Social Entrepreneurship – Doing Well AND Doing Good

The term social entrepreneurship can seem somewhat oxymoronic. Many people don’t think you can actually make money while doing good.

Is it really possible to do both? We believe so.

As a matter of fact, there are several companies that are extremely successful at being profitable while creating positive change in the world. And they prove that social entrepreneurship isn’t just for nonprofits.

In the world of business, it is becoming an increasingly popular notion. The tribes of socialpreneurs — individuals who use their business skills to tackle social issues like poverty, health care, environment preservation, and education — are no longer a rarity.

If you’re entertaining the idea of becoming a socialpreneur, that social enterprise idea brewing in your mind can, and will, achieve its own level of greatness.

The Origin Of Social Entrepreneurship

“Social Entrepreneurship” was first coined in the 1980s by Bill Drayton, Founder, and CEO of Ashoka, an organization that supports changemakers worldwide. However, the concept of using business principles to solve social problems is much older.

In the early 1800s, Englishman Robert Owen used profit-sharing and cooperative ownership to improve working conditions in his factories.

Later, in 1951, Vinoba Bhave founded the Bhoodan (Land Gift) Movement in India. Its basic principle was equitable land distribution among the landless, the idea that inspired Drayton 30 years after its inception.

And then, in 1996, Dr. Paul Polak came up with another definition for a new type of entrepreneur: a person who organizes and operates a for-profit venture aimed primarily at serving society.

Walking his talk, Dr. Polak founded and became CEO of Windhorse International, which was more of a movement than an enterprise. He redefined business design from production to distribution through products that even the very poor could afford.

Polak saw two kinds of entrepreneurs applying his business model, whom he called social inventors:

1. Those who create new products or services which meet urgent needs not met by existing suppliers.
2. Those who make existing goods or services available on more favorable terms so they can better meet urgent needs.

Types Of Social Enterprises

Social entrepreneurship comes in many forms. If you’re planning on transforming your existing business from profit-focused to social-centered, there are a few ways you can go.

Non-Profit Social Enterprise

For a non-profit to be considered an enterprise, it must be operated like a regular business, with profit being a major objective. But what differentiates it from other money-making ventures is that all earnings go back to the organization for maintenance and expansion.

In the US, nonprofits can be incorporated as either 501(c)(3) organizations (charitable) or 501(c)(4) organizations (social welfare).

Charitable organizations follow stricter rules about the percentage of their revenues that can come from sources other than donations. On the other hand, 501(c)(4) organizations are permitted to receive more funds from other sources, such as investments.

Sometimes, these types of nonprofits operate on larger budgets and don’t provide direct services to individuals. Rather, they focus on legislative change. One famous example is the American Civil Liberties Union (ACLU), founded in 1920 with an overarching goal to defend and preserve individual rights and liberties guaranteed by the Constitution.

For-Profit Social Enterprise

For-profit social enterprise businesses aim to make a profit while also solving social or environmental problems. While they exist in different industries, they operate on the same principle.

Some donate their own products to the impoverished, often matching every sale. A great example is the footwear company TOMS, which donates a pair of shoes to a child in need for every purchase made. In just 10 years, TOMS has given 95 million pairs of shoes to children worldwide.

Other for-profit socialpreneurs provide cheaper, healthier, or better alternatives. Justea is one of them. Founded in Vancouver, Canada, by Paul Bain, the company sources its tea directly from farmers in Kenya. Their overarching goal is to provide the refreshing antioxidant powerhouse beverage through ethical and fair trade means.

And there are those, like Modo Yoga, which channel a part of their profits to support other organizations engaged in noble endeavors.

Community Social Enterprise

Community social enterprises work towards achieving economic empowerment by addressing social issues within a specific community. Issues could range from poverty and food insecurity to education access or sustainable development.

The most popular community socialpreneurships are microfinance institutions. These neighborhood “banks” offer capital to locals interested in setting up a business but are unable to secure a loan from a regular bank.

Other businesses that fall under this category are those providing employment to people living nearby. Often, they choose to build their factories or production plants in certain places for that purpose.

Alternatively, some creative entrepreneurs find innovative ways to help their communities.

