Lesson – What is social entrepreneurship?

INTRODUCTION TO SOCIAL ENTREPRENEURSHIP

What is social entrepreneurship?

Social entrepreneurship is a concept and approach to business that involves using entrepreneurial skills and innovative thinking to address and solve pressing social and environmental issues. For examples, social and environmental issues can include poverty, education inequality, and inadequate waste management. These problems can be solved by a number of different initiatives: creating employment opportunities and offering skills development programmes for marginalised communities; ensuring equal access to quality education by creating community learning centres, providing scholarships and educational resources; setting up effective recycling programmes and reducing the use of single-use plastics.
Unlike traditional entrepreneurship, where the primary focus is on profit generation, social entrepreneurship places a strong emphasis on creating positive and sustainable societal impact as a central part of its mission.

What’s the difference between classic enterprise, association and social enterprise?

Now let’s understand the difference between a classical enterprise, an association and a social enterprise.
First of all, we have the classic company that seeks to strengthen its economic efficiency
The company creates wealth through its activity. Through the actions of its employees, it produces value and earns money from the dividends through the sale of its products and/or services. This money is then reinvested in the company for its development, or paid out to shareholders in the form of . Its goal: to sell more in order to grow.
For its part, the association works in the general interest.
The association receives private donations (individuals or companies), and public grants to serve the general interest. Its members are generally volunteers who give their time to address social and/or environmental issues. It therefore does not generate money (not-for-profit). Its aim: to serve the general interest
In this system, which could be described as a classical economy, the social enterprise has emerged which uses the best of the two models explained above.
The social enterprise seeks to put its economic efficiency at the service of the general interest.
Social entrepreneurs use profit as a means, not an end in itself, to effectively address social and environmental problems that neither the state nor the market can address alone.
The line between these 3 entities can be unclear.
For example, Many companies are claiming to take into account the social and environmental issues inherent in their activity and associations with commercial activities. While they are taking into account a number of societal issues through its Corporate Social Responsibility policy, a set of guidelines and actions that a company adopts to ensure that its operations practices have a positive impact on society and the environment, their main objective still remains to maximise its profit in order to remunerate its shareholders and increase the value of the assets owned by the shareholders.
There are also associations with a commercial activity, for example: An alumni association that sells branded merchandise like t-shirts or mugs.
The primary purpose of alumni associations is to foster a sense of community among former students and support the University. While they engage in commercial activities, such as merchandise sales, the revenue generated is typically used to fund alumni-related events, scholarships, or other programs. The primary focus is on alumni engagement rather than social impact.
Social enterprises differ from them in their business model, governance and impact. And this is what I will explain to you with the 4 pillars of social enterprise.

The 4 principles of a social enterprise

In this section, we’ll look at the 4 fundamental pillars that define a social enterprise.
An economically viable project
A social enterprise must produce social value and find its economic model to ensure its sustainability. On the other hand, the economic model is only a means to achieve a social objective and not an ultimate goal in itself.

A social and/or environmental purpose
Enterprises considered to be socially useful are those that contribute to at least one of the following objectives
– to support people in vulnerable situations ;
– to contribute to the fight against exclusion and health, social, economic and cultural inequalities, to education, etc.
– contribute to sustainable development in its economic, social, environmental and participatory dimensions, to the energy transition or to international solidarity
Limited profitability
In social enterprises, most of the money earned should be used to keep the business running or make it better. Making a profit is a way to support the enterprise’s social goals. However, even though this rule stops people from making unfair profits from investments and shares, it doesn’t mean that the business doesn’t need to make enough money to be sustainable. So, the business has to balance its budget to pay its employees and suppliers fairly, as well as to invest in necessary improvements.
Participatory governance
Governance means how a group or organization makes rules and choices and makes sure these rules are followed. In a social enterprise, it’s important to include employees and some other important people like the people who benefit from the project, volunteers, and local community members. Each of these people has an equal say, like a vote, in making decisions. Thus, the decision-making process is not based on the ownership of capital.

Conclusion

To conclude this episode, you will have understood that a social enterprise is not:
A project that prioritises economic impact over social impact.
A project whose priority is profit sharing among shareholders
A project without shared power
A project without an economic model
A project whose sole purpose is to create jobs
A project with an individual vocation and no collective dimension
A project disconnected from its territory
A project that is necessarily innovative

We hope this episode has helped you learn more about social entrepreneurship. See you in episode 2 – Being an Entrepreneur, What does it mean?