A lot of people are saying that the key to sustainability in the non-profit sector is entrepreneurship. Centres for social innovation (CSIs) are popping up like mushrooms and “social enterprise” is all the buzz among granting agencies and foundations.
Closer examination reveals a lot of fuzziness around the term “social entreprise;” it means very different things to different people.
For some, entrepreneurship is a generic term associated with energy, innovation and commitment. It’s about drive and the ability to build organizations or even whole movements. Without doubt one has to be a go-getter to champion important causes, often swimming against the current, and have fantastic networking and organizational skills to make real progress. The Ashoka Foundation favours such an all-encompassing approach, defining Susan B. Anthony as an entrepreneur for her tireless work establishing the equal rights of women.
For others however, entrepreneurship sticks closer to its business roots; it’s about applying business principles and methods to the social, non-profit, field. Charging admission, running a gift shop, perhaps creating your own products, are traditionally part of the non-profit mix of self-generated revenue, and the entrepreneurship here lies also in managing these functions in terms of cost and return, applying business measures and keeping them profitable, etc.
Yet another interpretation, sees social enterprises as businesses that have a distinctively social purpose. Examples on the Ashoka Foundation website include the Montessori school system and the first school for nurses set up by Mary Montessori and Florence Nightingale respectively. It is not necessary that they are profitable or profit-driven; they can be otherwise supported (by the state, individual or corporate patrons, etc.).
Yet for others, entrepreneurship is a precise business term. It means starting and running a business, an enterprise. The word “social” in “social entrepreneurship” means that the business is run by, within or under the umbrella of a social, non-profit, organization and revenues support the social mission of that organization. “Some have advocated restricting the term to founders of organizations that primarily rely on earned income – meaning income earned directly from paying consumers.” (ref: Wikipedia “social entrepreneurship”)
I favour the latter definition. To my way of thinking, the broader interpretations of “social entrepreneurship” confuse things. They seem to be intended more to make the non-profit sector sound better, more exciting, or more like the business community to which it must increasingly turn for support as state funding diminishes and the more traditional forms of patronage become obsolete.
Good things always come from introducing new language, new ways of talking about what we do. The introduction of terminology like return on investment (ROI), profit and loss, measures and milestones brings clarity to non-profit management, while also making it easier to show potential partners, sponsors and supporters what it is that an organization does.
I hope to follow up this post with some good examples of some different kinds of social enterprises. In particular I will be looking for examples of real businesses operated by non-profits in order to generate income to supporting their social purpose.
