Social Entrepreneurs, the Benevolent Merchants

Social Entrepreneurs, the Benevolent Merchants

One of the newest figures to emerge on the world stage in recent years is the social entrepreneur. This is usually someone who burns with desire to make a positive social impact on the world, but believes that the best way of doing it is, as the saying goes, not by giving poor people a fish and feeding them for a day, but by teaching them to fish, in hopes of feeding them for a lifetime. I have come to know several social entrepreneurs in recent years, and most combine a business school brain with a social worker's heart. The triple convergence and the flattening of the world have been a godsend for them. Those who get it and are adapting to it have begun launching some very innovative projects.

Thomas L. Friedman, The World Is Flat: A Brief History of the Twenty-first Century

An Initiator, visionary, challenger, the leader, proactive, risk taker, the decision maker, passionate, responsibility taker, the one that decides to make the idea a reality, motivator the one who inspires his team with agile and dynamic approach. These are very few words that describes characteristic of an entrepreneur. Passion is a superior energy that dwells in the heart of every successful entrepreneur and it possess an interior spark which helps to overcome every obstacle and pursue the goals further.

SOCIAL ENTREPRENEUR

A social entrepreneur builds strong and sustainable organization set up as non profit or companies. Social entrepreneur drives innovation and revolution in areas like health, education, sanitation, poverty with entrepreneurial zeal and courage to overcome traditional practices.. A social entrepreneur is a person willing to take all the risk factors and considerable efforts to change or eliminate the existing root cause of any social problem in society.

However a social entrepreneur must be financially knowledgeable to succeed in the cause taken. As the social ventures do not enjoy the same flexibility as regular start ups do when it comes to arranging capital from different funding sources like investments, banking, equity etc.

Social entrepreneurships is constituted by [a] The business that makes money and works towards improving a specified social problem by selling something to consumer or by contribution of part of sale to designated problem. [b] Other who solve the problem using grant or government money are also social entrepreneur.

Mission-linked millennial customers:

It's a pleasant surprise that 90 percent of global purchasers are likely to lean towards brands that support a social cause, the company that gives back to society(2014 study by Cone Communications and Echo Research) when price and quality are the same. Corporate social responsibility has a positive impact on customer perceptions of a company and brand loyalty. The customers want to feel like they are important and contributing to the society, are a part of something philanthropic, and have influence in social change. In fact, customers have now been an active player of product development, innovation, and social impact. The CAF World Giving Index delves into how and why people around the world give to charity, a collected data from 139 countries, 95% of the world’s population. It establishes that people are heading towards self actualization as the basic layers of the need pyramid have been achieved in developed or developing nations to a large extent. It confirms that this inclination towards giving of the millennial generation is about spirit and inner motivation, not about material intentions.

Rise of Impact Investors:

India is increasingly being a testing market for purpose oriented finance. Between 2010 and 2016, India attracted over 50 active impact investors, who poured in more than $5.2 billion. About $1.1 billion was invested in 2016 alone (Mckinsey). These sources of finance are diversified and complementary. Impact investors, traditional private-equity and venture-capital firms are bring critical and fulfilling skills to work. Over the years, as business models in sectors such as financial inclusion and clean energy have scaled, investor confidence has been built and impact investors have started playing in larger deals. As a good start, investments in clean energy like wind, solar, and small hydropower are bringing impact investing in India.

The obvious results:

When both the investors and the customers were leaning towards workable philanthropy, the advent of Social Entrepreneurship, a contemporary hybrid of social work and business was inevitable. 

The growth of income-generating activities for non-profits has developed a new operational system where business, market and values co-exist and work with traditional public sector ethics like responsibility to society and serving the public interest. Crucial to the success of a social enterprise is an effective business model, the channel that the social entrepreneur converts inputs into outcomes; the generation of both social measurable impact and revenue. The business activities overlap with the social programs and the business is created as a funding mechanism and to pursue the mission of the organization.

Generated revenue pays for the expenses and flows back into the services provided for those in need. This earning of income falls in the main course of activities as distinguished from occasional selling of merchandise to cover particular project expenses.

3 abilities of a Social Enterprise ensure it's success, to produce profit for the owners and shake off donation dependency, to generate positive change in society and to achieve a balance of profit and positive change. The first approach matches to the for-profit companies; the second approach applies to conventional charities and the third approach applies to social enterprises.

Examples of W. Grassi's 9 Business Models for Social Enterprises:

1. The Entrepreneur Support Model

They sell business support to entrepreneurs and help get their businesses off the ground.

Consulting services, Mentoring and skill training, micro financing or technical support fall in this category.

