What is Social Entrepreneurship?
There is currently no universally approved definition for ‘social entrepreneurship’, (Bornstein & Davis, 2010, p.2) and the associated terms used may have multiple interpretations depending on the lens through which they are viewed or the context they are used in. Social entrepreneurship is different from traditional commercial or business entrepreneurial activity because its focus is to “advance specific social objectives” (Nicholls, 2006, p.4). As the term is still vague and improperly used, further research and organizational efforts need to be made to officially incorporate this into the social service profession and define what counts as a social endeavor, how connected to the mission the social entrepreneurship must be, and measurements for the amount of social impact actually made (Nicholls, 2006, p.101). Social work ethics and values integration into traditional entrepreneurship also need to be clearly defined (Nicholls, 2006, p.101), so there is greater agreement and standards for the term, ‘social entrepreneurship’.
A defining feature of social entrepreneurship is that it always considers adding “social impact through innovation and adaptation of the discipline and tools from the business world in support of a social mission” (Nicholls, 2006, p.169). Bornstein and Davis defined social entrepreneurship as “a process by which citizens build or transform institutions to advance solutions to social problems, such as poverty, illness, illiteracy, environmental destruction, human rights abuses, and corruption, in order to make life better for many” (2010, p.1). Greg Dees, a founder of social entrepreneurship education, states that it enables “creative destruction” in combining new combinations of people and resources to address and resolve problems in society (Bornstein & Davis, 2010, p.1).
Guo, Chao, and Wolfgang researched social entrepreneurship and found that, like other entrepreneurships, a venture needed three characteristics to qualify: innovation, proactiveness, and risk taking (2014, p.32). Innovation requires the creation of “new programs, services, processes, policies…from the original combination of existing inputs or the application of an existing activity to a new area: (Guo, Chao, & Wolfgang, 2014, p.32). In being proactive, a venture must implement their innovation before other members of that industry, or early enough to influence future events (Guo, Chao, & Wolfgang, 2014, p.32). ‘Risk taking’ in the context of entrepreneurial endeavors refers to “the willingness to engage in behavior that disrupts internal or external operating norms. The behavior can, but need not, be financial; in fact, financial risk is often borne by a third party financer such as a foundation” (Guo, Chao, & Wolfgang, 2014, p.32). Nandan, Bent-Goodly, & Mandayam have simply described social innovation as “a novel approach to a vexing social problem” (2019). In the context of social impact, an innovation could be “an alternative way of conceptualizing or defining an issue, a different way of using resources, new outcome expectations for source uses, borrowing an old idea or model from another country or another client population, or numerous other ways of making something novel” (Nandan, Bent-Goodly, & Mandayam, 2019).
Social enterprise, although sometimes funded by the government, is unlike government efforts in that its development flows from the bottom up (Bornstein & Davis, 2010, p.34). These businesses do not control major resources or punitive policies, so they cannot force compliance- they are “most effective when they demonstrate ideas that inspire others to go out and create their own social change” (Bornstein & Davis, 2010, p.34).
Earned income is “income derived from selling products or services” (Nicholls, 2006, p.145). Joining the business market to generate revenue runs counter to non-profit agencies’ tradition of receiving funding from donations and the government (Nicholls, 2006, p.145). There are a variety of ways for social services to earn income, including “the development of mission-related businesses, commercial activity unrelated to an agency’s mission, merger with other non-profits, (and) partnerships with venture philanthropists” (Germak & Singh, 2009).
WHY
A combination of government cutbacks for social services and welfare, as well as reduced donations at a time of increased demand for social services has led to the necessity of charities and other public social serving organizations to become more proactive in raising funds and diversifying sources of income (Germak & Singh, 2009). The top categories of concern facing social service agencies and non-profits currently are inflation, staffing, funding, and high demand for services (Canadahelps.org, p.19). Reacting to this ‘funding crisis’ has led to an increased emphasis on independent fund raising, and raised the realization that “in reality, non-profit agency based social work is an enterprise more similar to a for-profit business endeavor than many social service administrators can understand or would like to believe” (Germak & Singh, 2009). Adopting a business model and an increased focus on creating revenue may be essential for the survival of many social services.
