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Social Entrepreneurship

Between the Quick Exit and the Long Sojourn

Social entrepreneurs have to get out there and do the work, with enough staying power to make a real impact. Part one of a two-part series.

I was mesmerized by this report on the Social Enterprise World Forum in Rio last October, the first such in Brazil. Put the energy of the social enterprise movement together with the joie de vivre of Brazil, and you get—let me tell you—the most explosive murals-cum-session-notes and the most exuberant challenge winners and awardees imaginable. NESsT, an organization that knows its social enterprise stuff, organized the event, and part of me wishes I had been there.

Another part of me, though, is feeling increasingly queasy about where the social enterprise concept and practice is heading. For context, I should mention my own relationship to the field. My background is journalism, political activism, and nonprofit rabblerousing. In 1987, I started a nonprofit called CompuMentor to connect nerds to nonprofits. My idea of sustainability was grant funding. At a certain point, we were rescuing extra review copies of software from computer magazines and letting nonprofits pick them over for $5 apiece. That morphed into TechSoup Global, which is best known for administering the product donations of more than 75 technology companies in 59 countries, with nonprofit partners in most. An admin fee makes everything go round, and 90 percent of our $28 million budget comes from this social enterprise. I tend to sum up my experience as: “Two weeks ago I couldn’t spell social entrepreneur, and now I are one.”

Before I get back to the “queasy,” let me say how much I like the social enterprise movement. It has unleashed massive creativity, not the least of which are new social funding mechanisms. It has opened a pathway into the social sector for highly skilled younger people who would otherwise have flowed seamlessly into the private sector. And it has developed what might be thought of as a ”philanthropy methodology,” enabling a new breed of high-net-worth individuals to feel a sense of ownership of their philanthropic moment.

And now here’s the Big Queasy, in the words of Mathias Craig:

There is no app for this. You have to get out there and do it—and you have to have the staying power to be at it long enough to have a real impact. Leading people on with the idea that there is a widget or a model or a process that will short-cut this leads to quick burnouts, ineffective allocations of funds, and ultimately less impact.

Mathias founded blueEnergy in 2003 to connect “the most isolated poor to the renewable energy, clean water, and sanitation services needed to improve their own lives.” It’s been ten years of slow achievement, some major recognition (CNN Hero, Ashoka fellowship, Fulbright Nexus Scholar), financial support from a personal network when times were lean, a variety of forays into fee-for-service offerings, and now, after all these years, it’s still a steep climb. This “making a difference” stuff can be a real grind, as it turns out.

But the conferences don’t talk very much about the grind. There is a peculiar symbiosis between the social enterprise, tech startup, and tech innovation memes—a collective hypnosis at times. You know: With the right level of innovation and the right business modeling, the mere absence of money need not prevent the poor from constituting a semi-lucrative market for products that will, eventually, help them out of poverty. And it will all be sustainable, with patient capitalists paid off fairly for their investment and with the social entrepreneurs themselves doing quite well in the bargain. To all of this, Mathias says:

What seems to be lost is that creating meaningful long-term impact in the social space is still really about the people [who] are willing to stick with the hard work and bounce back every time they get knocked down along the way, which is an almost daily occurrence.
Mathias_Craig_blueEnergy

blueEnergy Executive Director Mathias Craig (left) tests water pumped by a blueEnergy system in Nicaragua. blueEnergy Water Technician Vladimir Pao (right) discusses the well drilling process while the well and filter owner looks on.

Meanwhile, I chanced on the online persona of a British social entrepreneur named Liam Black. The cognitively dissonant mix that Liam presents mirrors the contradictions of social enterprise. On his business site, it’s all, “We create outstanding bespoke study tours and events,” and “By 2007, having created/led some dozen social venture businesses, I had become a bit jaded of the CEO life … ” But in a post titled “Letter to a Young Social Entrepreneur,” Liam is candid:

I can see clearly that a core part of what drove me was … huge enjoyment at the attention [that] came with being in the vanguard of the UK social enterprise movement. It feels very good to be talked and written about and even better if there are awards and baubles.

He is also passionate about social change. He did me the enormous favor of leading me to the meditation of the Brazilian Archbishop and inspiration behind liberation theology, Dom Helder Camara, written toward the end of his life when it was unclear to him whether his work had mattered at all:

We must have no illusions
We shall not walk on roses
People will not throng to hear us and applaud
and we shall not always be aware
of divine protection
If we are to be pilgrims for justice and peace
we must expect the desert.

