Introduction
Social entrepreneurship is
an approach by start-up companies and entrepreneurs, in which
they develop, fund and implement solutions to social, cultural, or
environmental issues. This concept may be applied to a wide range of
organizations, which vary in size, aims, and beliefs. For-profit
entrepreneurs typically measure performance using business metrics like profit, revenues and
increases in stock prices. Social entrepreneurs, however, are either non-profits,
or they blend for-profit goals with generating a positive "return to
society". Therefore, they must use different metrics. Social
entrepreneurship typically attempts to further broad social, cultural, and
environmental goals often associated with the voluntary sector in
areas such as poverty alleviation, health care and community
development.
At times, profit-making social
enterprises may be established to support the social or cultural goals of
the organization but not as an end in itself. For example, an organization that
aims to provide housing and employment to the homeless may operate
a restaurant, both to raise money and to provide employment for the
homeless.
In the 2010, social entrepreneurship is
facilitated by the use of the Internet, particularly social
networking and social media websites. These websites enable
social entrepreneurs to reach a large number of people who are not
geographically close yet who share the same goals and encourage them to collaborate online,
learn about the issues, disseminate information about the group's events and
activities, and raise funds through crowd funding.
Social enterprise is
an organization that applies commercial strategies to maximize
improvements in financial, social and environmental well-being—this may include
maximizing social impact alongside profits for external shareholders.
Social enterprises can be structured as
a for-profit or non-profit, and may take the form (depending on
in which country the entity exists and the legal forms available) of a co-operative, mutual
organization, a disregarded entity, a social business, a benefit
corporation, a community interest company, a company limited by guarantee
or a charity organization. They can also take more conventional
structures. Social enterprises have both business goals and social goals. As a
result, their social goals are embedded in their objective, which
differentiates them from other organizations and corporations. A social
enterprise's main purpose is to promote, encourage, and make social change. Social
enterprises are businesses created to further a social purpose in a financially
sustainable way. Social enterprises can provide income generation opportunities
that meet the basic needs of people who live in poverty. They are sustainable
and earn income from sales is reinvested in their mission. They do not depend
on philanthropy and can sustain themselves over the long term. Their models can
be expanded or replicated to other communities to generate more impact. A
social enterprise can be more sustainable than a nonprofit organization that
may solely rely on grant money, donations or federal programs alone. As a
for-profit model, you control the curriculum and funding of the program. The
incentives of the company are designed such that greater impact directly
correlates to a great profit. Investors and business partners today want to
know that the companies they choose are doing more than just providing a
product or service. They look for companies that are doing good. They will feel
a special connection to companies whose values align with their own.
Crowd funding is
the practice of funding a project or venture by raising small amounts of money
from a large number of people, typically via the Internet. Crowd funding
is a form of crowd sourcing and alternative finance. In 2015,
over US$34 billion was raised worldwide by crowd funding.
Although similar concepts can also be
executed through mail-order subscriptions, benefit events, and other methods,
the term crowd funding refers to Internet-mediated registries. This
modern crowd funding model is generally based on three types of actors: the
project initiator who proposes the idea or project to be funded, individuals or
groups who support the idea, and a moderating organization (the
"platform") that brings the parties together to launch the idea.
Crowd funding has been used to fund a
wide range of for-profit, entrepreneurial ventures such as artistic
and creative projects, medical expenses, travel, and community-oriented social
entrepreneurship projects. Its use has also been criticized for
funding quackery, especially costly and fraudulent cancer treatments.
Types of Crowd funding
Reward-based
Reward-based crowd funding has been used
for a wide range of purposes, including motion picture promotion, free software development,
inventions development, scientific research, and civic projects.
Equity
Equity crowd funding is the
collective effort of individuals to support efforts initiated by other people
or organizations through the provision of finance in the form of equity.
Software value token
Another kind of crowd funding is to
raise funds for a project where a digital or software-based value token is
offered as a reward to funders which is known as Initial coin offering (abbreviated
to ICO).
