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Tuesday, February 15, 2011

Social Entrepreneur vs. Social Enterprise

A Noteworthy Distinction 

As the field of social innovation grows, we are all still attempting to discern the jargon. What is the difference between the terms ‘CSR’ and ‘sustainability’? What about ‘social finance’ and ‘impact investing’? What does a ‘social business’ mean and how is that different from a ‘social enterprise’? What on earth does social innovation even mean?

Well, the answer is: No one really knows. 
(Sidenote: For the rest of this post I will use ‘social innovation’ as the big umbrella term for the others.) 

Sure, there are some well-articulated definitions out there, but these are merely opinions. From the research I’ve done and the network of social innovation professionals I have spoken with about this question, I have concluded that this sector is still very much in its infancy. And as any sector or industry develops, the structure behind its communication, efficiency, and norms develops with it. As such, the terms that describe the different pieces of this field are still building consensus. 

While I have my own way of defining each of the terms mentioned above, I would like to highlight my interpretation of the distinction between ‘social entrepreneur’ and ‘social enterprise’. In my mind, these are vastly different pieces of the social innovation puzzle and I feel compelled to explain why. 

Here it goes: 

Many people understand a social enterprise to mean a for-profit business model motivated by the shared value it procures. The idea is for the business operations to achieve a social mission while churning a profit (often a smaller margin than the traditional for-profit firms). The profit is the unique piece of the social enterprise that keeps it sustainable, as opposed to a traditional non-profit that depends on grants and fundraising. The profit is either reinvested back into the social enterprise to scale its impact, used to pay shareholders to pool capital, or invested in its affiliated non-profit  as unrestricted funding. 

A good example of a social enterprise is Potluck Catering, whose wonderful service I experienced in Vancouver for the Social Innovation and Social Finance Tour. Potluck’s revenue from its cafe and catering services is invested back into its 5 community social programs that are integrated into its daily operations. For example, Potluck provides a Life Skills Training and Employment Program that has trained and employed dozens of Vancouver’s downtown east-side residents with barriers to employment. Click here to learn about the other amazing ways they are giving back. 

I completely agree with this explanation of a social enterprise. Where I disagree is how people use the term social entrepreneur to describe the individuals who start-up these social enterprises.

Since the term ‘social entrepreneur’ was coined by Ashoka founder, Bill Drayton over thirty years ago, let’s take a look at how Ashoka explains this increasingly popular concept:

"Social entrepreneurs are individuals with innovative solutions to society’s most pressing social problems. They are ambitious and persistent, tackling major social issues and offering new ideas for wide-scale change.

Rather than leaving societal needs to the government or business sectors, social entrepreneurs find what is not working and solve the problem by changing the system, spreading the solution, and persuading entire societies to take new leaps.

Social entrepreneurs often seem to be possessed by their ideas, committing their lives to changing the direction of their field. They are both visionaries and ultimate realists, concerned with the practical implementation of their vision above all else."
So to me, the social enterprise is about the business model, and the social entrepreneur is about the person.  And this person has a system-changing idea.  

The concept of system-change was quite fuzzy to me at the start.  I didn't see the full picture until I engaged with some of Ashoka's social entrepreneurs and understood the level of impact they are having on our society. Take Al Etmanski, for example:

Al is an author, advocate and social entrepreneur specializing in innovative, multi-sectoral  solutions to social challenges. He is President and co-founder of Planned Lifetime Advocacy Network (PLAN), which assists families across Canada and globally address the financial and social well-being of their relative with a disability, particularly after their parents die.  He proposed and led the successful campaign to establish the world’s first Registered Disability Savings Plan for people with disabilities.

Al identified a social gap, created a new idea to solve it, and changed the way individuals with disability can live as citizens.  I am completely inspired not only by his work, but also by his personal drive, perseverance, and entrepreneurial quality.  While I can throw out a ton more examples, I recommend you take a look at the Ashoka Global  website, where there are almost 3000 social entrepreneurs being show-cased. Now if you're looking for some inspiration, you know where to go!

So can social entrepreneurs start up social enterprises? Absolutely.  But not all social enterprises are started by social entrepreneurs.  It is this systems-change piece as well as the new idea that makes this distinction so clear in my mind.

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