Most aspiring social entrepreneurs would not characterize themselves as anticipating long desert sojourns. Admittedly, that’s a bit of a dour projection for even an idealistic young Stanford grad. But they shouldn’t anticipate a quick exit either. In my next post, I’ll take a look at how we might better manage our social entrepreneurial expectations.

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COMMENTS

  • Andrew Hartwell's avatar

    BY Andrew Hartwell

    ON June 20, 2013 06:30 AM

    Thank you Daniel.  I am happy that someone with a bully pulpit is saying such things. Over the years, there have been so many “quick-and-easy” ways to assess non-profits.  These are always effective at testing alignment to fads, but may or may not accurately describe the impact and effectiveness of the work.  In some areas, real change must be transformational, which requires depth of involvement over a long period of time.

  • BY Lucky Gunasekara

    ON June 20, 2013 05:13 PM

    Daniel, you’ve never ceased to be a constant source of wise counsel in keeping efforts grounded in reality.

    I couldn’t agree more with your points here - entrepreneurship, socially-conscious or otherwise, is by default a risky endeavor. You should go in eyes-wide open that you will likely fail, your equity is worthless, your backers will be disappointed, and then…with that reality-check, go about a systematic de-risking and iterative evolution of your business that doesn’t enlivens not kills the soul of your enterprise. I think the oft-forgotten rule here is that you only need to succeed once and that what really matters in the long-run is the tenacity and longevity of your commitment to a cause and the relationships and perspectives that encompass those efforts. I can’t tell you how many times I’ve run into a social entrepreneur who was on fire about their work in their 20s and then hit their 30s and post-grad years and give up. We need more funds, more mentorship, and most of all more perspective that the most important thing we can do is nurture and support this young talent to go not just from success-to-success but most of all from success-to-failure-to-success and so on.

  • BY Jonathan Peizer

    ON June 20, 2013 05:48 PM

    Daniel,

    Elegantly put.

    What I wrote about mixing profit & social Value in 2000 I still think holds true today. The point I made [below] about meeting social value first is a quick and dirty allusion to the long sojourn you more elegantly speak of Daniel. It takes time to meet the mission and generate the value that leads to sustainability. The alternative, I think, is to form a commercial social enterprise that can compromise on mission when it needs to in order to maintain profitability. What I mean here is that a long sojourn is not always necessary, but it does require making a decision between social value and profitability and deciding the right balance for individual projects:

    “Both profit and value motives function best when neither is compromised by the other. The trick to sustainable, socially responsible development work is leveraging both to avoid that compromise.

    In order to insure these two motivations do not conflict, there are two ways to insure both sustainability and socially impact. One is to create a sustainable mission-based, socially responsible enterprise that never compromises its value motive. The other is to forego the value motive as the primary principle and try to achieve commercial success with an idea that delivers social impact. Each model has application depending on the circumstances.

    Socially responsible, sustainable NGO ventures attract interest and investment because they achieve their mission without ever sacrificing their values. People and institutions are always looking to support best practice examples that tackle social issues successfully. The prerequisite for profitability in these best practice examples always flow from meeting the value-based mission first. If one applied a conventional business analysis to these ventures at the outset they would never be implemented. That’s because traditional business models are also based on profit and not value analysis. Most for-profit ventures would never engage in these activities from the start because the mission or constituencies served are not intrinsically profitable. From the business perspective, these ventures would only achieve profitability with a retooling significant enough to change either the value-based mission or the constituency served. One the other hand, if one looks at these same ventures from the value perspective, the [financial] potential becomes more obvious as long as the social mission is achieved successfully first. Examples are ISPs that the Open Society Institute started in Central & Eastern Europe to provide connectivity where it did not exist to the social sector, NGO’s and school children in the 90’s. Once the idea was proven and competition entered the marketplace all prices for connectivity dropped to levels consumers could afford. When that happened the project was spun off as a pure commercial entity which still gave discounts to social sector clients that met certain criteria. I’d like to say we thought this all out beforehand, but we did not. We anticipated success of the not-for-profit meeting its mission, and when it did, new opportunities arose around it.