Debt-based
Debt-based crowd funding (also known as
"peer to peer", "P2P", "marketplace lending", or
"crowd lending") arose with the founding of Zopa in the UK in
2005 and in the US in 2006, with the launches of Lending
Club and Prosper.com. Borrowers apply online, generally for free,
and their application is reviewed and verified by an automated system, which
also determines the borrower's credit risk and interest rate. Investors buy
securities in a fund which makes the loans to individual borrowers or bundles
of borrowers. Investors make money from interest on the unsecured loans; the
system operators make money by taking a percentage of the loan and a loan
servicing fee. In 2009, institutional investors entered the P2P lending
arena; for example in 2013, Google invested $125 million in Lending Club. In
2014 in the US, P2P lending totaled about $5 billion. In 2014 in the UK,
P2P platforms lent businesses £749 million, a growth of 250% from 2012 to 2014,
and lent retail customers £547 million, a growth of 108% from 2012 to 2014. In
both countries in 2014, about 75% of all the money transferred through crowd
funding went through P2P platforms. Lending Club went public in December 2014
at a valuation around $9 billion.
Litigation
Litigation crowd funding allows
plaintiffs or defendants to reach out to hundreds of their peers simultaneously
in a semiprivate and confidential manner to obtain funding, either seeking
donations or providing a reward in return for funding. It also allows investors
to purchase a stake in a claim they have funded, which may allow them to get
back more than their investment if the case succeeds.
Donation-based
Running alongside reward-based crowd
funding, donation-based is second as the most commonly used form of crowd
funding. Donation-based crowd funding is the collective effort of individuals
to help charitable causes. In donation-based crowd funding, funds are raised
for pro-social or pro-environmental purposes. Donors come together to create an
online community around a common cause to help fund services and programs to
combat a variety of issues including healthcare and community development. The
major aspect of donor-based crowd funding is that there is no reward for
donating; rather, it is based on the donor's altruistic reasoning. Ethical
concerns have been raised to the increasing popularity of donation-based crowd
funding, which can be affected by fraudulent campaigns and privacy issues. In
the context of Maldives,
Donation-based crowd funding is most commonly used form of crowd funding which
is being called Donation mainly for seeking medical assistance for not affordable
patients.
Elements of Social Entrepreneurship
Social Impact
Social impact is a key element of a
social venture. A social venture can make impact at different levels (for
example: community, local, regional, national) or with varying degrees of
depth. How a social venture makes the impact and where it wants to
make the impacts are important strategic decisions.
Social Innovation
Social ventures break new ground,
pioneer new approaches, or develop new models. These ventures need to
creatively navigate the economic, social, and institutional barriers to
addressing the social need. Social entrepreneurs develop new approaches
to addressing social problems or utilize technology to facilitate problem
solving.
Sustainability
A sustainable social venture is
financially viable and positioned to fulfill its mission over the
long-term. Many social ventures are not sustainable because they rely
upon unstable grant-making or government institutions for their funding.
Alternatively, earned-income or fee-for-service business model are generally
more effective strategies for social ventures. Some social ventures are
not sustainable because they have not organized their internal resources
effectively to fulfill their mission.
Measurement
Measurement and evaluation are essential
to social entrepreneurship. In addition to the financial metrics used by
traditional ventures, social ventures must measure their impact and evaluate
its effectiveness. There are many ways to gather and evaluate the social
impact of a venture. The key is that the social venture is using an
appropriate type of measurement tool that is in line with their theory of
change.
Elements of a successful Social Enterprise
1. Sustainable
The goal of every enterprise is to
become self-sustaining. Relying on donor aid and funding isn’t practical any
more as policies from around the world are limiting the amount of aid and
funding countries and organizations receive. As a result, it is important that
any enterprise adopts strategy which ensures that the business becomes an
ongoing concern.
2. Socially Inclusive
Social enterprises are attractive in
modern society because they strive for inclusion in the workplace. Brownies and Downies in South
Africa employs staff who suffer from downs-syndrome. The BEEHIVE in Malawi
(Blantyre) employs as many women as they do men for their construction
projects. This has enabled families from within the area to essentially become
dual-income earning households, thereby improving the family`s disposable
income, savings and investments.
3. Diversifiable
The BEEHIVE provides staff with
virtually free day care for toddlers and a primary school for children. At
present they offer these services at a fee to the general public but still free
for their staff. This strategy also ensures sustainability. What began as a
solution for parents who couldn’t afford babysitters became a school within the
community.
4. Professional
Social enterprises also demand a high
level of professionalism, as you would find in the private or public sector.
Kwithu Kitchen in Malawi is made up of women from within the rural community
and apart from providing them with an income, they also take time to train them
in basic business management and accounting.
5. Easily Replicated
During the program, learners were shown
videos of other social enterprises from across the world such as Iyeza Health
in South Africa, Social Bite in Scotland and WeCyclers in Nigeria. Interaction
after the videos was centered on being able to start similar businesses in
Malawi using similar models.
