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Social Entrepreneurship

The Power of a Simple and Inclusive Definition

To live up to its vision to change the world for the better, the social entrepreneur movement must clearly and simply define itself.

It’s no secret that the social entrepreneur movement is characterized by confusing and often-contradictory definitions—for example, nonprofits that charge a fee for service and for-profits that have a social impact. Our failure to adequately define the social entrepreneur movement has made it inaccessible to the very communities where cutting-edge innovation is likely to come from.

Attempts at clear definitions are not new. In Stanford Social Innovation Review’s spring 2007 article “Social Entrepreneurship: The Case for Definition,” Rotman School of Management’s Roger Martin and Skoll Foundation’s Sally Osberg made a pioneering attempt at defining the field of social entrepreneurship. It uses apt phrases such as “unjust equilibrium,” “transformative benefit,” “social value proposition,” and “stable state hegemony.” But for many people interested in pursuing social entrepreneurship, this language is too abstract and difficult to understand.

In his book Creating a World Without Poverty: Social Business and the Future of Capitalism, Noble Laureate Muhammad Yunus, a hero among social entrepreneurs, defines social business this way: “[It is] a non-loss, non-dividend company designed to address a social objectives within the highly regulated marketplace of today. It is distinct from a nonprofit because the business should seek to generate a modest profit, but this will be used to expand the company’s reach, improve the product or service or in other ways to subsidise the social mission.”

Definitions offered by leaders like Yunus and Osberg are no doubt useful to entrepreneurs who align with their organizations’ approach to social change, but they are not inclusive. Skoll, organized as a tax-deductible organization, resists giving money to for-profit entities. On the other hand, social entrepreneur organizations such as Crowdfunder and The William James Foundation align with the Yunus definition and admit only for-profit social entrepreneurs to their contests. Consequently, those looking to engage in the social entrepreneur movement often get too focused on their organization’s legal structure, when they should be focused on vision and impact.

A New Definition for Social Entrepreneurs

Michigan faces difficult social challenges with its two largest cities. Flint and Detroit are ranked as the first and second most dangerous cities in the United States, respectively—a result of myriad of social issues. This is the kind of place where the social entrepreneur movement needs to scale. Michigan recently became the nation’s first state to hold a statewide social entrepreneurship contest, in partnership with the Michigan Economic Development Corporation (MEDC). As part of the delivery and training team for the contest, we needed a definition that was inclusive and welcoming to a new generation of social entrepreneurs, and also clear enough for coaches and judges who may have never heard of the concept to understand.

We developed a simple definition, married to a five-point checklist, to describe an excellent social entrepreneur without regard to tax status or a specific approach:

A social entrepreneur is a pragmatic visionary who tenaciously addresses social problems by creating an innovative, sustainable, system-changing solution.

  1. The entrepreneur is a tenacious leader with a pragmatic vision.
  2. The solution addresses a clear social problem.
  3. The solution changes systems, not just symptoms of the problem.
  4. The model prioritizes social impact over financial gain.
  5. The model generates a sustainable funding stream.

We know this isn’t the final word on defining social entrepreneurship. But what we discovered was that distilling a clear and simple set of distinguishing characteristics invited greater grassroots participation of contestants, judges, and coaches. It also attracted a broader network looking to support this movement. The response was overwhelming, with more than 250 teams entering the contest.

The ability to scale the social entrepreneur movement is undermined by our collective failure to define it simply and inclusively. What we learned in Michigan is that when we take the risk to be clear, simple, and welcoming, we can unleash the innovative power of an entire new generation of change agents.

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COMMENTS

  • Joybarnitz's avatar

    BY Joybarnitz

    ON May 23, 2013 09:57 AM

    Interesting definition and checklist. I’m interested in how outcomes will be measured.

  • BY Sydney Frymire

    ON May 24, 2013 06:23 AM

    Thank you for this timely article. I’m reading Paul Hawken’s book, Blessed Unrest. He describes our social justice movement that is unnamed and growing exponentially. These are exciting times.

  • BY Dan Nordley

    ON May 24, 2013 08:36 AM

    Nothing says social entrepreneurship like cooperatives! They have Structure and Values that ensure a socially responsible business.  Otherwise, the social entrepreneur structure is purely whimsical.  A terrific whimsy of the owner, but can change in a heart beat.

    Also, highly recommend Marjorie Kelly’s new book:  Owning Our Future

    Cooperative Values and Principles

    The following Statement of Cooperative Identity was adopted by the International Cooperative Alliance in 1995:

    Definition: A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly
    owned and democratically controlled enterprise.

    Values: Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity.