    In some sense, it’s actually easier for a successful not-for-profit organization to adapt a revenue generating model than it is for a commercial entity to combine a value and profit-based mission. A not-for-profit NGO can avoid compromising its principles simply by not engaging in revenue generating activities antithetical to its mission. On the other hand, for-profits with socially responsible missions have an inherent conflict. They may very well have to compromise their mission in some instances to stay solvent. Or they may go bankrupt trying to achieve their mission. Some organizations may wish to start off exclusively meeting a value-based mission and then become a for-profit entity once that mission is achieved.

    The opposite and equally successful examples are companies who use social impact as a means to achieve a profit objective. Companies are evaluated first for their efficacy in achieving financial viability through social impact, with the social impact mission given extreme scrutiny. However, as with any other startup they are evaluated on standard profitability criteria as well. [These companies are not value-based per say like NGOS are. That is, unlike NGO’s their value is not derived from the currency of trusted source relationships that define their “net worth” as institutions in the sector and may limit what they can do, but rather the currency of the bottom line.] They pursue social impact as the primary way of generating revenue; however it’s clear at the outset that social impact may be compromised in some cases to maintain profitability.

    For example, a for-profit using the services of inner city kids to do web development work. Because profitability was the primary motive, when the company needed to employ non-inner city youth to fill certain client project needs, it could compromise short term social impact and hire the appropriate personnel to insure long term viability. By contrast, if a nonprofit organization had as its core mission the value that it would only hire inner city youth for this type of activity under all circumstances, it would need to sacrifice some clients and limit profitability in these areas.”

  • BY Mario Morino

    ON June 20, 2013 07:14 PM

    Daniel, as always, you’ve connected your heart and mind in a most insightful post.  In the world you describe I’m an interloper, someone on the sidelines seeking to help/support courageous nonprofit leaders doing the work.  I believe it is critical these leaders be encouraged, expected, and supported to do all they can to build more rigor and muscle in their organizations to be better, while being focused on mission. There are no silver bullets, no short-cuts, no methodologies guarenteeing success and no quick-fix tools.  It is all about people and excecution.  As Jim Collins says so well, becoming a great organization is a function of continuous improvement over time.  It requires courageous, unrelenting leadership, that sticks with their mission for years on end. For too many, their zealousness gives way over time to hard reality.  For those that endure, the transformation, the impact is possible.  Many thanks.

  • BY Daniel Ben-Horin

    ON June 21, 2013 12:05 PM

    Thanks for these comments! I must say, I’ve received more email about this piece than about any other I’ve written. I’m hoping some of those email comments make their way here.

    JP’s points are provocative and I would pair them with the perspective Serge Raicher of European Venture Philanthropy Association (EVPA) very entertainingly (especially for Candide fans) makes here: http://www.youphil.com/fr/node/5895

    The bottom line, for me, is that *there are two very separate phenomena occurring, and we get quite confusing and confused when we treat them as a single phenomenon called Social Enterprise.*

    One phenomenon is a new form of investment that is trying to capitalize, pun intended, on the trend in the world toward valuing the double bottom line. It’s not *that* much different than if everyone in the world started wearing purple and we started seeing purple branding and purple products all over the place. That wouldn’t mean that brands started ‘believing’ in purple. It’s just good business. And I think this is a *good* thing. I’m not one of those who worries too much about greenwashing or impactwashing. I am happy when corporations and investors do the right thing for any reason….and then you can try to hold their toes to the fire to do more and better.

    The other phenomenon is huge bottom up trend toward altruistic behavior. Clay Shirkey’s “Cognitive Surplus” is very interesting on this subject. HIs argument, in a simplistic nutshell, is that interactive social media has facilitated a massive consciousness and free time shift, away from television and toward honoring our human impulse to do good (if our basic needs are met first). I agree! 

    My argument is that we shouldn’t muddy the distinction between these two phenomena. And while the money is associated with the first phenomenon, and the boom of conferences/awards etc. follow the money, I would bet on the second phenomenon proving the more longterm and important.

  • Kyle Reis's avatar

    BY Kyle Reis

    ON June 21, 2013 01:37 PM

    Daniel - Your piece for me gets at the “social enterprise to what end” question. In the version you profile, social enterprise happens over the long haul—with humility, patience, sweat equity and capital eventually leading (in most cases) to positive social gain. In recent versions, social enterprise seems more an end in itself: social enterprise for social enterprise’s sake.