2. The Market Intermediary Model

They help their clients by marketing or selling their clients’ products or services for them. 

Examples include organizations that help struggling dairy farmers by marketing the produce and enter the milk supply chain, supply cooperatives like fair trade, agriculture, and handicraft organizations.

3. The Employment Model

These enterprises provide their clients with job opportunities and vocational training. 

Disabilities or youth organizations providing work opportunities in landscape, cafes, printing, or other business are good examples.

4. The Fee-for-Service Model

These organisations charge the customer directly for the beneficial services they provide. Many clinics, schools, museums and membership organizations use this common model to a greater or lesser degree.

5. The Low-income Client Model

They offer social services directly but focusing on low-income clients. 

Healthcare, utility programs at a subsidised charge use this model.

6. The Cooperative Model

This is generally a fee-based membership organization that provides member services to a group that shares a common need or goal, owned and operated by its members,. They run the cooperative and receive the benefits of its success. 

Examples include bulk purchasing, collective bargaining union, agricultural co-ops, and credit unions.

7. The Market Linkage Model

These enterprises serve as brokers for their clients. They attempt on building relationships and otherwise connecting their clients with markets for their clients’ products and services. Unlike those adopting the market intermediary model, these enterprises generally do not market or sell their clients’ products and services for them.

Examples are Import-export, market research, and broker services.

8. The Service Subsidization Model

They fund social programs by selling products or services in the marketplace. In contrast to organizational support model(following), service subsidization enterprises integrate their internal business with external social programs. 

For example, a law firm may use the earnings produced from the firm’s regular law practice to fund a program for providing free law services to those in need.

9. The Organizational Support Model

This type of Social Enterprises sells products or services to fund social programs. But the programs they fund are part of a different parent organization. In other words, an organizational support SE attempt to raise funds for a parent non-profit that organises the social programs the SE wants to support.

The Indian scenario

Though the second fastest growing economy after China, India consists of around 40% of the world’s poor, with a little under 30%of the population living below the poverty line. The country is still in combat with issues like illiteracy, malnutrition, and poor healthcare. It is previously ranked 130th among 188 countries in the Human Development Index (UNDP, 2015). 39 central government policies relevant to social entrepreneurship are there, 26% of which were framed by the Ministry of Micro Small & Medium Enterprises and 16% by Department of Financial Services of the Ministry of Finance. An important policy launched was the ‘National Skill and Entrepreneurship Policy’ announced in 2015 by the Ministry of Skills and Entrepreneurship. It includes a part on social enterprises that targets to foster social entrepreneurship and grassroots innovation. The Indian 

social enterprise ecosystem is well developed in India with a vast range of domestic and international investors and support organisations.

Names that deserve to be mentioned:

Jean-Marc Borello: His organisation perhaps is the world's biggest social enterprise, Groupe SOS, 350 stand alone organizations in 20 countries that help more than 1 million lives. Prevention and Care of Addicted, Housing and Integration. Groups SOS is highly innovative in its solutions related to health, housing, education, social inclusion, senior citizens, and employment.

David Risher and Colin McElwee: A former Microsoft executive and the former marketing director of ESADE business school in Barcelona, started Worldreader in 2010 to provide digital books to the masses and improve the general education level. The non-profit has of nearly 32,000 book titles in 43 languages available to readers in 69 countries. Worldreader donates Kindle e-readers to schools with the help of sponsorships and fundraising, and it also has an efficient app where a 5 million readers are getting access to the whole library of titles. 

Poonam Bir Kasturi: Through her company Daily Dump, Kasturi helps the people of India bridge the gap between technology and nature and convert household waste to a resource.Daily Dump sells products like leaf composters and sorting bags. The company was started in 2006, so far, 30,000 Indians have used their products made from 28 tons of organic waste daily.

A last word

What I always try to advocate and also propagate is a set of fair and just business practices which is in reality more complex accomplished than uttered. Just like the focus of the spotlight in the graph, strong profit motive and fair business practices can professionally contribute more sustainably to socio-economic development than non-profit initiatives. We can cite customer service in India for example which is still in its nascent stage in professionalism. If customers are taken care of, the largest portion of society will be benefited with better facilities of life leading to greater productivity. A very common phenomenon around is people tired of about the brands is the poor response leaving heaps of unaddressed grievances.

In fact an entrepreneur is by all means a social worker who contributes to society by his willingness to bring solutions, new ideas on any social problem, innovation and creativity. Unlike an industrialist entrepreneur has always mindset for creativity and welfare of society. They always follow the rule to give more then to take.