“I am not anI am not anI am not anI am not an idea man; the task is not to aspire to some heaven but to make everyday life divineidea man; the task is not to aspire to some heaven but to make everyday life divineidea man; the task is not to aspire to some heaven but to make everyday life divineidea man; the task is not to aspire to some heaven but to make everyday life divine."

S.RengasamyS.RengasamyS.RengasamyS.RengasamyMadurai Institute of Social SciencesMadurai Institute of Social SciencesMadurai Institute of Social SciencesMadurai Institute of Social Sciences

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Student’sStudent’sStudent’sStudent’s Primer Primer Primer Primer

Dr.G.Venkatasamy

S.Rengasamy. Introduction to Social EnterprisesS.Rengasamy. Introduction to Social EnterprisesS.Rengasamy. Introduction to Social EnterprisesS.Rengasamy. Introduction to Social Enterprises

“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 theidea of nonprofits acting in an entrepreneurial manner was anathema to most people in thesector: 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 revenuefrom its activities, it is not acting in an entrepreneurial manner. It may be doing good andwonderful things, creating new and vibrant programs: But it is innovative, notentrepreneurial.

Why is the distinction so important?

Because only earned income will ever allow a nonprofit to become sustainable or self sufficient. Innovation is a precious resource and it served as the primary engine of nonprofitgrowth through the 1970s and 1980s. But innovation can take a nonprofit only so far. It’s onething to design, develop and implement a new program -- and quite another to sustain itwithout depending on charitable contributions and public sector subsidies.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, thenumber of nonprofits competing for grants and subsidies has more than tripled, and thenumber of people in need has escalated beyond our most troubling nightmares. Smartnonprofit managers and Board members realize they must increasingly depend on themselvesto insure their survival . . . and that has led them naturally to the world of entrepreneurship.

Box: The paradox of Social Enterprise

What is Social Enterprise? Definitions.

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Social enterprise is: “a business or service with primarily social objectives whose surplusesare principally reinvested for that purpose in the community, rather than being driven by theneed to maximize profit for shareholders and owners”.

UK Government

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Social enterprise as "a revenue generating venture founded to create economicopportunities for very low income individuals, while simultaneously operating withreference to the financial bottom-line."

The Roberts Foundation Homeless Economic DevelopmentFund

1996

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Social enterprise refers to "the myriad of entrepreneurial or 'self-financing' methods used bynonprofit organizations to generate some of their own income in support of their mission."

NESsT

The paradox of Social Enterprise The paradox of Social Enterprise The paradox of Social Enterprise The paradox of Social Enterprise1.

Those in the private sectorprivate sectorprivate sectorprivate sector wondering if social enterprises are a threat or anopportunity2.

Those in the voluntary sector voluntary sector voluntary sector voluntary sector trying to work out their medium/long-term future, andwhether they should engage or resist the notion of social enterprise. 3.

Those in the public sectorpublic sectorpublic sectorpublic sector being asked to develop, support or commission work fromsocial enterprises.4.

Those who self-define as part of the social enterprise secsocial enterprise secsocial enterprise secsocial enterprise sector tor tor tor, wondering how tounderstand themselves and describe the value of their approach to others.

S.Rengasamy. Introduction to Social EnterprisesS.Rengasamy. Introduction to Social EnterprisesS.Rengasamy. Introduction to Social EnterprisesS.Rengasamy. Introduction to Social Enterprises

Box: Third Sector - Social Enterprises

Third Sectorhird Sector

Third Sectorhird Sector ---- Social EnterprisesSocial EnterprisesSocial EnterprisesSocial Enterprises

The problem with a three-sector analysis of the economy is that it tends to marginalizeorganizations that transgress the boundaries of these dominant definitions. For example,co-operative enterprises (owned by employees, producers or consumers) cross theboundary between the private and voluntary sectors. They often have a social orcommunity goal, but are usually set up to negotiate and distribute social and financialbenefits equitably rather than prioritize the social and financial goals of the founders. Inaddition, they frequently adopt the democratic practices of the state sector by having elections for senior positions and assemblies of people who can directly questionexecutive authority. The Emergence of the Third Sector The Emergence of the Third Sector The Emergence of the Third Sector The Emergence of the Third Sector The continued growth and development of co-operative forms of enterprise, and ‘mutualhelp’ as a commercial principle led to the emergence of a new term in the early 1990s - Third Sector. This term covers more than voluntary bodies and charities to includemutual organizations (e.g. building societies), social firms and producer, marketing andconsumer co-operatives. One social value that pervades the entire Third Sector is aconcern that modern private and public sector management principles have contributed to the social exclusion of disadvantaged groups and vulnerable individuals. For some in the sector, the goal is to address (and find alternatives to) powerful political andfinancial interests that disempowered citizens.Many Third Sector organizations, therefore, share a common goal of reducing socialexclusion. They may do this in a variety of ways: by providing services more cheaply todisadvantaged groups; by using collective bargaining power to negotiate access to scarceor expensive resources; by organizing themselves in a way that enfranchises andempowers individual members (and gives them a collective political voice); by adopting traditional approaches that redistribute surplus wealth to disadvantaged groups throughcharitable 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 conceptof New Public Management underpins a commercialization agenda (attempts by government to make greater use of markets and private sector thinking in public servicedelivery to ‘save’ money). Accompanying this is the contentious belief that businesspractices 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 sectormanagement principles as the cause of social exclusion, it is no surprise that there isresistance 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 commercialcontracts for service delivery. So, in recent years, the boundaries between the privateand public sector (in term of market thinking and managerial practices) have started toblur traditional distinctions between different sectors of the economy. Secondly, theemergence of radical business alternatives with a strong social orientation, democraticorganization, and positive attitude to profitable trading has led to a new language thatdescribes relationships and organization forms that bridge the boundaries betweensectors.