    This, however, in large part reflects the proliferation and democratization of philanthropy itself.  Everyone is indeed now a philanthropist and this means that, as with civil society, let a thousand philanthropy models bloom. Yes, some will not pass the smell test.  However, just as civil society thrives for all of us precisely because it casts a big tent, thus must philanthropy open its arms wide as well. 

    But this is also why it will become increasingly important to generate better overall information about this activity using, for example, concepts like those espoused by Markets for Good.  For only then will we be able to begin separating the social enterprise wheat from the chaff…and invest our future social enterprise dollars accordingly.

  • Doug Jacquier's avatar

    BY Doug Jacquier

    ON June 21, 2013 06:02 PM

    Daniel
    A thoughtful and important brace of pieces and they marry well with your earlier SSIR piece on Innovation Obsession Disorder http://www.ssireview.org/blog/entry/innovation_obsession_disorder 

    The excellent comments from Jonathan Piezer and Matthew Chanoff (see comments in the companion piece) encapsulate many of my thoughts.

    Clearly there is an opening here for enterprising souls to develop events, webinars, e-books etc along the lines of ‘Making a difference in the long run – the art and science of maintaining and scaling good ideas’.  And for funders to sponsor an awards program for the social enterprise ‘stayers’ and ‘scalers’ of the world, that may ultimately influence social entrepreneurs, funders and donors to get out of the wading pool, where anyone can be an Olympian.

    Finally, clarity in this issue, as Daniel has indicated, is not assisted by the perennial debate about what social enterprise is (varying definitions rehearsed here http://www.enterprisingnonprofits.ca/what-social-enterprise) . A more profitable (pun intended) line of inquiry is the one suggested by Kyle Reis i.e. broad agreement on what constitutes long term impact on an issue and rewarding those who consistently perform in those areas.
    (And of course there’s always the issue of where governments fit in this as they spend the common wealth, but I digress ... or do I?)

  • BY Jessica Mayberry

    ON June 22, 2013 04:31 AM

    Daniel, this is a great post once again. I am an Ashoka Fellow for my org http://www.videovolunteers.org and h,ave just completed a program that Ashoka runs for the social entrepreneurs whom it thinks have the most ‘scalable’ ideas, called the ‘globalizer.’

    Being in the program made me think we are starting to see a shift from obsessing about scale towards wanting to have more honest conversations. On the one hand, the program aimed to ‘gobalize’ NGOs that were all just national. And the program talked a lot about revenue models. But the Ashoka organisers also wanted to drive home points that I rarely hear on the NGO/funder circuit: that markets don’t work for NGOs; scaling means economy of problems not economies of scale; that social entrepreneurs don’t experience pull, they have to push their ideas. I found it really refreshing to be in a place that acknowledged these challenges and it is what I like about Ashoka.

    As for the Fellows in attendance, I wonder how many of us feel that we are truly ‘scalable.’ For myself, I entered the rpogram saying, ‘how much difference can mentorship and discussion make when we can’t address the two fundamental things - how to find funding and the key partnerships.’

    For myself, the term scaling doesn’t inspire me in the way it did a few years ago - or seem that relevant. A more important driver is that I retain my passion for my work and my belief that, as a community, we changemakers are moving things in the right direction.

  • BY Daniel Ben-Horin

    ON June 22, 2013 11:51 AM

    Jessica’s comment spurs all kinds of thoughts for me. It’s less a matter of ‘right way vs. wrong way’ and more a matter of clarity about motivation and goals…and methodology. I *do* think it is wrong and harmful to ‘play’ at helping the poor. Obviously, no one says in so many words, “Well, I think I’ll have a couple of fun years after college playing around with a social enterprise in Africa and then I’ll go work at a bank,” but that’s the net effect of certain kinds of projects. That said,I have no problem at all with short-term projects/interventions that move the dial in some appreciable way, however small, and where the founders do not make a personal long term commitment. But I am, personally, more aligned with and interested in the people who, to quote Jessica, can “retain my passion for my work and my belief that, as a community, we changemakers are moving things in the right direction.”

