Professional Documents
Culture Documents
Primer
Dr.G.Venkatasamy
“II am not an idea man; the task is not to aspire to some heaven but to make everyday life divine."
divine
“Social entrepreneurship” is one of the most misunderstood phrases in the nonprofit sector
today. Everybody, it seems, has a different definition of what it means. Twenty years ago the
idea of nonprofits acting in an entrepreneurial manner was anathema to most people in the
sector: The idea of merging mission and money filled them with distaste. But the phrase
“social entrepreneur” is bandied about freely these days.
Here is the gist of the problem: Unless a nonprofit organization is generating earned revenue
from its activities, it is not acting in an entrepreneurial manner. It may be doing good and
wonderful things, creating new and vibrant programs: But it is innovative, not
entrepreneurial.
The rules of the game for nonprofits have changed dramatically during the past 20 years.
Operating costs have soared, resources available from traditional sources have flattened, the
number of nonprofits competing for grants and subsidies has more than tripled, and the
number of people in need has escalated beyond our most troubling nightmares. Smart
nonprofit managers and Board members realize they must increasingly depend on themselves
to insure their survival . . . and that has led them naturally to the world of entrepreneurship.
Box: The paradox of Social Enterprise
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Many Third Sector organizations, therefore, share a common goal of reducing social
exclusion. They may do this in a variety of ways: by providing services more cheaply to
disadvantaged groups; by using collective bargaining power to negotiate access to scarce
or expensive resources; by organizing themselves in a way that enfranchises and
empowers individual members (and gives them a collective political voice); by adopting
traditional approaches that redistribute surplus wealth to disadvantaged groups through
charitable practices and organizations.
The identification and growth of the Third Sector has been accelerated by changes in
the public sector. Since the early 1980s, there has been a shift away from welfare
through state institutions and increased use of agencies and contractors. The concept
of New Public Management underpins a commercialization agenda (attempts by
government to make greater use of markets and private sector thinking in public service
delivery to ‘save’ money). Accompanying this is the contentious belief that business
practices and managerial solutions will improve the ‘performance’ of both the public and
voluntary sectors. Given that many in the Third Sector regard private and public sector
management principles as the cause of social exclusion, it is no surprise that there is
resistance to the idea that the same techniques can solve contemporary social problems.
Nevertheless, it is this thinking that drives change in the UK National Health Service
(NHS). As in other parts of the world, the NHS exemplifies the trend towards a
“contracting culture” in which grants and state funding are replaced by commercial
contracts for service delivery. So, in recent years, the boundaries between the private
and public sector (in term of market thinking and managerial practices) have started to
blur traditional distinctions between different sectors of the economy. Secondly, the
emergence of radical business alternatives with a strong social orientation, democratic
organization, and positive attitude to profitable trading has led to a new language that
describes relationships and organization forms that bridge the boundaries between
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S.Rengasamy. Introduction to Social Enterprises
Both definitions capture the social and financial characteristics of the social enterprise;
however, The Roberts Foundation's definition emphasizes social enterprise as a program
approach, whereas NESsT's definition stresses it as a funding approach.
Diagram: What is a Social Enterprise
• "Social Enterprise is a nonprofit venture that combines the passion of a social mission with
the discipline, innovation and determination commonly associated with for-profit
businesses " The Nonprofit Good Practice Guide
• Social enterprise - as business trading for a social purpose - Social Enterprise Coalition UK
Box: What is a Social Enterprise?
• A social enterprise is any business venture created for a The main idea behind the term is
social purpose--mitigating/reducing a social problem or that where an organization engages
a market failure--and to generate social value while in some form of social enterprise
operating with the financial discipline, innovation and activity, the resulting product (or
determination of a private sector business. Virtue Ventures service being sold), process (the way
in which they produce or sell it) or
profit (what happens to the income
• Social enterprises are social purpose organizations that generated),is social. Social
use a business vehicle to fulfill their mission. They enterprise is not just about making
encompass a wide spectrum of business activities money, it is also about making sure
including, but not limited to: community owned there is a wider social (and/or
businesses, credit unions, mutual’s, not-for-profit environmental) benefit as a result of
business ventures, trading arms of charities, employee- the trading activity. This is
sometimes known as the double (or
owned businesses, co-operatives, community housing
triple) bottom line.
associations, social firms, micro-credit schemes, some
farmers’ markets, community settlement associations,
agricultural shows, arts festivals and indigenous arts groups.