    In the tradition of their founders, cooperative members believe in the ethical values of honesty, openness, social responsibility, and caring for others.

    Principles:
    1. Voluntary and open membership
    2. Democratic member control
    3. Member economic participation
    4. Autonomy and independence
    5. Education, training, and information
    6. Cooperation among cooperatives
    7. Concern for community

  • BY Chris Blauvelt

    ON May 24, 2013 02:28 PM

    Excellent definition!  I like the focus on “sustainable” for profits, which can apply equally to non-profits and for-profits

  • DELPHIA SIMMONS's avatar

    BY DELPHIA SIMMONS, Thrive Detroit Street Newspaper

    ON May 24, 2013 10:37 PM

    Appreciate the way each point builds upon, supports, and strengthens the next. Thanks so much for sharing!  I’ve been in meetings where the definition was elusive.

  • Elizabeth Garlow's avatar

    BY Elizabeth Garlow

    ON June 24, 2013 05:10 AM

    Joybarnitz, thanks for your comment.  Metrics to measure progress against solving a well defined social problem are key. Point #3 has been a big driver of this conversation for us with social entrepreneurs in Michigan.  For example, we’re helping entrepreneurs measure systems change through networking-building (extent of partnerships with other orgs, people and communities), and how widely influential and adopted the solution is within that network (network resilience).

  • Elizabeth Garlow's avatar

    BY Elizabeth Garlow

    ON June 24, 2013 05:15 AM

    Dan Nordley, fantastic addition to the conversation.  Thank you.  Cooperatives are an important part of this movement, and are often solving the social problem of poor workforce opportunities for low-skilled or under-employed individuals through their unique ownership and training models. We had cooperatives participate in our social entrepreneurship challenge in Michigan.

    Structure and values are important to ensure that a social enterprise truly does prioritize social impact and move the needle on a problem.  I think that’s one reason why we’re seeing more alternative legal structures such as the L3C and B-corporation, which attempt to put structure to a company seeking to embody the kinds of values you’ve outlined above.

  • Sandra Treacy's avatar

    BY Sandra Treacy

    ON June 26, 2013 09:57 AM

    I think the definition is extremely helpful;  one cautionary note would be to remember that “clear social problems” are the result of multiple factors so that the pragmatic vision of the tenacious leader needs to incorporate that into a solution.

  • Elizabeth Garlow's avatar

    BY Elizabeth Garlow

    ON June 28, 2013 09:52 AM

    Sandra, you are spot on. The fact that there are multiple factors is in part what influenced our emphasis on systems change over addressing ‘symptoms’ of a problem, because it invites the entrepreneur into root cause analysis, which leads them to discover and work through mutliple factors. Thanks for the comment.

  • Anu Keshavan's avatar

    BY Anu Keshavan

    ON August 11, 2013 09:51 PM

    Elizabeth & Rich,

    Interesting blog post.
    On “Consequently, those looking to engage in the social entrepreneur movement often get too focused on their organization’s legal structure, when they should be focused on vision and impact.”
    I am not sure if I fully agree with the above statement. 
    ‘The William James Foundation’ mentioned in the write up is a non-profit organization.  It focuses on empowering for-profit impact entrepreneurs solving social problems. The organization is fully focused on vision and impact.

    The question that repeatedly comes to my mind is - should there really be a ‘single definition’ in the social entrepreneur movement, for it to live upto its vision to change the world for the better?
    Is it not again getting too focused on the ‘definition/s’ when the focus should be on vision and impact? Am sure we all agree and continue to see that it is possible for non-profits, for-profits, cooperatives, b-corps, etc. with various legal structures in the social entrepreneur movement are changing the world, a better place to be.

    Could you share a few examples for “enterprises often get too focused on their organization’s legal structure, when they should be focused on vision & impact?”

    Thank you,
    Anu

  • As the ED of the William James Foundation (Mentioned above) let me weigh in. We go with the SEA definition of Social Enterprise—If the primary mission of the organization is social, it is a social enterprise. e.g. “We don’t hire people to bake brownies, we bake brownies to hire people.”—and we chose to work with the for-profit sub-set of social enterprises. (We are also a 501(c)3 public charity, and do so through the educational component of our work.)

    We made the choice to just work with for-profits because it gives our organization a focus, and because we believe that for-profits (mostly, but not exclusively) have an easier time coming to scale without outside resources.

  • BY Allison Voglesong

    ON February 7, 2014 11:27 PM

    This article has been an excellent guideline for me as a professional working in the nonprofit world.
    Thanks for the keen insight and excellent guideposts for driving the conversation about how business can be the starting point for benefitting the greater good.

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