According to the 2023 Giving Report, Canadians are donating less in the most recent two decades, yet “two in ten Canadians (22%) expect to use or are already using charitable services withing the next six months to meet basic necessities” (Canadhelps.org, p.1). Inflation has led to a greater need for social support, while less are able to donate or volunteer (Canadahelps.org., 2023. P.1.); “82% expect their finances to be negatively impacted by inflation” (Canadahelps.org, 2023, p.4). The most recent assessment of Canadian non-profits has found that “57.3% of charities cannot meet current levels of demand”, and since the COVID pandemic, “40.3% of charities have experienced a lasting increase in demand since the pandemic”, at the same time raising fewer funds (Canadahelps.org., 2023, p.5). Of the 24 issues surveyed in the 2023 Giving Report, half of charities reported being “highly concerned about staff burnout” and it was the second largest concern noted (Canadahelps.org, p.5).
‘The Giving Gap’ is another factor identified as contributing to the funding crisis (Canadahelps.org,2023, p.12). The generosity of adults over fifty five years has enable non-profits to run off donations but are experiencing a substantial decline in donations as this demographic is no longer able to donate as extensively as they have in the past (Canadahelps.org., 2023, p.12) and across Canadian households, less people are donating overall (Canadhelps.org, 2023, p.15).
Having enough staff and volunteers to maintain operations is also becoming more of an issue. Fewer Canadians are able to volunteer at the same time that inflation is increasing the cost of overhead costs and expenses, forcing agencies to reduce paid staff and 80% of agencies have reported that “inflation has impacted their service delivery costs while funding has not increased to match” (Canahelps.org, 2023, p.22). Staffing burnout and underpay are causing high turnover, with agencies generally unable to pay the competitive salaries necessary to keep the skilled workers necessary to deliver quality services (Canadahelps.org, 2023, p.28Bornstein & Davis, 2010, p.57). 58% of Canadian charities surveyed reported they were run entirely or almost solely by volunteers (Canadahelps.org, 2023, p.29)- unless these agencies are able to begin to pay for staff, they may fold in the future as volunteerism and philanthropy becomes increasingly unaffordable.
A greater involvement of the social work field in business and enterprise has the potential to alleviate many of these issues and improve the sustainability and quality of social services offered, through innovation, market research, and earned income. A social enterprise does not necessarily need to generate profit to be helpful; it can still benefit the agency by: “(1) reducing the need for donated funding, (2) providing a more reliable, diversified funding base, or (3) enhancing the quality of programs by increasing market discipline” (Nicholls, 2006, p.208). Social entrepreneurship can also help non-profits “diversify their funding base, decrease reliance on donors, and recover program costs or subsidize social programs” (Nicholls, 2006, p.208).
Along with funding challenges, charities are becoming more entrepreneurial due a greater demand from funders (such as the government and private donors) to have “professionally prepared proposals require accountability for the financial metrics, program milestones, and revenue and service targets” (Germak & Singh, 2009). Changes in the government have led to reduced government spending on social services and welfare services, plus the privatization of social services” (Germak & Singh, 2009). Social entrepreneurship has risen from the necessity of turning to non-traditional fundraising methods to continue to provide programs (Germak & Singh, 2009) and address new market needs.
In 1995, Harvard Business School offered the first course on social entrepreneurship (Nicholls, 2006, p.144). There has since been an increase in available opportunities and professional awareness of the field, but it still lacks “serious, rigorous research and people willing or able to do so” (Nicholls, 2006, p.144). When taught, it is often highly “generalized from a very limited skill set” and not applicable to practical application in the many possible circumstances or uses that it could be of benefit (Nicholls, 2006, p.144).
To qualify as entrepreneurial, a venture needs to be innovative; “thinking as entrepreneurial as innovation suggests that the disruptive creation of new models and techniques is… a critical driver of social change” (Nicholls, 2006, p.2009). Often the market research, accountability, and introduction of business concepts such as ‘supply and demand’ can lead to more effective and efficient services.