Madeleine Shaw and Suzanne Siemens are two such examples. They formed Nestworks to provide working spaces for parents who didn’t want to leave their kids at home.

This co-working space in Vancouver integrates office setups, meeting rooms, and media and event venues with lunchrooms, play places, and sleeping quarters for children in one facility. It supports the community’s economic and social growth by allowing consultants, entrepreneurs, and professionals to pursue their respective careers while spending quality time with their little ones.

Transformational And Incremental Social Enterprises

Transformational and incremental social enterprises are for dreamers bent on changing current systems of society through business.

Transformational social entrepreneurs focus on creating structural changes using innovative strategies to disrupt old ways of doing things, challenging traditional thinking in the process.

Incremental ones will identify gaps within systems where they can implement simple yet powerful solutions that incrementally improve the quality of life.

Alex Husted is one such example. His company, Helpsy, focuses on reducing the massive amounts of clothing that end up in landfills and oceans. They collect used clothes, shoes, and textiles, breathe new life into them through upcycling, and resell them.

To create lasting change, both styles of socialpreneurship require courage, tenacity, patience, leadership skills, and creativity, in addition to selflessness, respect for others, and a genuine desire to help. 

Can You Make Money While Doing Good?

Just ask Elon Musk, founder of Tesla, about his line of electric cars that seek to curb global warming through vehicles powered by renewable energy. The ambitious socialpreneur even acquired SolarCity, the largest solar panel producer in the US. SpaceX, his other multibillion-dollar company, also runs on solar power and other renewable energy resources.

On July 18, 2022, Musk became the richest man in America, with a net worth of $230.4 billion.

There may be many different types of social entrepreneurs, but they all have one thing in common: the mission to be part of the solution rather than of the problem. And yes, you can absolutely become rich, even wealthy, while doing good as a socialpreneur.

So, who are some Social Entrepreneurship Heroes?

Blake Mycoskie – TOMS Inc.

Net Worth: $625 million in August 2022

TOMS operates on a one-for-one buy and give business model. But CEO Mycoskie doesn’t stop there.

His team provides sustainable employment and assists in developing local communities. In addition, TOMS also trains artisans in countries like Ethiopia so they can sell products such as scarves, gloves, and hats made out of recycled materials. 

Neil Blumenthal and David Gilboa – Warby Parker

Net Worth: $1.88 billion in August 2022

Since its inception, Warby Parker has helped millions of people afford glasses. The company employs an innovative buy-one-give-one model that allows customers to purchase a pair of glasses and donate another pair to someone in need.

This business practice not only provides access to eyewear for those who can’t otherwise afford it but also creates jobs. Through their Impact Foundation, Co-Founders and Co-CEOs Blumenthal and Gilboa give significant charitable donations to nonprofits worldwide.

Ethan Brown – Beyond Meat

Net Worth: $2 billion as of August 2022

Beyond Meat sells vegan meat substitutes to satisfy consumers’ tastes and protein needs without risking their health while promoting a plant-based diet kinder to the planet.

The company’s principle: “We believe there’s a better way to feed our future. By shifting from animal to plant-based meat, we can positively affect the planet, the environment, the climate, and even ourselves.”

With our world changing so quickly and new challenges coming up daily, it’s taking entrepreneurs longer periods – and sometimes business upheavals – to achieve success. We may never find out what success means for long periods. The good news is, even if you can’t pinpoint it now, there’s always room for positive change tomorrow!

Do Your Part And Do Well

Social entrepreneurship – turning social issues into economic opportunities – is for those who want to use their skills to do good while simultaneously making money.

While social entrepreneurs often seek to create business-based solutions to social problems, they are also willing to create profitable businesses that benefit society and their bottom line.

Whether you want to pursue a non-profit, for-profit, community, or transformational social entrepreneurship is up to you. However, you must have the right skills and mindset to ensure your venture succeeds and becomes impactful.

Looking to learn more about Social Entrepreneurship?

Recommended reading includes Super Corp: How Vanguard Companies Create Innovation, Profits, Growth, and Social Good by Rosabeth Moss Kanter, The B Corp Handbook: How to Use Business as a Force For Good by Ryan Honeyman, Evolved Enterprise by Yanik Silver, and Doing Good Better by William MacAskill. Be inspired and become a changemaker!