6. Value Addition
Kwithu Kitchen in Malawi (Mzuzu) takes
tomatoes from the fields and turns them into pastes, purees and sauces. After
being packaged they are sold in supermarkets across Malawi. This limits waste
as processed goods are made to last, and they can be easily exported thus
bringing in forex into the country.
7. Reactive
Social enterprises respond actively to
social needs and provide answers to problems within the community.
Perhaps the biggest problem is having to
distinguish a social enterprise from a for-profit enterprise and a non-profit
organization (like NGOs).
Non-profit`s are usually donor funded
and don’t trade but if they do, profits are not primary to the organizations
survival; for-profits are interested in trading and paying out
dividends to shareholders or investors; whilst social enterprises are
concerned with the triple bottom line and profits are often seen as a way to
build up the local economy.
Advantages of Social Entrepreneurship
If you are seeking ways to build a
business and leave your mark on society, social entrepreneurship can help you
do both. Social entrepreneurs use their business and creative skills to help
identify and solve social problems on a large scale. According to the Schwab
Foundation for Social Entrepreneurship, a social entrepreneur is a passionate
risk taker who applies innovative and practical solutions to benefit society
through their business practice. There are several benefits to being a social
entrepreneur from both a business and societal standpoint.
1. Implementing Societal Change
Perhaps the most rewarding advantage of
being a social entrepreneur is the impact you can have on society. Social
entrepreneurs create businesses in a variety of industries that can have a
positive impact on society, including alternative energy, health awareness and
education. According to David Bornstein, the author of "How to Change the
World: Social Entrepreneurs and the Power of New Ideas," social
entrepreneurs view communities as the solution and not as the beneficiaries of
products and services. Social entrepreneurs provide the resources and expertise
that help communities improve their qualities of life.
2. Creating Inspiring Solutions
Another benefit of becoming a social
entrepreneur is the freedom to explore and create innovative solutions that can
inspire change. Social entrepreneurs are constantly on the lookout for new and
inventive solutions to problems and often enlist leaders within their field to
assist in project development. Social entrepreneurs are rewarded by taking
risks, thinking outside the box and looking for create ways to address
problems.
3. Working as Your Own Boss
Entrepreneurs do not work under a boss,
so they have the freedom to trust their own intuitions and make their own
decisions. According to the PBS website, there has been a surge of both
entrepreneurship and social sector competition since the last decade of the
20th Century. Social entrepreneurs are zealous problem solvers whose leadership
skills and passionate nature might cause them to feel unsatisfied in a
traditional employer-employee relationship.
4. Creating Jobs and Income Streams
As business owners, social entrepreneurs
benefit the economy by generating jobs and income. In addition to providing
jobs, social entrepreneurs also use part of their profits to fund projects that
can benefit the community as a whole. This combination of business acumen and social
awareness is a big lure to many people interested in becoming social
entrepreneurs.
Disadvantages Social Entrepreneurship
1. It Can Be Difficult to Make Money
Although some social enterprises receive
grants and donations from outside donors, many businesses just break even
when bringing money into the business. For your social enterprise to succeed
and have the impact you are looking to achieve, you also need to make money.
2. You Need to Constantly Monitor Changes in the Market
Social enterprises offer unique ideas
and products that target specific communities. Since communities and audiences
are always changing, you must constantly monitor your market. Falling
behind can result in your business missing the chance to make sales or update
your strategy to maintain interest.
Conclusion
In conclusion, whilst social enterprise
is not entirely new in the Maldives but it is still a relatively unfamiliar
concept which has great potential to develop society.
The key points that are
taking in to consideration about Social entrepreneurship and Enterprise are as follows:
- To be successful in sustainable business practices often requires entrepreneurship and innovation.
- Entrepreneurship and innovation are relevant in for-profit and nonprofit ventures.
- Entrepreneurship can be viewed as recognizing change, pursuing opportunity, taking on risk and responsibility, innovating, making better use of resources, creating new value that is meaningful to customers, and doing it all over again and again.
- Being an entrepreneur requires taking on significant responsibility and comes with significant challenges and potential rewards.
- Entrepreneurship is a mind-set, an attitude; it is taking a particular approach to doing things.
- The motivations for becoming an entrepreneur are diverse and can include the potential for financial reward, the pursuit of personal values and interests, and the interest in social change.
- For innovation to be relevant for sustainable businesses, it has to be meaningful and affect a large number of stakeholders.
- Successful entrepreneurship often requires creativity and innovation in addressing a new opportunity or concern in a new way.
