ind the moti © Tolist the characeens HONS OF a soci, * To understand the fave, Oe #0cal lal entrepreneur enterprise ial entrepreneur were used first in literature on social change ally came into widespread use in th = ron, che ee e Pread use in the 1980s and 1990s, promoted by Ball ster national organization thar promeael gee entrepreneurship thers such as Charles Leadbeater The social entrepreneur is d, recognizes 2 social and manage a venture to make nizations which strive to achieve a social organizations to do good, while others use Social entrepreneurs often focus on the disadi vantaged sections of society. Social entrepreneurs Pioneer innovative and systemic approaches for meeting the needsof the marginalized, the disadvantaged, snd the dsenfranchized. They champion the cause of those that lack the financial mean whe political dlout to achieve their goals. In several ways, a social entrepreneur tries to solve social issues in a business- like manner. Vijay Mahaj IT Delhi and One of India’s le ize, create, mission driven org; purpose. Some use profits from the social the social enterprise itself for good. ian is one of the leading social entrepreneurs in India. After an ergnsing dee fom bad, he went on to start BASIX, wl 4 management degree from IIM, Ahmedabad, 0 sta . ading er firms, According to him, single goal optimization is a 20* century_ 450. Entrepreneurship — seholder value by maximizing _ shat ee ‘which may include socally ‘exymoron. A social entrepreneur does not look only at : profits, but tries to create stakeholder value by pursuing a variety of goals, a= i 5 quite different from those faced by a These entrepreneurs with a social mission face challenge oe they are likely to perceive and al mission is central to their jon is, usually, a means to an end. business entrepre assess opportu h creat Anshu Gupta was born in a middle clas family in Uttar Pradesh. He joined the media 7 and while an intern, he saw the need for clothing among the poor in India. Anshu was inspire sp from the well-to-do, sorts and repairs ‘he organization is active all over the found Goonj, a social enterprise that collects used clothing the clothing, and later distributes it among the needy. TI country and they take a project oriented approach for their initiatives. Cloth for Work In Cloth for Work (CFW) programme, Goonj worl infrastructural improvements that need to be undertaken in the vill work repair roads, dig wells, clean ponds, and build schools in the village, for which they are paid with ‘material resources such as furniture, clothing, utensils, and foodgrains. cs with partners and communities to identify lages. Villagers then work to Not just a Piece of Cloth In 2004, Goonj started providing a pack of five sanitary napkins for &5 made out of waste cloth for women in villages and slums. They found clothing gave these women, who neglect or are ignorant of this critical health issue, a sense of dignity and self-respect. School to School Urban children create a school kit by contributing their old school supplies like bags, pencils, uniforms, etc. Goonj then awards the school kits in rural schools while engaging the children in other activities. MOTIVATIONS OF A SOCIAL ENTREPRENEUR Having already defined a social entrepreneur, one must consider what motivates a social entrepreneur beyond creating social value. Many things may be described as motivators for these people; : there are four motivations that may be defined as the most influential, Among these mornaioal * The possibilty of exploiting change as a new opportunity ‘+ Ethical motives and moral responsibility Personal fulfillment Selfishnessa ee The Social Entrepreneur 451 sxploiting change sia ea carpreeaen spbeTtunity is a motivator for entrepreneurs, but ici not limited to ee ee cotrepen abe Present the possibility to create new value in areas that have nee co, comand ee Jobal ut Nicholas Apostol, CEO of Environmental Rubber of Puerto individuals. So, he adopted ae With regards to the environment and impoverished wasteful and hazardous to the envieees ce “sPobing of rubber. Instead of buming rubber which zardous and offered new aay fa Apostol implemented a recycling Practice that was much her Apostle cy ee sca value while being profitable. Regardless of fis recyding prea Was wealth driven or not, he now embodies a social entrepreneur, He ore Fick MSE Useless rubber to be used for asphalt, rubber, tyres, athletic oe al a Apostol was ot afraid of change, He embraced it as a means of innovation. Ehlaee a im Profitability and a favourable public perception while creating social value. on nd moral responsibility are major reasons for motivating social entrepreneurs. Founder of Grameen Bank, Muhammad Yunus, i a perfect example ofa social entrepreneur motivated ovals and ech Miers 6075 47 difeoes families to create small items for without the burdemtePbank leans of loan sharks. This sign of affection began his idea of issuing credit loans to the poor of Bangladesh to help pull it population out of poverty. Previous to the } ts