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S.Rengasamy. Introduction to Social Enterprises
• Social Enterprise is a means by which people come together and use market based
ventures to achieve agreed social ends. It is characterized by creativity, entrepreneurship,
and a focus on community rather than individual profit. It is a creative endeavor that
results in social, financial, service, educational, employment, or other community benefits.
Talbot, Tregliga and Harrison 2002.
Box Diagram Social Enterprise and Triple Bottom Line
A “social enterprise” is any entity that uses earned revenue to pursue a double or triple bottom line
either alone (in a private sector or nonprofit business) or as a significant part of a nonprofit’s mixed
revenue stream that also includes philanthropy and government subsidies
Social enterprises directly confront social needs through their products and services rather than
indirectly through socially responsible business practices such as corporate philanthropy, equitable
wages and environmentally friendly operations – or through the unrelated business activities
mounted by nonprofits
• Social enterprises can be defined as "organizations with an explicit aim to benefit the
community, initiated by a group of citizens and in which the material interest of capital
investors is subject to limits. They place a high value on their independence and on
economic risk-taking related to ongoing socioeconomic activity."EMES:
• Social enterprises - defined simply - are organizations seeking business solutions to social
problems. They need to be distinguished from other socially-oriented organizations and
initiatives that bring (sometimes significant) benefits to communities but which are not
wanting or seeking to be "businesses". In this respect these latter organizations are more
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likely to remain dependent on gifts and grants rather than develop true paying customers.
Sometimes the market for the products or services is individual consuming customers,
people who are choosing their offerings in preference to those of rival organizations,
which may or may not share the same social commitment. In other instances, there are just
one or a few customers who offer the social business a commercial contract to deliver a
service, often using public funds to do this. This is actually a tricky one to categorize.
Whilst there are customers who must be satisfied if they are to remain committed into the
future - and a revenue stream as distinct to a grant - large contracts may not be renewed
because public funding dries up and not because the social business has delivered poor
service. In this respect it mimics a grant. In all cases, their employees or members can be
fully-paid at a typical market rate, paid more modest sums or even be volunteers ‘The
diverse world of social enterprise: A collection of social enterprise stories’ John
Thompson and Bob Doherty. (2006)
In its widespread usage, "social entrepreneur" is the individual and "social enterprise" is the
organization. Therefore, social enterprise is an institutional expression of the term social
entrepreneur.
Box: Ten Interesting Facts about Social Enterprise
Ten Interesting Facts about Social Enterprise
1. Social enterprise has galvanized a sizable global movement!
2. The crux of Mohammad Yunus Nobel Laureate speech was about “social business” [social enterprise]
not microfinance per se.
3. Social enterprise is attracting mega bucks from new break-out foundations (Clinton Foundation,
Gates Foundation, Omidyar Network, Skoll Foundation, etc.) and venture philanthropists (Bamboo
Fund, Acumen Funder, LGT, etc) as well as (little by little) the usual development aid donors (World
Bank, IFC, IADB, DFID, USAID missions, etc.)
4. Strong synergies overlap, value ad, and duplication of components exist between social enterprise and
microfinance, fair trade, base of the pyramid, enterprise development, and value chain approaches to
economic development.
5. The British Government deemed social enterprise as an essential strategic tool for the social sector
development and as a result created a special unit for social enterprise in the Department of Trade
and Industry and a legal designation (Community Interest Company.
6. Barack Obama presidential campaign also mentions social enterprise as part of its platform.
7. Over 80 universities around the world teach social entrepreneurship and social enterprise, many of
which have dedicated centers to further the study of social entrepreneurship (among them: Harvard,
Oxford, Stanford, NYU, Columbia, UC Berkeley, INSEAD, etc.)
8. Social enterprise has broad applications across sectors and thus can be used as an integrated
approach for economic development plus health, education, housing, water, etc.
9. In its relatively short history, social enterprise has been a regular featured in mainstream press
including, PBS series, “New Heroes” hosted by Robert Redford, Fast Company annual Social Capitalist
Awards, The Economist, The Guardian, etc.
10. Social enterprise methodology is premised on social sector organizations achieving financial
sustainability, high performance, and strategic social impact and engendering an entrepreneurial
culture.
Social enterprises are social mission driven organizations which apply market-based
strategies to achieve a social purpose. The movement includes both non-profits that use
business models to pursue their mission and for-profits whose primary purposes are social.
