Today, NWBC has released its research report, Social Entrepreneurship Amongst Women and Men in the United States.  This report uses brand new data on social entrepreneurship among men and women in the United States to confirm the message that women are successfully launching, leading, and growing social ventures across the country.  In particular, this project gives an exciting “first look” at data from the 2015 Global Entrepreneurship Monitor, and reveals some pretty interesting trends about social enterprises.  Learn what percentage of U.S. entrepreneurs report leading a social enterprise, how entrepreneurial motivations differ between men and women, and recommendations for why and how policymakers should support social enterprises.

(Okay, fine, I’ll share one stat—but you’ve got to go here for the rest!  While women account for about 4 of 10 traditional entrepreneurs, women make up nearly half of all social entrepreneurs.  This difference is notable, and explored in our paper.)

Social entrepreneurship sounds cool, but…how, exactly, is it different than a normal approach to business?

In an economy where corporate social responsibility is on the rise, and non-profits are on every corner, it can sometimes be difficult to figure out just which ventures are examples of social entrepreneurship, and which are just…good corporate citizens.  Let’s look a little closer.

A decade ago, the Stanford Social Innovation Review published, “Social Entrepreneurship: The Case for Definition.” In it, the authors describe social entrepreneurship as the arc of three actions:

(1) Recognizing a persistent problem that burdens one community or group more than others—they call this problem a “stable but inherently unjust equilibrium;”

(2) Identifying an opportunity to address this problem—to upset this equilibrium—through the creative problem-solving typically associated with an entrepreneurial mindset;

(3) Creating an approach that re-balances the perceived burden, creating “a new, stable equilibrium that releases trapped potential or alleviates the suffering of the targeted group.”

Perhaps surprisingly, these authors do not insist that social enterprises require a profit margin—only an entrepreneurial approach, which they describe as “inspiration, creativity, direct action, courage, and fortitude.”  (Equally as notable is the extent to which this definition mirrors the classical justification for public policy intervention.)

In general, the authors distinguish between classical entrepreneurship and social entrepreneurship as follows:

Unlike the entrepreneurial value proposition that assumes a market that can pay for the innovation, and may even provide substantial upside for investors, the social entrepreneur’s value proposition targets an underserved, neglected, or highly disadvantaged population that lacks the financial means or political clout to achieve the transformative benefit on its own. This does not mean that social entrepreneurs as a hard-and-fast rule shun profitmaking value propositions. Ventures created by social entrepreneurs can certainly generate income, and they can be organized as either not-for- profits or for-profits. 

Okay, fine.  That’s a pretty good definition.  But can you give me an example?

Sure!  Consider ROAR for Good, winner of the 2016 Philadelphia Region InnovateHER competition.  Athena, ROAR for Good’s first product, is a wearable alert system that users can deploy discreetly to let designated contacts know that they’re feeling unsafe.  At the click of a button, pre-programmed contacts receive a text message with the user’s coordinates, and are able to remotely keep an eye out for them.  Users can also use the device in alarm mode for emergency situations.

This product is a physical manifestation of ROAR’s vision: “A world where everyone feels safe and empowered.”  The sale of Athena not only serves to directly empower the consumers who purchase it, but also funds donations into “educational programs that have been shown to increase empathy and reduce violence.”  Further, ROAR indicates that one tenth of the money raised through its crowdfunding campaign benefit is invested “raising awareness about the warning signs of abuse and helping end relationship violence.”

ROAR fits the model of a social enterprise in that founders recognized that an individual in an unsafe social situation often feels powerless, identified a technological solution to the problem, and created a mechanism to both empower consumers in the moment and fund initiatives designed to target the root causes.

You can find some other examples of social entrepreneurs, and descriptions of social entrepreneurship, here and here, too.

How can I tell if the business I’m patronizing is a social enterprise?

Great question (and way to be an educated consumer)!  While social entrepreneurs can pursue their missions however they see fit, some businesses are incorporated as benefit corporations so as to facilitate their socially-conscious missions.  This status explicitly requires members of their governing boards to consider all stakeholders—not just shareholders—as they make business-related decisions.

Remember, social entrepreneurs care about a triple bottom line.  This means that return on investment should come in the form of blended value, or net positive financial, social, and environmental gains.  In order to achieve this kind of return, social entrepreneurs need to always consider all desired outcomes for the business, not just the financial goals.  A benefit corporation writes this value into its legal structure.

Some benefit corporations are additionally credentialed as Certified B Corporations ™, but it’s important to note that these two structures are distinct.  In other words, you can be organized as a benefit corporation without undergoing the credentialing process to become a Certified B Corporation™.  Check out a helpful comparison here.

Okay, I’m getting the hang of this concept. 

Great!  It’s pretty interesting, right?  Now go check out our report, Social Entrepreneurship Amongst Women and Men in the United States!

Join the conversation online using #NWBCSocialEnt.

Author: Annie Rorem, Senior Research Manager at the National Women’s Business Council.