The Future of Social Entrepreneurship?
22 November 2012 at 10:22 am
What’s the future of social entrepreneurship? Eli Malinsky, Executive Director of the new Centre for Social Innovation in New York City shares his five predictions including the rise of impact investing.
1.) Social entrepreneurship will dissolve as a distinct discipline
Don’t be alarmed – this is a good thing. Right now, social entrepreneurship is treated as a discipline in its own right. For the moment, this is a welcome situation, drawing attention and resources to the social sector while stimulating new frameworks and new enterprises. But through the coming years we’ll see social entrepreneurship woven into the very fabric of existing disciplines, becoming an integral lens through which we understand all sectors and fields of study. The mainstreaming of social enterprise means its disappearance as a distinct activity and will, ultimately, lead to the systemic shifts necessary for broad-scale social change.
2.) Assumptions of high profit margins will be recalibrated to the realities of mission-based enterprise
Enthusiasm around impact investing continues to grow. And an increasing number of social entrepreneurs are convinced that they can make money and find meaning in their work. The good news is that the social sector will prove that enterprises can be financially sustainable, even profitable. The bad news is that optimistic assumptions around profit margins will encounter a hard reality check. Succeeding in business is very difficult. Succeeding in a business with an integrated social mission is doubly so. Despite the occasional success story, social entrepreneurs and impact investors will have to get used to thinner profit margins that will, generally speaking, have an inverse relationship to social impact.
3.) The greatest social change will be unleashed by moving the corporate needle
The surge of enthusiasm for new social ventures is astonishing. All around us, social entrepreneurs are creating new projects poised for growth and impact. These initiatives are laudatory and necessary – and definitely part of the picture. But the substantive impact we need to avoid catastrophe and reconfigure existing systems will be achieved far more through incremental shifts in corporate behavior than through revolutionary ones in the nonprofit or entrepreneurial sectors.
4.) Social impact assessment will become more sophisticated and fully integrated into organizational analysis
Social impact assessment continues to make strides in measuring and articulating the results of social change projects. As donors and investors demand clarity of impacts in an increasingly crowded market, new models and tools for social impact measurement will continue to be developed. As with the dissolution of social entrepreneurship as a distinct discipline, social impact assessment will no longer be a supplement or alternative to existing tools for organizational assessment, but an integrated and essential feature of any robust product or service analysis.
5.) Impermanence and constant reconfiguration define the career arc of aspiring social entrepreneurs
This should come as no surprise to those who have been observing broader trends in employment and independence. MBO Partners reports that there are nearly 17 million members of America’s ‘independent workforce’, a number predicted to rise to 23 million in the next five years. Social entrepreneurs are not immune to this change in workplace patterns and may be even more susceptible given the emerging and evolving nature of the sector. Individuals planning to make a living through social entrepreneurship should brace themselves for a career marked by frequent changes in employment and a constant reconfiguration of skills and teams, each assembled for different tasks at given times.
You can follow this topic on Twitter using the Hashtag #FutureSocEnt
Eli Malinsky is executive director of the new Centre for Social Innovation in New York City. The Centre for Social Innovation is part co-working space, part community centre and part incubator for entrepreneurial people and projects.
This article was first published by Forbes.com and is republished here with permission.
As a graduate of an intensive course for social entrepreneurs and director of a charity, I found it sobering that of the twenty students, all of whom had great skills and wonderful ideas, that twelve months later none have been able to create a sustainable organisation or even a full paid job. Everyone is still looking for government seed funding, on-going government funding or the golden fleece of a large corporation. They have sacrificed careers, mortgages and even put their relationships under considerable stress to fuel their dream. They are heroic human beings on any reckoning.
The need for concerned citizens and communities to find fresh ways of engagement to fund un-met needs in communities remains unabated. For all the multitude of charities (700,000 in Australia alone, including more than 70 responding to the needs of people with breast cancer in New South Wales alone) the social needs of the marginalised and disenfranchised have been largely unaltered in my lifetime. So much effort and to what end, some ask.
People outside government have invariably been best placed to identify cracks in the social fabric that need attention. They are often the most creative in the way they construct projects and programs to address social disadvantage at a personal and policy level. There is more innovation outside the machinery of government. But in the end social entrepreneurs mostly look to attracting either government funding or unleashing the intensely sought after corporate social responsibility dollar. Without these traditional props that major and minor charities have relied on since the dawn of time very few social enterprises could exist.
Sustainability, an income stream, is at the heart of things. A new approach to generating an income stream is said to be combining social programs with business skills. An example might be a church group who set up a coffee shop to train disengaged young people in hospitality skills. Very laudable. But if they set up next to a coffee shop established purely as a business then they have the capacity to drive that business to the wall. If the social enterprise, usually by way of a charismatic leader, has attracted financial backing in the form of donations and gifts, if they secure their premises by finding someone who considers them a good cause, or if they underwrite their business model by bringing in volunteers from the corporate sector to teach skills, manage the books or construct web sites, then they have effectively cut the ground under the next door business.
I hope that the powerful dreams of people, not least Gen Y, are given a reality check at the very beginning so that when things get tough, and they will, that they do not lose hope. But I still can’t see how the new model of social change agents is significantly different from the old fashioned charity model. I would love to be convinced otherwise.