refused to lend micro loans especially to the poor due to high cost and « belief no one would be able to pay them back. Since its inception, the bark has enjoyed a payback of well over 90 per cent much to the chagrin of other banks. As of end of 2018, che Grameen Bank cisbursed 8.92 million loans creating unparalleled socal value. Beyond this direct impact of social «, Yanus’ bank creates social value indirectly as well. As of 2018 ic employed over 20,000 people in 80,000 villages. Personal fulfillment is another motivation of social coeeprencurs ee Ed = perceived as selfis 4 le, when one sees a commercial to donate to a children’s fund, one may not = oat ae to donate. Donating to this cause may fulfil someone personally: ee is sense of accomplishment may not have the same i may just mia a oe oa ated be able to create interests as morals or ethics, yet despite it possibly being considered selfish one may be able social value ORE ee or social entrepreneurs. Though this is applicable to social Slits a iar rato wo current cnr trying to make efforts to create it is casier Oo mart isa company with a highly unfavourable public perception. Though Be aes aided more socal lace people may care to ions over its manufactures and suppliers in South America fom using believe, Walmart inne cae "Amazon. According to Green to Gold author, Andrew Winston, this any resources obtain dledly saved the Amazon. In addition to Walmart, UPS imposed a new sanction may have single handed'y M™™" ecactly did this accomplish? UPS saved over 3 million entrepreneurs, social value. For instance, wer, the company has a lot t0 gripe 0 ii ties % ivers: no left turns in CHET Tr very routes, and 32,000 metric tons of CO,. Both of ro or a) Oe eae acs and tier changes Ballons of gas anni Ot perceived 2550 ‘cc.), but the changes inarguably created social value. th anies are NOt ES eceptioms selfishly (profitably public pet452 Entrepreneurship ——___— in rural India, particularly jn SELCO has installed solar lights in over 350,000 households in rural ; Karnataka. It was started by Harish Hande and Neville William in 1995. They started with fhe cost and the balance as an financial model where the household would pay only 25 per cent of the cost 1. SELCO also provided warranty, free service, and a money back affordable monthly installm : guarantee. Their approach and processes have led to innovation in products and services around alternate energy access CHARACTERISTICS OF A SOCIAL ENTERPRISE There are three characteristics of social enterprises as defined by Social Enterprise, London. ‘ First is ‘enterprise orientation’. They are directly involved in producing goods or providing services %0 market and they seck to be a viable trading organization with an operating surplus. Second, is their ‘social aims’ They have explicit social aims such as job creation, training or the Provision of local services. They have ethical values including a commitment to local capacity building, and they are accountable to their members and the wider community for their social, environmental, and economic impact. 3 The last common characteristic is ‘social ownership’. They are autonomous organizations with governance and ownership structures based on participation by stakeholder groups or trustees. Profits are distributed as profit sharing to stakeholders or used for the benefit of the community. The UK has also developed a new legal form called the Community Interest Company (CIC). CICs are a type of limited company designed specifically for those wishing to operate for the benefit of the community rather than for the benefit of the owners of the company. This means that a CIC cannot be formed or used solely for the personal gain of a particular person, or group of people. Legislation caps the level of dividends payable at 35 per cent of profits and returns to individuals are capped at 4 per cent above the bank base rate. Another example of a type of social enterprise is the social firm, A social firm is a business st up specifically to create employment for people otherwise severely disadvantaged in the labour market. There can be many similarities between social entrepreneurs and business entrepreneurs, catreprencurs also have to market theit enterprise, often to get developmental projects or to get They too have to convince their consumers to switch to the alternatives being offered to them, Dees (2001) gives a very detailed definition of a social entrepreneur. According to Dees, th entrepreneur plays the role of a change agent in society by: j * Adopting a mission to create and sustain social value * Searching for and pursuing new opportunities to serve that mission Continually innovating, adapting and learning, in pursuit of the mission * Acting boldly without consideration of resources currently in hand Being accountable for outcomes of activities Many social entrepreneurs wil exhibit these si and very few will exactly fi this mould ofan a eee =Acumen Fund pioneey ” ; z Sa uranaformative Busan ne of ‘patient capital’, which refers to