How do we define social entrepreneurship? The term first appeared in the literature on social change in the sixties and became more widespread in the eighties.
Social entrepreneurship is the process of pursuing and developing suitable solutions to social problems, often using or changing a society’s basic infrastructure.
Social entrepreneurs act as passionate, evangelistic visionaries and change agents, seizing opportunities to improve societal systems by advancing sustainable solutions. The daunting missions social entrepreneurs pursue (usually in developing regions) include:
There are continuing arguments over who qualifies as a social entrepreneur: philanthropists versus social activists versus environmentalists versus other socially oriented change practitioners. For our purpose in this issue, we have limited the term to founders and operators of organizations that primarily rely on earned income—income earned directly from paying customers.
Business entrepreneurs typically measure performance of a venture in terms of profit or return on investment (ROI). Social entrepreneurs also measure the venture’s positive return to society. Conceptually, social entrepreneurs use a comparable financial measure defined as “sustainability”: Can the social entrepreneurial venture sustain itself based on its internally generated funds flow? If not, how much additional externally generated financial funds and/or human volunteered resources are needed?
The financial metric revolves around the venture’s operational funds’ financial position. The calculation is straight forward: at the close of a given financial operating period, a quarter or a “budget year,” an accounting is done of operating monies spent, including volunteer manpower dollars, compared to actual operating revenue generated.
A social entrepreneurial venture that has a negative or break-even operating cash flow—particularly with a heavy volunteer manpower dollar component—is probably non-sustainable. The entrepreneurial funding community must then evaluate the non-financial societal value the venture is delivering to its community and whether this value is worthy of the additional funding necessary to keep it in operation.
To quote Bill Drayton, “Social entrepreneurs are not content just to give a man a fish or to teach him how to fish. They will not rest until they have revolutionized the fishing industry.”
Dr. CHARLES KING is professor of marketing at the University of Illinois at Chicago and president of Networking University.