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The Problem with Social Entrepreneurship: Guest Post

By Nell Edgington



Below is a guest post from Mat Despard, a teacher of nonprofit management and leadership at the School of Social Work at the University of North Carolina-Chapel Hill and coordinator of UNC’s Nonprofit Leadership Certificate program. Matt has a real interest in economic empowerment interventions to improve social, economic, and health outcomes among very poor women with children and writes a blog on nonprofit issues. Mat is a reader of the Social Velocity blog, and after a thought-provoking email exchange about social entrepreneurship, I asked him to put his thoughts into a guest blog post for Social Velocity. Here is his post.

OK, so first of all, let me be clear: the idea of innovation to tackle tough social problems like the lack of clean water in developing countries is a great thing. Yet I have some misgivings about the social entrepreneurial banner, from a nonprofit perspective:

  1. Elevating the individual. Not all of us can be a Geoffrey Canada or Paul Farmer. And besides, as Dr. Farmer is nice to acknowledge, behind every social entrepreneur is a team doing some serious heavy lifting to implement the entrepreneur’s vision. Mr. Canada talks about the importance of community change in Harlem. Why not focus on entrepreneurial organizations or communities? After all, to solve tough social problems, we need collective action that can be sustained by communities (and supported by governments) over the long haul.
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  3. Poor economies of scale. Too often aspiring (and usually young) social entrepreneurs assume they need to start their own organization vs. partner with an existing one. This results in the need to raise unrestricted revenue to build infrastructure – bookkeeping/accounting, program evaluation, information systems, etc. albeit with poor economies of scale. Energy and resources get diverted from problem solving to organization building.
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  5. Ignoring current efforts. There is no shortage of nonprofits doing very innovative things that nonetheless fail to be recognized, perhaps because they lack a charismatic leader and/or partners who champion and market the innovations. I hear about and interact with organizations in developing countries with very innovative ideas that routinely go unheard.
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  7. Lack of evidence. Many social entrepreneurial ideas are largely untested. It’s great that these ideas represent new approaches to tackling social problems, but promotion of these ideas tends to be far out in advance of sufficient evidence that they merit promotion as “the next big thing”.
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  9. The commercial assumption. A strong bias exists in favor of commercial approaches to addressing social problems. It’s great to exploit market opportunities to make innovations more financially sustainable and/or create new economic opportunities for the poor, but often public or private subsidies are needed to catalyze change.
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  11. Lack of an ethical framework. It’s hard to imagine any social entrepreneur who would say that social and economic justice and human rights are unimportant. However, in addition to elevating the individual, the attention given to social entrepreneurship celebrates the ideas (i.e. the means) and not the commitments (i.e. the ends). As such, the focus is on entrepreneurship as a desired activity or way of being, not as a tool (among other tools such as political advocacy and grassroots organizing) to be used to advance human rights.

I think the enthusiasm around social entrepreneurship is great, especially if it means that more people are engaged in creating new ways of solving social problems. Let’s just be honest and humble about what we’re doing and recognize that social entrepreneurship is nothing more than an expression of the human impulse to seek greater peace and justice in the world.


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About the Author: Nell Edgington is President of Social Velocity (www.socialvelocity.net), a management consulting firm leading nonprofits to greater social impact and financial sustainability. Social Velocity helps nonprofits grow their programs, bring more money in the door, and use resources more effectively. For more information, check out Social Velocity consulting services and clients.


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5 Comments to The Problem with Social Entrepreneurship: Guest Post

Jeff Mowatt
June 24, 2011

Mat, What a coincidence that you’re from Chapel Hill, which is where we, People-Centered Economic Development began in 1996.

It was there on campus at UNC where founder Terry Hallman distributed his paper on an alternative to traditional capitalism which describes what we are today, in the UK, a ‘social business’.

I can’t disagree with what you say, but we’re not all that way. As you’ll see, we went on to leverage change on an international scale.

Jeff

Al Huntoon
June 25, 2011

Hey Matt – good post. And thanks to you, Nell, for inviting my friend Matt to share his thoughts.

As you know Matt, I agree and would add that a large part of the problem seems to be lack of perspective. In other words, it’s not necessarily social entrepreneurship in and of itself that’s the problem. What is most troubling to me is a widespread absence of critical analysis and sense of context. The mantle of social entrepreneurship has become so desirable, so appealing – even glamorous – it seems like there is a common failure to take a hard look at how it really works.

Another difficulty is that it is so difficult to know precisely what is meant by social entrepreneurship. The concept is applied in so many different ways that I think it limits the rigor with which social entrepreneurship can be studied and that limits what can be learned.

Of course all this doesn’t mean that social entrepreneurship hasn’t had a huge positive impact or continues to have potential – its has and it does. But that means it is critically important to separate the hype from the hard facts.

Al

Prentice Zinn
June 26, 2011

Only six problems with the new religion of the sector?

Granted, you’ve nailed the big hairy ones, but I’ll challenge Nell’s readers to add to your list.

Here is another one to keep us rolling:

#327. The lack of capacity to be self-critical as an emerging field.

I like the posh digs, free drinks, and handsome blazers at the social entrepreneur club as much as anyone, but sometimes the insular love-fest gets to be a bit much.

Would it kill us to brush up on a bit of history of the field, study about the politics of social entrepreneurism, and talk one-on-one with nonprofit organizations about what works and what is particularly troublesome?

Thanks for kicking off a much needed discussion.

Josh Dormont
July 4, 2011

Mat –
I applaud your critical view of social entrepreneurship and the challenges it has for delivering scalable solutions. A few additional thoughts:
1) Social Entrepreneurship (SE) focuses on niche problems – it’s no fault of those involved in SE. In fact, successful SE ventures unleash a great deal of energy, money, and creativity into solving important, but often small problems. Great social entrepreneurs have focused on systemic change, and didn’t start small. Wendy Kopp, Geoffrey Canada were success ‘entrepreneurs’ because they set out a grand vision from the start. These days, the need for immediate deliverables, tight metrics, and shortened purse strings makes these kind of innovations less likely to occur.

2) Some of the best innovation happens from within existing organizations – intrapreneurship is much less sexy than entrepreneurship, but it is needed just as much. I applaud the Investing in Innovation grant competition because it took another path – it created three tiers of winners, broken down by the burden of proof of impact. This was a brilliant approach that tackled all of the issues of SE:
– it enabled proven solutions to scale
– it empowered existing organizations to innovate from within
– it provided seed funding for emergent ideas with deep need

The i3 model wasn’t perfect, but I would welcome other sectors to explore its success.

Tamilla Mirzoyeva
November 27, 2011

I find these points well on point, especially the glamorization and idolization some companies have gained by greening their labels. But in reference to number 2, I would argue that a successful social business has to have economy of scale in order to even be considered a business.

Having scalability allows the agility to fail quickly, bounce back and try new ideas in a shorter span of time. . But to continue, the company has to have the ability to scale up, while retaining its performance in competitive environment. There are plenty of social businesses that have shown this ( i.e Whole Foods). Also by not relying on large subsidies (number 5) to function, programs are more independent and stable. As we have seen post recession, private donations and government driven funding is first to go during market volatility.

Profit creates an incentive to innovate. It forces companies/ organizations to assess, develop and adapt to their target market. Profit also allows organizations to grow by their own financial and social success metrics, rather than perceived benefit and impact.

Applying real competition, scalability and a financial business model towards social causes gives that push towards sustainability the sector direly needs right now.

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