investments which aim to a5 ince a tucline Novogratz isthe founder and current CEO of Acumen Systems Foe" April 1, 2001, with seed capital from the Rockefeller ors have since seats and a few individual philanthropists. Acumen Fund's ncluding the Bill & Melinda Gates Fy eae ¢ si a te ‘Sal Fa taion The fond Se ‘oundation, Google, and the Skoll Foundation. dhciplined Inveszensy Ioan Grieg, ace grants chat idl be Hasaeel ao eee Fund. Acumen Fund w,; Foundation, Cisco investors and ady Ic seeks to set the global standard fe bal standard for how to effect wide-reachin, change in poverty | alleviation and private sector development by. Sn © Mentifying extraordinary social enterprises wth innovative approaches © Supporting these enterprises financially so that they become financially sustainable and scalable * Creating the standard for measuring the social and financial returns ofthese investments * Building a global community of professionals, donors, and social entrepreneurs capable of solving some of the most intractable problems of poverty Funding here are several funding models for starting a social enterprise, There are several types of social enterprises. Some are purely for-profit and some are not-for-profit and many more are somewhere in between, having found a blend of objectives that suits their founders. Some of the funding models used are discussed below. An entrepreneur may use one or several of the models discussed. Debt This is especially useful if the enterprise has assets or secure future cash flows. Several educational stes in India have used debt finance to set up their infrastructure. a rofitable business model and that opens up the option of access- uity— Several enterprises have a robust prof pens up the option ofa Be sads and then was able to expand its capital base by inviting retail iavstos to ives in its IPO. cai mations Socal entrepreneurs can raise money by connecting with individuals who fel deeply ae ‘fic cause. To do this, the enterprise must identify closely with a cause and connect with the for ee lieve init. Goon), set up by Anshu Gupta, collects old clothes o redisribure amongst the ee wee Goon) has attracted investment by becoming the most visible provider of apd in rt, underprivilege? haan ‘apda aur mal Government grants hat have goals matching ¢ d “The government is certainly the biggest funder in this space. For social enterprises a he government’ policy objectives, thee can be no better source. A word of ea rent works very slowly and vested interests can easily thwart your best intentions. a Bi Incerational aid dation, Bill and Melinda eeiat Foundation, or government-funded ones like Department for International and Danish International Development Agency (DANIDA), are good soures to find from these sources is contingent upon achievement of well-defined goals (DFID) Developrally ‘moneyoo Me ee re Governance For compan governanes ithe mechani by which theyre srr and contol In con companies there is travonlly avery igi governance framework in place. Some aut that this sng sucnes in sructure and reporting is absolutely applicable to social enterprises 25 wel. OcheEtbaigg cha such rigity inhibits a socal enterprise’ ability 1 do the most good for those they ae sedkng to help and that a flexible framework, similar to that frequently found in non-pro! ak ia Sheela Patel comments in her essay The Wrong Rss that one big problem “is whae I call he lg frame virus—an infection that drives funders to insist upon seeing the logical framework or busines plan of an intervention, from inputs, to outputs, to outcomes. Equitable solutions take trial, eros, and time.” is i ative However, the majority of experts agree that some sort of governance structure is imperative for the survival of a social enterprise. Governance is important to all companies because is, essentially, the structure by which a company is run, It dictates who reports to whom as well as which ‘ype of decisions are delegated to what positions. For example, does the board or the entrepreneur decide how much the entrepreneurs benefits will amount to? Without a clear governance structure, it is much, easier for corrupt practices to go unnoticed for a longer period of time. It can also make corrections of such errors much more difficult and time-consuming. ‘There are some key factors which should be a part of every governance structure. These factors are clear channels of communication, some degree of transparency to stakeholders and the public, and 4 distribution (as opposed to a concentration) of power between the entrepreneur and the board members. _ Having these factors as a part of the governance structure will help to ensure that the company is able to attain its goals while avoiding corrupt or questionable practices. Clear channels of communication are essential in governance structures. When information « be easily hidden, itis more difficult for those who would like to make bad choices to actually make without being noticed immediately. It also creates an environment in which people feel