Their aim – to accomplish targets that are social and or environmental as well as financial – is
often referred to as the triple bottom line. Many commercial businesses would consider
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themselves to have social objectives, but social enterprises are distinctive because their social
or environmental purpose remains central to their operation.
Rather than maximizing shareholder value, the main aim of social enterprises is to generate
profit to further their social and or environmental goals. This can be accomplished through a
variety of ways and depends on the structure of the social enterprise. The profit from a
business could be used to support a social aim, such as funding the programming of a non-
profit organization. Moreover, a business could accomplish its social aim through its
operation by employing individuals from disadvantaged backgrounds or lending to micro-
businesses that have difficulty in securing investment from mainstream lenders.
Box: Types of social enterprise
Many non-profit organizations see social enterprise as a way to reduce their dependence on
charitable donations and grants while others view the business itself as the vehicle for social
change. Whether structured as nonprofits or for-profits, social enterprises are simply
launched by social entrepreneurs who want to
improve the common good and solve a social Think about this statement also
problem in a new, more lasting and effective way “Sometimes culture change is like
than traditional approaches. They are conceived and trying to put lipstick on a bulldog! It’s
operated by visionary entrepreneurs who recognize exhausting work, it doesn’t look right
potential where others may not see it and who apply and even if you can get the lipstick on,
discipline, pragmatism, courage and creativity to it’s still a bulldog!”
pursue their solution in spite of all obstacles, toward Liam Black/Jeremy Nicholls,
a world that is more abundant, secure and inclusive
for all.
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Social Economy
A social enterprise in India is primarily NGOs, who raise funds through some services (often
fund raising events and community activities) and occasionally products. Despite this, in
India the term, Social Enterprise is not widely used, instead terms like NGOs and NPOs
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(Non-profit organizations) are used, where these kind of organizations are legally allowed to
raise fund for non-business activities. Child Rights and You and Youth United, are such
examples of Social
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Enterprise, who raise funds through their services, fund raising activities (organizing events,
donations, and grants) or sometimes products, to further their social and environmental goals.
The key characteristics of a social enterprise are:
1. They trade i.e. sell goods and/or services and any profit or ‘surplus’ made as a result of
their trading activities is either ploughed back into the business or distributed to the
community they serve
2. They have a clear social purpose. This may include job creation, or the provision of local
facilities e.g. a nursery, community shop, or social care for the elderly.
3. They are owned and managed by the communities they serve
Development Trusts
Commercial businesses whose social aims are provision of
employment of disabled or disadvantaged people
Community led businesses
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They are autonomous organizations whose governance and ownership structures are normally
based on participation by stakeholder groups (eg employees, users, clients, local community
groups and social investors) or by trustees or directors who control the enterprise on behalf of
a wider group of stakeholders. They are accountable to their stakeholders and the wider
community for their social, environmental and economic impact. Profits can be distributed as
profit sharing to stakeholders or used for the benefit of the community.
Box: Main starting points for social enterprises
The best established European research network in the field, EMES, works with a more
articulated definition - a Weberian 'ideal type' rather than a prescriptive definition - which
relies on nine fuzzy criteria:
Economic criteria:
1. Continuous activity of the production and/or sale
of goods and services (rather than predominantly
advisory or grant-giving functions).
2. A high level of autonomy: social enterprises are
created voluntarily by groups of citizens and are
managed by them, and not directly or indirectly by
public authorities or private companies, even if
they may benefit from grants and donations. Their
shareholders have the right to participate ('voice')
and to leave the organization ('exit').
3. A significant economic risk: the financial
viability of social enterprises depends on the efforts
of their members, who have the responsibility of
ensuring adequate financial resources, unlike most
public institutions.
4. Social enterprises' activities require a minimum number of paid workers, although, like
traditional non-profit organizations, social enterprises may combine financial and non-
financial resources, voluntary and paid work.
Social criteria:
5. An explicit aim of community benefit: one of the principal aims of social enterprises is to
serve the community or a specific group of people. To the same end, they also promote a
sense of social responsibility at local level.
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6. Citizen initiative: social enterprises are the result of collective dynamics involving people
belonging to a community or to a group that shares a certain need or aim. They must maintain
this dimension in one form or another.
