• Stories of the people that move us into action

    Breaking down the terms: social enterprises and charity

    Despite the road we have travelled to turn social entrepreneurship from a vague topic into a trend in the Western Balkans, as societies we still often face challenges when we are explaining the difference between social entrepreneurship and humanitarian or charity work. We therefore take it upon ourselves to break it down for all those struggling with explanations that could prove clear and easily understandable.

    Shall we begin?

    First, there were definitions. A social enterprise is an organization that applies commercial strategies to maximize improvements in human and environmental well-being—this may include maximizing social impact alongside profits for external shareholders. Social enterprises can be structured as a for-profit or non-profit, and may take the form (depending in which country the entity exists and the legal forms available) of a co-operative, mutual organization, a social business, a benefit corporation, etc. What differentiates social enterprises is that their social mission is as core to their success as any potential profit, but income and profit are involved in the mix. A charitable organization is a type of non-profit organization, which centers on philanthropic goals as well as social well-being, which gathers no profit.

    Social entrepreneurs seek long-term solutions.

    Secondly, there were beneficiaries. Both social entrepreneurship and charity strive to change the world for the better by using tools and knowledge to create long-term solutions to complex problems. In those strivings, charities have a smaller scope of work – they focus on vulnerable groups in societies and ways of improving their lives (through access to food, water, education, etc). Social entrepreneurs on the other hand find creative and self-sustainable solutions, which deal with the wider group of modern day challenges. Although they often directly target vulnerable groups in societies or on the global scale, they also tackle wider issues relevant to quality of life concerning all humans – environment protection, access to healthy food and clean water, employment, immigration, energy, education and learning, democracy and corruption, etc.

    You need colourful examples? Lets take a quick look at Robin Hood. What we know – he was fighting hunger and poverty by stealing from rich and giving to the poor. His work was dependent on (unwilling) contribution of others, and those he was helping needed his continuous help. Andrew Carnegie, steel magnate from US, who built about 2500 libraries in US, Canada and Europe and developed a system of maintaining those libraries know as Carnegie formula, which ensures that libraries will need no other funding while remaining accessible to public, i.e. everyone, for free. Access to information to all was provided long-term through a sustainable solution.

    This leads us to third differentiation – duration of the effects as one of the core differences. Effects of charity work are mostly short-term and need repetition, while social entrepreneurs seek long-term solutions.  In other words charity moves assets from those who have to those who don’t. Social entrepreneurs cause long-term changes trough innovation and mutually benefit exchanges.

    For example, if we look at access to fresh food and water as a challenge, a charity would simply provide those in need with fresh food and water, while a social entrepreneur would sell the seeds and tools for growing food and teach them how to grow it and how to produce seeds. In that way target group i.e. those in need are provided with fresh food in long-run and after first contact are no longer dependent on their help.

    What differentiates social enterprises is that their social mission is as core to their success as any potential profit, but income and profit are involved in the mix.

    Fourthly, different approach is employed. Both charities and social enterprises have a goal to better the state of well-being of others, but they focus on different things. Charities deal with current situation, with the status quo, while social entrepreneurs look at undermining causes and try to change them in order to prevent the consequences, in other words charities deal with the consequences while social entrepreneurs deal with the root cause of the problem.

    And finally, funding and sustainability come in play, as an essential differentiating characteristic inherent to these two models of change making. Charities rely on donations, they are driven by compassion and are not independent in their funding or work. On the other hand social enterprises rely on their own work through creating different business models which make their work sustainable.

    In the time of scarce resources and severe challenges we are facing as the human kind, we are in dire need of sustainable models who use existing resources wisely and who create new value and impact. If you want to invest, social enterprises are the way to go. They are scalable and generate lasting solutions.

    If someone asks, tell them – this is what social entrepreneurs do.

    We at Social Impact Award support you in building social enterprises that find solutions to the most challenging issues of our time. We play, we experiment, we dream big, we work hard. We are 100% human and radically collaborative. We do so by hosting events and organizing workshops to raise awareness for social entrepreneurship, teaching the necessary skills to navigate from vague intentions to promising ventures, providing access to networks and promoting the best teams with the Social Impact Award.

     

     

     

    Author: Benjamin Bajramović, SIA BIH Country Coordinator

    Editor: Vladica Jovanović, SIA Regional Coordinator for BIH, MNE & KOS