i sharing questions about policies and/or practices and their legality or morality. Transparency is another important governance structural element. It allows interested parties s 2 donors, grant foundations, chose who actually access the service provided, as well a the pul ww funds are generated and spent. It creates trust in the company. donor loyalty to the social of feedback so they can make their views kno of the three governance factors discussed. eur, then there is no real way to prevent Top: While boards sat in silence, executi Power is concentrated in just one person, the entrepreni thar power. Pete Smith, in his article Tonguectied at the American University and the Smithsonian states thar, “...strong, active, independent to assure tha leaders do nor go astray.” Too much power can be a temptation too a strong board with power which it is willing to exercise can keep the p becoming an issue.© © . : —— The Social Entrepreneur 455 attracting Talent yne of the biggest challenges c social entrepr oxxanization. Several interesting strategies soe fal atrat the right talent to build thee poard. ‘spies are followed by social entrepreneurs to get the right people First, one of the most eff evepreacurllad san pe social entrepreneurs can attract top talent for a specific cfficient way to manage and micah loyees within the company. This is an extremely effective jamme th prem ia sources in a social enterprise. Aravind utilized a traini eres, naa, a ul. Instead of going out and recruiting qualified — ry was willing to pay: Arawak seats in the area, ot would request more money than the arm exactly what they had og ain women to complete nursing tase. Thee ‘nase! cred op talent, because they oe a ihe Programme, and become expert tit. They can be ly what was: necessary for the com \¢ best at what they do. This was beneficial because they did ified nua’ pany and. ‘Surgeries to be successful, and did not cost as much as In addition, a fae Spateooal part of the success of social enterprises. Without volunteers, og ee emselves. By emphasizing the level of social good, 25 well ie scons is, more volunteers will flock to such enterprises. While Habitat for mnsidered a non-profit, the business model, focusing primarily on volunteers, is 2 positive one to look at in a lesson to retain top talent. These are individuals who want to be there to support a se and are highly motivated. Considered a forward thinker and a management pioneer im the y 20% century, Mary Parker Follete felt that awareness of social issues, somewhat actribured co sophisticated methods of communication, provides the “opportunity for people to dedicate theit its to the citizen sector”. By merely making social issues a more prominent topic ina society, cerain exprises will be able to attract more interested and motivated individuals. While some positions in social enterprises are easier to fill than others through training or slunteers, top talent in executive positions is more complex. Positions that call for a higher sil level will most likely only be filled if there ae incentives forthe employees, aside from the social impact ve mock will have. This is merely a fact of survival, Aravind used a free and fee business model to a eee venue and was able to pay its doctors a substantial salary in order ro retain qualified doctors Hearn caaract surgeries. Without the fee and free busines plan chat generated revenue, the » ia eve been as willing to provide services to those in need. Social enterprises Aravind doctors may not hav q a cn So eee Aravind doctor eynes mode that wll gnerate revenue and provide economic vale or those invest in the COMPAMY, ye sght people 10 be a part ofa social enterprise itis ko important ro ave In addition 0 fa bo be considered top talent. In an atl in Fortune Magazine, John the best resources set one of the few wealthy ef: in Detroit, proposed an idea to turn the ailing Hancz, a money managet 2 make the land usable, provide employment, and bring life back to city of Detroit into 9 ara cople and has now dwindled ro 900,000. By formulating feasible a city thar once had o¥et Py beable ro attract op alent within the farming industry o provide business plan, Hant Wi gies, and to make the former home of the auto industry thrive again. nnologfay in which social entepreneurs can atact top talent from other Teerall chere af6 MARY NT ct, a well as potential incentives for those of higher sil, socal -date technolSe ee eee ili i They can also train from with; Jent to facilitate a business plan. They “a aapeel Ily, social enterprises can look to other business, 3 ke their business plan work. 56 Entrepreneurship — rises can bring in outsi sein resources to eit maxi the proper technologies to mal ik ‘Muhammad Yunus, Grameen Bani : ’ Muhammad Yunus began offering microloans to impoverished people in Bangladesh in 1976, conomi sufficient and proving the mic chy empowering them to become economically self-sufficient and proving =o oe ares now been replicated around the world. He has helped the cause of soca cneepreneurs