Today there is a growing expectation and need for businesses of all shapes and sizes to step up to a bigger role in society. An increasing number of businesses are embracing challenge, strengthening their businesses by creatively addressing the world’s pressing issues. It’s not always easy, but it does make sense in a world that is becoming more complex and interdependent: Large corporations, in particular, are at risk of losing their legitimacy if they choose not to take a more active role in addressing their responsibilities and role in society. It’s not about purpose versus profit, because they are not mutually exclusive but about recognizing that business is an integral part of society and therefore has both the need and the responsibility to build strong, sustainable relationships with societies based on mutual benefit. Fortunately many companies such as Unilever, Tata, Royal DSM, Marks & Spencer and Toronto-Dominion Bank are leading the way demonstrating that these approaches make good business sense as well as societal sense.
However, responsible conduct in the business world is not only for the large, well-established corporations. Global connectedness through technology, a lack of job opportunities and an urge to make a difference in the world has produced a whole new generation of young social entrepreneurs. It is not that the idea of social entrepreneurship is particularly new. The term was developed as early as the 1960s but it is only recently that the concept has really taken off. Why now? Many young people today are drawn towards the idea of seeking meaning in what they do while also looking for a way to make a living.
Traditionally social entrepreneurship has been viewed as being only about altruism while in reality it is also about capitalism. For the new generation of social entrepreneurs the traditional distinctions between non-profit and for-profit is breaking down. Many have realized that you don’t need the separation between a non-profit and for-profit business model to catalyze positive change in society. In fact, they have realized the two sectors can learn and benefit from each other through partnerships as well as investor relationships. And the idea of being both able to do social good and run a profitable business is increasingly socially acceptable.
Take for instance ThinkImpact founded by Saul Garlick. At the age of 18 years he was inspired to do social good after travelling in South Africa. He was shocked by the poverty of small rural villages and when back in America he raised US$ 10,000 to build a school in the village of Mpumalanga, South Africa. A few years later he returned and saw the school in a devastating condition and suddenly he realized that just funding a cause was not enough – something more sustainable was needed. He realized that social change comes from relationships and ideas not only bricks and mortar and that’s how ThinkImpact was born. Today ThinkImpact is an educational travel company. The company doesn’t have volunteer, intern or study abroad programs and they don’t perform traditional international development work. Instead, it seeks to bring together students and local community members to spark ideas and create businesses in rural Africa and Latin America by sending students around the world to explore different cultures, tackle tough challenges, and form relationships with people they wouldn’t otherwise meet. ThinkImpact started as a non-profit but by mid-2013 Saul Garlick decided to reincarnate the company as a for-profit entity. The reason: Dependence on donations and grants restrained the company’s operation and made it unsustainable. Today the company is B-corp certified and works with impact investors. (Sources: New York Times and ThinkImpact)
Another great example of this new breed of social entrepreneurs is Adam Braun, founder of Pencil of Promise. Adam Braun believes that the non-profit sector can learn and get help from the for-profit sector. The organization partners with for-profit businesses to run social campaigns; in an article from Forbes Adam Braun states: ”We don’t just ask for money, we earn it. We are able to bring real value to companies through marketing efforts and expanded social media following.” Since Pencil of Promise was founded in 2008, it has helped break ground on 180 schools. But it doesn’t just build schools; it also involves local communities. Local communities have to put around 10-20% of funding into the various projects. In many cases the community provides labor and materials, which Adam Braun says, holds the community accountable for the project as it is a value exchange between two parties in a business transaction. Instead of referring to the organization as a non-profit organization Adam Braun likes to say Pencil of Promise is a for-purpose organization. Why? Because it focuses on the bottom line. However instead of gross profit, it focus on gross efficacy. (Sources: Forbes and Pencil of Promise)
Social entrepreneurship is not only a product of the Western world.In the slums of Bangladesh, most garbage is left to rot on the streets and to tackle the problem, two enterprising local engineers launched the company Waste Concern – one part non-profit and one part for-profit. Lions Clubs International and the United Nations Development Programme made small initial contributions to cover the cost of buying some land and equipment, and the engineers set about hiring some of the unskilled and unemployed women who lived in the slums to collect garbage and bring it to the Waste Concern facility. In partnership with a major Dutch corporation, Waste Concern now has the capacity to serve 3.6 million people and to handle 700 tons of garbage per day. The company employs more than a thousand women, reduces health risks from festering garbage, recycles countless tons of rubbish, reduces greenhouse gases by 90,000 tons per year, and increases crop yields for small farmers through the sale of its fertilizer. (Source: Fast Company)
These three examples highlight just a few of the many new social entrepreneurs that have dared to break down the traditional boundaries between the non-profit and for-profit world, proving that it is possible to combine a profitable business and at the same catalyze positive changes for a world that suffers from an increasing number of challenges. Let’s hope to see more socially engaged entrepreneurs in the future.