Social Entrepreneurship: New Approaches to Changing the World

(This is a guest post from Taylor Ansley, a fellow at Z Smith Reynolds Foundation, who is covering the Council on Foundations Conference for Tactical Philanthropy)

By Taylor Ansley

This panel featured a number of perspectives on social entrepreneurship, social enterprise, and social venture investment.

Gregory Dees, of Duke University’s Fuqua School of Business, described the evolution of social entrepreneurship. He pointed to the early 1980s as a point of origin for the social innovation models driving influential organizations like Ashoka, the Skoal Foundation, and others. Dees described the parallel rise of social enterprise—revenue-generating social ventures—alongside social innovation, and provided a clear example of each: many point to Teach for America as a social innovation, bringing a new model to bear on education inequality. Yet Teach for America is not a social enterprise, in that it exists on corporate, foundation, and public support. The Nature Conservancy tie that Dees was wearing, on the other hand, is by no means a social innovation, yet is a social enterprise in that sales of the ties benefit the Nature Conservancy’s work.

Bill Drayton of Ashoka, dubbed the “godfather of social entrepreneurship” by the moderator, spoke next. Ashoka funds social entrepreneurs around the globe who develop creative responses to pressing problems. Drayton emphasized his belief that powerful social change will only happen when we “move to an ‘everyone a change maker’ world.” He told the stories of a handful of Ashoka’s 2,500 fellows and shared impressive statistics on past fellows. After five years:

• 97% of fellows are still continuing their social entrepreneurship full time?
• 88% of fellows have had their models adopted by outside organizations
• 55% of fellows have successfully pushed for a change in national policy

Drayton also emphasized that fellows serve, on average, 174,000 people directly.

Erich Broksas, from the Case Foundation, spoke of his organization’s work supporting both for-profit and nonprofit ventures using technology to connect individuals with opportunities to give. The Case Foundation capitalizes on an internal culture of entrepreneurship to leverage investments in for-profit companies that advance social causes.

Finally, Brian Trelstad of the Acumen Fund spoke of his organization’s goal of providing “patient capital to impatient people.” The fund—which has raised over $80 million in capital—invests in projects around the world that are deemed to be too high risk and low reward for traditional investors. One example Trelstad highlighted was a water purification system developed in India as a revenue-generating venture. Acumen Fund is not looking for immediate returns on their investments, but rather hoping to build social enterprises that are financially sustainable about 5 years down the road. The fund uses a comparison they call BACO: Best Available Charitable Option, to determine if their investments are leveraged into social gains beyond that which a charitable grant might have accomplished. Trelstad called the BACO model an “imperfect and temporary tool” that Acumen hopes to replace with a comparison against peer social venture funders.

Audience members submitted questions on a variety of topics:

How do we create a culture of social entrepreneurship in our community/funding area?

Bill Drayton spoke of the need to reach individuals at an early age in order to build successful adult social entrepreneurs. He emphasized what he termed “applied empathy” as a crucial component for change-makers.

Gregory Dees stressed that entrepreneurship—in the business OR social benefit world—is not easy to create. He argued that building the capacity of social entrepreneurs will depend on inspiring creativity, celebrating successes in a public way, and not stigmatizing failure. Failure is a natural part of the for-profit entrepreneurial world, and yet social entrepreneurs often face unrealistic expectations of success all the time.

How can foundations—particularly more traditional funders—embrace social entrepreneurship?

Erich Broksas from the Case Foundation spoke of the ability for foundations to seek social returns on their investments—both grants and endowment portfolios. Members of the audience pointed to the Robert Wood Johnson Foundation’s Pioneer Portfolio and the Lawrence Welk Fund’s youth advisory board (“because young people understand this”) as foundations that are incorporating social entrepreneurship into their programs. Bill Drayton chimed in that foundations are a unique type of organization in that they do not have to listen to their clients; he described this as a “dangerous structure” that can prevent innovative models from receiving support.

What are the limits of social enterprise and social entrepreneurship?

Dees emphasized that the conceptual limits are clear: it’s difficult to imagine some problems to be solved with revenue-generating solutions. But, he argued, in reality the only limit is the creativity of social entrepreneurs; individuals around the world are solving problems in creative and financially sustainable ways that would have been considered impossible years ago. He pointed to Muhammed Yunus and the Grameen bank as one example.

As you can tell by this extensive post, it was an extremely informative and condensed session full of optimism for, as the session title suggested, “new approaches for saving the world.”