throughout the world when he won the Nobel Prize in 2006. Jeroo Billimoria, Aflatoun Realizing thae children living in poverty need an advocate, Jeroo Billimoria founded Childline, which has fielded 3 million calls for assistance from street children in India's largest cities She expanded the concept into an international organization called Child Helpline International, which supports helplines in 143 countries. Bunker Roy, Barefoot College Bunker Roy, created the Barefoot College in rural communities in India to train illiterate and) semiliterate men and women, whose lack of educational qualifications keeps them mired poverty. Today Barefoot College graduates include teachers, health workers, and architects are improving communities across India. Ann Cotton, Campaign for Female Education (CAMFED) Ann Corton started the Campaign for Female Education (CAMFED) in 1993 to simple goal of ensuring an education for young girls in Africa whose families cannot afford sch | fees. CAMFED has broken the cycle of poverty for hundreds of thousands of young womet | Zimbabwe, Ghana, Zambia, and Tanzania. | Sewer: Bad on te daa from Sal Foundation SUPPORTING SOCIAL ENTREPRENEURS. There are many organizations which exist in order to unite and suy i the world. One of them is Schwab Foundation and their mission eae Social Entrepreneurship provides unparalleled platforms at the national, regional leading social innovators chat highlight social entrepreneurship as a key element ecological problems in an innovative, sustainable and effective way.” Their teading social entrepreneurs in the world in order to bring the most build the community of social entrepreneurs, and through all thisSe ‘ The Social Entrepreneur 457 hat social enterprises encounter on their wa reneui n y in order to cultivate i chat would follow in the footsteps of the predecessors a seu ro : another example of an organization that provides entrepreneurs with the canes gather Comer and discuss presing issues of the socal work on global and iteration oy ae ‘oll World Forum which is held every year forall leading figures of the social Ashoka is another great example of an organization that helps to build the community of social entrepreneurs. Theit main mission is to offer support and to recognize achievements of social catrepreneurs. One of their flagship programmes is Ashoka Fellows, where leading social entrepreneurs from around the world are selected for a grant to help them further their work. The Nand and Jeet Khemka Foundation is working hard to advance the profession of social entrepreneurship in India. They organize an annual forum on social entrepreneurship and have nscituted an annual ‘Social Entrepreneur of the Year’ award. They also partner with Ashoka to grant fellowships to social entrepreneurs. Another association is Social Enterprise Alliance; their vision is “how we imagine the world different because of what we do.” The mission is to create a successful social field that would support healthy social enterprises. They participate in the Social Enterprise World Forum and Social Enterprise Summit 2010 offering a chance to the entrepreneurs to learn and to be motivated by new practices and new novative ways to conduct business. Their website has helpful information and tools for those who endeavour in social enterprise. Several leading education institutes have also set themselves up as resources for social entrepreneurs. In India, Tata Institute of Social Sciences, in Mumbai, runs a year-long programme to train and orient budding social entrepreneurs. XLRI (Jamshedpur) and XIM (Bhubaneswar) have social venture incubators which are designed to hand hold social entrepreneurs in their early days. in Elkington in his 1998 book Cannibals with Forks: The Triple es Bo ae 11.1981, Freer Spreckley fist articulated the triple bortom Bosom tina publication called Social Audit: Management Tol for Co-operative Working where Fine oe ac social enterprises should include in their performance messurement. oe ae TL seats that a company’s responsiblity les with stakeholders rather than The concept holders, in this case, refers to anyone who is influenced, either direcdy or shareholders. ‘Wiscuions of the firm. According to the stakeholder theory; the business entity indy ON ie ehicle for coordinating stakeholder interests, instead of maximizing should be wed 2 vractica terms, triple bortom line accounting results in expanding che shareholder Ping fameworko take into account social and ecological performance inadvon jitior financial performance. 