Box: Socialism & Social Enterprise
“In socialist jurisprudence, social enterprise was a term designed to replace the capitalist notion of
businesses dedicated to the pursuit of profit. The social enterprise generated revenue in excess of
the costs of production, but profit-making was not the goal of socialist business–rather, its
fundamental organizational purpose was to serve collective benefit. Moreover, in keeping with
Marxist/Leninist ideology, the social enterprise was owned & controlled not by private
shareholders–a hallmark of bourgeoise capitalism–but by workers themselves, from the workers
immediately connected to the enterprise to society as a whole.”
Jeff continues to write that “social enterprise” migrated to Western minds and charities much the
same way that “civil society” was reborn and co-opted. Meaning “citizen’s society,” the term was
used to unite individuals against centralized government power. Now the term is best understood
as a descriptor of anything “non-governmental.” (In the 1960s and '70s, Stalin dissidents got the
clever idea of leveraging Marxist rhetoric to subvert the centralized Leninist state. One concept the
dissidents revived was "civil society"--grazhdanskoe obschestvo, equally translatable as "citizens'
society"--which the dissidents were able to use to challenge the concentration of power in a government
elite. Relatively moribund in Western political rhetoric for roughly a century (we had drifted to
"civilization" instead), the term "civil society" soon enjoyed an international revival as a term
synonymous with nongovernmental associations).
It seems that “social enterprise” has drifted just as far from its original conception. (Social
enterprise, in the sense of a venture with a social purpose, migrated to the West in a similar fashion. In
particular, in the late 1970s, the Polish labor union "Solidarity" became the subject of international
attention for its challenge to Communist Party and state control of labor unions. Having learned from
emulated the previous decade's dissident appropriation of civil society, Solidarity leaders put forth a
model of social enterprise that circumvented the state. Instead of being controlled by the government
and Party, the social enterprise would be run by its workers for the greater social good). As a social
venture that was meant to give power back to people and allow them ownership, much like a
cooperative, “social enterprise” has best come to represent corporate philanthropy and cause
marketing campaigns. Both of which are focused on turning profits and not helping people. Julia
Moulden asks, “is making a difference only for the rich?” She easily gives examples that it is not,
but is it? As far as the foreign aid/ international development arena it appears that social
enterprise is geared towards engaging wealthy Western populations in feel good campaigns, like
Product (RED), that are best defined as image marketing campaigns for corporations to try and
look better as a way to bring in more customers. Lucy Bernholz has termed this business model
“embedded giving” where “commerce is used to generate funds for a cause.” She writes:
“Embedded giving is just one more example of the blurring of sectors and roles between
commerce, philanthropy, and public good. [...] Maybe today’s teens and kids who have seen so
much embedded giving will grow up to expect that every product and every service comes with a
charitable affiliation.”
7. Decision making not based on capital ownership: this generally means the principle of 'one
member, one vote', or at least a voting power not based on capital shares. Although capital
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owners in social enterprises play an important role, decision-making rights are shared with
other shareholders.
8. Participatory character, involving those affected by the activity: the users of social
enterprises' services are represented and participate in their structures. In many cases one of
the objectives is to strengthen democracy at local level through economic activity.
Charity Social Enterprise & Commerce
The Social Enterprise Way –The ethical Path between Charity & Commerce The mutuality Bridge
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Typical businesses: many have social aims & Traditional Charities, Community and
benefits including donating to charity, but Voluntary organizations: primarily rely on
this is not central to what they do or why fund raising, grants & donations
they exist
Mission Orientation
Social enterprises, can be classified based on their mission orientation as well as the
integration
between social programmes and business activities . The diagram below illustrates this
continuum.
Mission Centric Mission Related Unrelated to mission
The relationship between The relationship between The relationship between the
the business activities and the business activities and business activities and social
the social programs are the social programs are programs is supportive, providing
comprehensive: financial synergistic; adding value, unrestricted funding to the
and social benefits are financial and social, to one nonprofit parent organization.
achieved simultaneously. another. External social enterprises are
They are often mission- Integrated social often unrelated to mission; their
centric and their business enterprises are often business activities are not required
activities are connected mission-related & their to advance the organization’s
to the organization’s business activities are mission other than by generating
mission. connected to the income for the its social programs
organization’s mission. or overhead.
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9. Limited distribution of profit: social enterprises include organizations that totally prohibit
profit distribution as well as organizations such as co-operatives, which may distribute their
profit only to a limited degree, thus avoiding profit maximizing behavior
Box: Frequently Asked Questions about Social Enterprises
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