    It *is* a marathon and we *need* the long distance runners. They are related to but different from the people who are cresting the Social Enterprise wave…riding the zeitgeist. Cresting and riding is a *good* thing, from my perspective. Some of those cresters and riders will undergo personal transformation and decide to make a life of it, and they will bring formidable skills to the task. We now have a social enterprise ‘industry’ that supports the cresting, but we also need to develop mechanisms that support this transformation. The global community built by Ashoka is the best example I know of such a mechanism; we need more.

  • Doug Jacquier's avatar

    BY Doug Jacquier

    ON June 22, 2013 02:34 PM

    Apposite quote in this context: “As the founder and chief executive, I had the vision and the hutzpah to create something extremely meaningful and impactful in the world. But I didn’t have the foresight or the strength of will to see it through and fight back against the prevailing pressures constantly whispering in my ear to do it cheaper, do it leaner and do it with lower gosh-darn overhead.” Kjerstin Erickson, former CEO, FORGE
    From http://www.huffingtonpost.com/kjerstin-erickson/nonprofit-emaciation-confessions_b_3473599.html

  • BY Mathias Craig

    ON June 22, 2013 04:28 PM

    Daniel, I want to thank you again for including me in this important project.

    Mario, it’s great to see your comment on here.  I am a big fan of “Leap of Reason” and have shared it with our leadership team.  It comes up in conversation quite a lot and we are looking for ways to imbed its key points deeper into our DNA, across the organization.  We are in a challenging place where we have the commitment of the leadership team to continuous improvement but we haven’t cracked the nut on how to build this culture everywhere in the organization and how to fund the kinds of initiatives and leadership to make it happen.  As you say it’s about the people in the end and we want to invest in this, but how do we get the support - both financial and mentoring - we need to go from wanting/believing to executing?  Would love your advice on this - if you have a moment, please send me an email at mathias.craig—AT—blueenergygroup.org . 

    Jessica, as a fellow Ashoka-er, I really appreciate your comments.  Jonathan Lewis over at Café Impact has a great video on the bad taste that the constant pressure to scale can leave in your mouth - and alternative ways to view growing your impact: http://cafeimpact.com/how-to-scale-your-impact-by-going-small/  From. my point of view, we all need growth.  All living things need to grow!  But what is often lost is that there are many ways to grow, and some don’t involve scaling your operations.  In the video they discuss scaling by going deep.  At blueEnergy we’ve made a conscious choice to go deep in our work and then scale through sharing.  We call it open-source impact.  The concept is simple - we figure out what works, we do it, we learn from the doing and then we share.  In this way we scale our impact without scaling the bureaucracy.  It took us nearly 10 years to come to an explicit understanding of this model and it has been transformation for us both internally and externally.  Next step is figuring out how to connect our very clear vision for impact and growth with the funding we need to build out the model.  That’s easier said then done!

    Doug, your post of Kjerstin’s story of starving FORGE is a very topical one.  It touches on the very issue of needing to build an institution that can survive and grow in the long-haul and the role that overhead investments play in this.  The conversation started by the “Overhead Myth” piece (http://www.overheadmyth.com/) is important. As Mario mentions, so many of us in our 20s are/were passionate and deeply committed to our work but if we don’t make the right investments in our team, in our administration, in our governance, in our IT systems, in our infrastructure, we tax that passion at an unsustainable rate, with predicable consequences.  Even in “normal” times, passion waxes and wanes and if you have the support system in place to see you through the hard times, that’s ok.  If you’re running on passion alone, then you have no ability to recharge and eventually the tank hits empty.  The lack of proper investments comes in part from pressure from funders and the sector to keep overhead to unrealistically low figures, but as Kjerstin points out, part of the pressure comes from the leadership itself, naively believing that passion alone is enough.  But growing your impact means growing complexity and eventually you reach a point where you need talent and systems as much if not more than passion.  And that takes planning and money.  Leaders need to realize this before it’s too late for their organizations and the sector needs to support this transition from pure passion -> passion + talent + systems, for the sake of real social impact.

  • Vladimir P's avatar

    BY Vladimir P

    ON June 24, 2013 10:35 AM

    El trabajo social es la base para el futuro lleno de éxitos en los proyectos de blueEnergy, para ello es importante estar comprometidos con nuestras comunidades, con nuestra gente. Gracias Mathias C por compartirme esta información de mucha relevancia para nosotros en Nicaragua.

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