10eee 458. Entrepreneurship ——— EVALUATING SOCIAL PERFORMANCE Social ent irs are driven by social value creation and that leads to a problem. In case Of business maaan SL ep " assessing the value created by way of assets o¢ entrepreneurs, it is eaxy to measure performance by oe profits, On the other hand, it is difficult to measure social value onto a ae able to accurately quantify the social value created by reducing the crime rate = <7 saving the Ganges Dolphin from extinction, Even when improvernent can be measured, itis difficult to attribuy cc Sjeocasan to a specific intervention. For example, the income of a village might go up after . but the proportion of the improvement that can be attributed to the activities of the NGO will always remain a contentious issue. While in several instances the social enterprise is able to be sitet on eed relying ‘on Funding, it is still important for the government, the community, etc., to be able to understand the the commencement of the activities of an NC actual achievements of the company in terms of social value. : ‘Measuring social value is a very challenging task in comparison to a private value When measuring social value, the assessor must consider several aspects besides the profitability of the company. Unitus is a microfinance firm which is currently exploring ‘livelihood development, which involves identifying and backing entrepreneurs who are creating opportunities for poor men and ‘women to significandy increase their earning capacity. For them, there is a clear measure of financial success, the increases in the clients’ incomes, but many investors may ask is that enough? “Was income merely 2 means to an end, and should quality-of-life improvements be the standard of success?” Thatis where the very ambiguous, yet sometimes more convincing measures of success come into play. Another way of assessing social enterprises is through Social Return on Investment (SROD, 2 means of measuring value creation. SROI measures ‘cost-savings to society and change in individual lives as a result of social enterprise employment.’ It by no means is able to ‘quantify and caprure all sspects ofthe benefits and value that accrue asa result of a successful programme, but rather to identify direct demonstrable cost savings or revenue contributions that result from that intervention.” enterprises through these various methods it becomes easier to ar le for social value creation. The enterprises must take into ic it is important to “prove” to societ companies, By assessing different i show some quantitative values that while it may seem to them like they are creating social value, and other potential investors the benefits of the existence of such The main motivations of a social entrepreneur inhibits rprise’s are ‘the possibility of exploiting change as a the most good tor nee new opportunity, ethical motives and moral and that a flexible framework is b (esponsibility, personal fulfillment, and selfishness. _ such enterprises, There are so Whereas most businesses have options ofaccessing should be a part of only debt and equity as sources of finance, given These factors are clear: their social goals, social entrepreneurs have some degree of tr other sources of funds, like public donations, government funds, and funds from donor agencies. Some argue that strictness in structure and reporting should be absolutely applicable to social enterprises. Others believe that .sesso" mut consider seven tion. the profilin of the om Enterre ‘Aone, Support to social Return a curs jal valve i avery yalue'n Xo someone who rec- Social return on investment (SRON it measures and uses entrepreneurial cost-savings to society and change in indevidasie Freate, and manage a ven- lives as a result of social enterprise employment, Triple bottom ine (ret) Tet mechanism by which enter- results in expanding the traditional reporting d and controlled, framework to take into account social and business of lending small ecological performance in addition to financial ‘to people who do not have any Performance. ‘the organized financial sector. ee eer eed oat 6. What are the key factors of a governance structure? - How can social entrepreneurs attract and "Generally, what are the main motivations of retain the right talent? 2 social entrepreneur? 8. According to Dees, what are the various ways which a social entrepreneur plays the role 9. What are the challenges in measuring a social change agent? performance of social enterprises? the various sources of funds for social 10. Define ‘Social Return on Investment’ and “Triple Bottom Line’. is a social entrepreneur? is a social entrepreneur different from r entrepreneurs? zi List some of the organizations supporting social entrepreneurs. Lee Reet |. All entrepreneurs are social entrepreneurs. 4. Governance structures will slow down a Argue in favour of this statement. social entrepreneur. Argue. 2. What would be the advantages and disad- 5. Can social performance be actually vantages of accepting grants? measured? What are the challenges of managing volunteers? --- [Eee - 1. Interview a local social entrepreneur. What 3. Try to calculate the monetary eminent a differences do you find between the social socal benefit For example, how mich does 3 entrepreneur and other entrepreneurs? family gain if the main breadwinner ; have to migrate to make a living or how much 2. Study a local for-profit business and try to list : does a family save if drinking water is available out the positive social impacts of the business. oe