is fair.
Let's look at the social entrepreneurship matrix for a moment.
First, we see the obvious extremes between requiring profit for
sustainability only -- what we'd expect for a pure non-profit
organization -- versus requiring profit for wealth accumulation
-- what we'd expect in a pure for-profit business.
But, there's another dimension: organizations with a social mission
focus -- what we'd expect for a pure non-profit -- versus those
with a market mission focus -- what we'd expect in a pure for-profit.
Now we have four different types of organizations or solutions.
Traditional for-profits are the most common solution, which have a
stronger market mission focus and primarily requiring profit for
wealth accumulation. Microsoft, Dell, Coca-Cola, 3M, and GE being
among the thousands of common household names.
Traditional non-profits are the second most common solutions with
a stronger social mission focus that primarily require profit for
sustainability only. Well-known examples being GoodWill/Easter Seals,
the Salvation Army, and Arc.
A lesser-known yet very useful solution has a strong market mission focus
yet primarily requires profit to sustain a particular project or program
-- a funding vehicle for a solution that is more non-profit-oriented.
Examples here include the Goodwill Stores, Salvation Army Stores, and
Arc's Value Village Thrift Stores, where the profits are used to
support projects that have strong social missions.
Finally, the topic of this presentation: social enterprises which
have stronger social mission focus yet also require profit to reward
entrepreneurs and investors who took risks and responsibility for
developing an innovative solution to a social need. Examples of
social enterprises include Peace Coffee, Toms Shoes, and Minnesota
Diversified Industries (MDI).
It's important remember that a solution can fall anywhere on this grid.
For example, IndependencePartners' mission would likely described as
75% socially-driven and 25% market-driven. Plus, IndependencePartners'
profit model would likely be described as 51% focused on sustainability
only and 49% focused on rewarding entrepreneurs and investors. So, would
likely be described as falling somewhere between a traditional non-profit
and a social enterprise, but not strictly described as a non-profit nor
strictly described as a social enterprise. Certainly, we would not be
described as a funding vehicle or for-profit solution.
In many places around the world, societies are facing particular
challenges or problems. Generally, there are increasing
social needs that must be addressed in the face of diminishing social resources.
Currently, we rely on solutions from government, non-profit, and
for-profit organizations to satisfy these needs. For simplicity,
we'll include government within the non-profit category for this discussion.
In the next few minutes, we'll briefly summarize the primary differences
between non-profit and for-profit organizations. For a more detailed
explanation of these differences, we suggest researching information
about different forms of businesses.
First, Ownership and Governance.
A non-profit is owned by the entire community; everyone has a stake
in the organization. Therefore, community stakeholders provide
high-level oversight and strategic planning.
On the other hand, a for-profit may have one or more specific
individuals or organizations sharing ownership -- they have
shareholder ownership and governance.
Next, we'll discuss the focus of sustainability.
Non-profits generally focus on program sustainability -- how can
we be sure our solutions continue serving our communities?
For-profits typically focus on financial sustainability
-- how can we be sure we continue maximizing the earnings on
our investments.
Next, we'll talk about the population and needs focused upon.
Non-profits generally focus on satisfying the needs of individuals,
families, and communities, whereas for-profits focus on satisfying
the wants of consumers. In other words, non-profits focus on social
needs, whereas for-profits focus on market demand.
Now let's look at how each generally measures success.
Non-profits typically measure their success in terms of the number
of stakeholders whose needs have been satisfied and how well they've
been satisfied. Whereas, for-profits generally measure their success
on the amount of profit earned. Profits are typically a reflection
of how well the company has adapted and innovated for their market,
how efficient the company's been, and how well they've expanded
their solution to larger geographic areas and similar needs.
In other words, the objective of a non-profit is to expand the offering
of their solution, whereas for-profits often focus on acquiring market share.
Finally, when the amount of money coming in to a non-profit exceeds
the amount of money going out, they accumulate a "reserve", which they
reinvest toward sustaining, expanding, or creating solutions.
On the other hand, when the amount of money coming in to a for-profit
exceeds the amount of money going out, a "profit" is earned, which is
often given to their leaders and owners as rewards for the risks and
efforts they've made. The leaders and owners can then decide if they
want to reinvest some or all of their rewards.
By using these tools, societies attempt to balance responsibility,
risk, and reward.
Often times, in a free-market society, there is a tendency to think
organizations are either non-profit *or* for-profit.
However, social entrepreneurship offers an alternative whereby the
community -- typically the non-profit sector -- *partners with*
entrepreneurs and their teams -- typically the for-profit sector
-- to create an "and" solution to balance responsibility, risk,
and rewards.
[pause]
The focus is on collaboration and partnership.
For more information about social entrepreneurship in general,
check out the wealth of information provided by the following
organizations:
Ashoka – Innovators for the Public
Ashoka Changemakers – the World's Fast Track for Social Change
Changents – Connecting the People Who Help the World to the
People Who Help Them
Net Impact – A Global Network of Leaders Who Are Changing the
World through Business
Social Edge – by Social Entrepreneurs, for Social Entrepreneurs
Stanford Social Innovation Review (SSI Review)
Beyond Profit – Social Enterprise Magazine
[pause]
For more information about the way IndependencePartners is
using social entrepreneurship, check out the IndependencePartners'
channel on YouTube. Specifically, take a look at the video
titled "IndependencePartners' Overview for Community Organizations
and Professionals". Plus, take a look at our first solutions
project over at DSPMatch.com
This has been a presentation of IndependencePartners --
A Catalyst for Independent-Living Solutions -- Eliminating
the Concept of Long-Term Care by Empowering Independent-Living