What is Social Entrepreneurship: 3 Things You Didn’t Know
By Devin Hibbard
Social entrepreneurship applies market-driven principles to solve social or environmental problems. Put another way: Social enterprises make money, but they balance their quest for revenue growth with a motivation to have a positive impact on the world.
Given the modern boon of purpose-driven businesses, you may think you know all there is to know about this fast-growing corner of the private sector, but its roots go further back than you’d think and it’s already having a far bigger impact on economies, societies and the environment than many realize. Read on for three things you likely didn’t know about social enterprises and social entrepreneurship.
1. The roots of social entrepreneurship go back over 150 years
In 1844, a group of weavers working in the cotton mills of Rochdale, England, formed the world’s first modern cooperative business, which experts say laid the groundwork for today’s social enterprises.
Life was grueling for the weavers in Rochdale: Although they worked long hours in dismal conditions, most couldn’t afford to keep food on the table for their families. The Rochdale Equitable Pioneers Society began as a cooperative allowing workers to pool their resources to purchase food and household goods at lower prices. Eventually it morphed into a shop in which every customer was a member, had a say in the business, and got a share of the profits.
Other prominent change-makers also helped sow the seeds for the modern social enterprise movement. In the 1860s, as Florence Nightingale was forming the foundation of modern nursing, she was also a prominent social reformer who insisted the healthcare industry should provide high-quality care to everyone, regardless of their ability to pay. In the 1950s, Vinoba Bhave — a student of Mohandas Gandhi and one of India’s best known social reform advocates — turned to market principles to lift up India’s most vulnerable. His Land Gift Movement called on wealthy landowners to give a sixth of their holdings to those of low income and low caste, eventually resulting in the transfer of 1.5 million tillable acres.
2. Social enterprises now employ millions of people worldwide
Today, social enterprises employ about 40 million people and engage more than 200 million volunteers globally, according to research from the European Commission. The sector provides a significant share of employment in a number of countries, developed and emerging alike.
Social enterprises account for more than 10 percent of employment in France and over 8 percent of gross domestic product (GDP) in the U.K., for example, while more than 18 percent of people in Senegal and over 10 percent of people in Peru are pursuing some sort of social entrepreneurial activity.
3. Modern social enterprises are using this franchise model to expand
Social franchises build on the commercial franchise strategies that helped countless restaurants and retailers grow from regional chains to multinational businesses, but instead of scaling for profit, they’re scaling for impact.
Street Business School is one of hundreds of social enterprises that use social franchising to grow their reach. After working in Uganda for nearly 15 years, SBS now partners with NGO leaders to scale its women’s entrepreneurial training curriculum to communities around the world.
This franchise model is more cost-effective than scaling through self-replication (e.g., opening new offices and hiring new staff around the world) — and, more importantly, it’s a more effective way to actually increase positive impact. After all, local leaders know their communities in a way a social enterprise based thousands of miles away could never hope to match. By resourcing these leaders, social enterprises can scale their big ideas in ways that are relevant for different communities with different needs.
Case in point: As of September 2020, SBS has certified 287 “Lead Coaches” to adapt and implement its entrepreneurial training program in 25 countries. If it were self-replicating, its annual operating budget would have increased by more than $3.3 million, and it would have missed out on the local insights that allow its model to create significant impact in different regions of the world.
The bottom line
Social entrepreneurship and social enterprise are booming worldwide, and experts say this movement is just getting started. “Not only is their potential far from fully realized, but fast-growing and increasingly diversified social needs and environmental concerns call for a bolder presence of social enterprises,” the European Commission and OECD assert in a policy brief. Click here to learn more.
For more information on SBS’ social franchise model, or to refer a potential partner, visit https://www.streetbusinessschool.org/global-partners/