• 3 trends that will influence the social entrepreneurship sector in 2019

    By Katherine Milligan, Head of the Schwab Foundation and Member of Social Impact Award’s Global Advisory Board

    In spring 2018, Katherine has joined SIA’s Global Advisory Board. In her work with the Schwab Foundation Katherine gets in touch with many social innovators, capacity-builders and funders from around the world. We asked her to share three key trends which she is currently observing in the development of social entrepreneurship globally, especially with regards to the early-stage support of social enterprises.

    #1: There’s a difference between market-based and financially profitable.

    In the early days of social entrepreneurship, most of the trail-blazing organizations that pioneered important innovations were non-profits. For many young people today, however, social entrepreneurship is about a commercially viable enterprise. I think the discourse has swung too far into that direction and needs to come back to somewhere in the middle. Yes, social enterprises should strive for financial viability wherever possible, leverage market forces, and embrace business practices and principles. At the same time, there is a reason why these problems persist: because the market or the government failure is just so extreme.

    Designing a business model to solve these problems does not mean you’re going to turn a profit – not in year one or two, but maybe not even in year five. Otherwise, conventional businesses would have stepped in already.

     

    So, there are a lot of myths, hypes, and misconceptions around the sector that are not necessarily helpful, and I believe young entrepreneurs creating start-ups need a more realistic view about what the journey ahead of them holds.

    #2: Public institutions are our partners, not the opposition.

    Another trend is the relationship of the social entrepreneurship sector with governments and related institutions. A few decades ago, the social entrepreneurship movement was born out of frustration with the inability of governments to solve social problems at scale. This resulted in the image of a social entrepreneur striking out in opposition to the traditional public services such as education, health care, waste, sanitation, water, etc.

    Now, many social entrepreneurs aren’t asking anymore whether they should work with government, but rather how. If you think of solving a problem on a national level, you cannot avoid or escape public institutions as key partners.

     

    First, as a social entrepreneur, you must build up your own credibility and prove that you can build something more cost effectively than other providers or consistently produce better outcomes. But once you have done that, you can use this credibility and engage with government. Such collaboration can come in various forms: procurement, meaning the  government agency outsources a particular service and provides the social enterprise a fee for services rendered; government adoption, where a social enterprise’s methodology or model gets embedded into a public system like the healthcare system; or technical assistance, meaning the social entrepreneur advises government on a policy reform, a new law, or  a planning process.

    #3: The myth of the ‘hero entrepreneur’ is dead.

    The third and last trend that I would like to mention sends a message that shall speak directly to young social agents and entrepreneurs who are now starting their career.

     

    The myth of the ‘hero entrepreneur’ is dead. It is a very unhelpful and destructive myth. It put enormous burden on the entrepreneur’s shoulders. More and more people are recognizing that social entrepreneurship is a team sport and that this is not about me, my idea, my solution, my organization.

     

    It really is about solving the problem and doing whatever it takes in working with other stakeholders and actors in a particular system or problem area. It is about putting your wellbeing at the center of your work, being very clear about your motivation for doing this work, having a ‘managed ego’ in doing this work. If this is all about you and your ego and your agenda, people sense this and realize that this is not authentic and ultimately it will undermine your ability to create trust-based relationships and partnerships. Being a managed ego leader and prioritizing your and your collaborators’ wellbeing are huge trends and will be on top of the global conversation in 2019.

     

    You can read the rest of our interview with Katherine on page 24 of our Global Impact Report 2018.

    Katherine Milligan is the Director and Head of the Schwab Foundation for Social Entrepreneurship. She received her B.A. from Dartmouth College and her Master’s in Public Policy from the Kennedy School of Government, where she was the recipient of the Pforzheimer Scholarship for Excellence in Nonprofit Management.  Katherine’s previous work experience includes a Sheldon Knox Research Fellowship at Harvard University (2004-2005); a Global Leadership Fellow of the World Economic Forum (2005-2009). Before that, she was a Peace Corps volunteer in West Africa and a strategy consultant for several non-profits. Her work has been published in the International Institute of Economics, Stanford Social Innovation Review, MIT journal Innovations, and the Harvard Business School.

  • What is the difference between social entrepreneurship 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.

    First, there were definitions.

    a) 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. Social entrepreneurs seek long-term solutions.

    b) 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.

    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.