SOCIAL ENTREPRENEURSHIP: The only big difference between commercial and social entrepreneurship: Denomination of the returns =====================

1. SOCIAL
ENTREPRENEURSHIP

2. An Entrepreneurial Revolution
• 1 million new ventures a year in U.S.
• 85% of the new jobs in small and start-up
firms
• Product/service introduction rate higher than
ever before
• Rate of wealth creation exploding
• And it’s a global revolution

3. What Is Social Entrepreneurship?
Nonprofits making money

4. The only big difference between commercial and
social entrepreneurship:
Denomination of the returns
Social and commercial entrepreneurship have
most of the same characteristics

5. The Process of Social
Entrepreneurship
1. Find an opportunity
2. Develop a business concept
3. Figure out what success means and how to
measure it
4. Acquire the right resources
5. Launch and grow
6. Attain goals

6. The Main Difficulty: Measurement
• What is profit?
• How do we count it?
• What is “social return o n investment” for
venture philanthropists?
• Can we compare investments?

7. Three characteristics
• Social entrepreneurship meets needs unmet by
commercial markets and (usually) the
government
• Social entrepreneurship is motivated by social
benefit
• Successful social entrepreneurship usually
works with, not against, markets

8. Case 1: Housing Opportunities Made Equal
(H.O.M.E.)
• Services
– Core services in housing disputes and fair housing
advocacy in Virginia
– Special projects and lawsuits
• Opportunity: Educate people on fair housing
before-the-fact, instead of fixing situations after-
the-fact
• Enterprise: Start fair housing training Institute
• Returns: More housing for the disadvantaged,
fewer complaints

9. Case 2: Boaz & Ruth
• Opportunity: Underused human capital
• Endeavor: New businesses using former inmates
in an aggressively faith-based setting
• Social returns: Young people not returning to jail,
peaceful neighborhood

10. Social Entrepreneurs “Look” Like
Any Other Kind of Entrepreneur
Innovativeness
Education and experience
Achievement orientation
Independence
Sense of control over destiny
Low risk aversion
Tolerance for ambiguity
Entrepreneurial
orientation
Community awareness
And social concern
Socially-entrepreneurial
orientation
Innate characteristics
Innovativeness
Education and experience
Achievement orientation
Independence
Sense of control over destiny
Low risk aversion
Tolerance for ambiguity
Entrepreneurial
orientation
Community awareness
And social concern
Socially-entrepreneurial
orientation
Innate characteristics

11. Risk + Innovation
High risk
aversion
Low risk
aversion
Highly-
innovative
Dreamer Entrepreneur
Not
innovative
Stuck Gambler

12. Opportunities vs. Threats
Opportunities for social entrepreneurs look like
threats and tragedies to others

13. Myths about Social
Entrepreneurship
• Social entrepreneurs are anti-business
• The difference between commercial and social
entrepreneurship is greed
• Social entrepreneurs are nonprofit managers
• Social entrepreneurs are born, not made
• Social entrepreneurs are misfits
• Social enterprises usually fail
• Social entrepreneurs love risk

14. Why does social entrepreneurship
matter?

15. A Nation of Social
Entrepreneurs
Immigrant stock with a high
entrepreneurial orientation
+ Faith in own abilities
+ Vast ungovernable frontier
= Citizens willing to meet their
own social needs, without an
excessive reliance on the state

16. What Is a Nonprofit?
• Tax & regulatory definition: an organization that
– Enjoys special tax status
– Faces a nondistribution constraint (profit=0)
• Functional definition: an organization that forms to
– perform “public tasks”
• environmental protection, social service provision
– perform tasks for which there is demand but no supply from for-profits
or governments
• religious activity, art museum
– influence the direction of public policy
• political party, issue organization
16

17. International Facts
• U.S. is very large
– represents more than ½ of all nonprofit activity worldwide
($600b)
– has 45% of all world’s nonprofit employees
• Rich nations tend to have more developed
nonprofit sectors than poor nations
– Government social spending is positively correlated with
nonprofit sector size

18. Main Challenges at Present
• Money
• Competition
• Demonstrating effectiveness
• Technology
• Trust
• Human resources
• Public-sector relations
Ref. Salamon 2002

19. Main Opportunities at Present
• Demographic shifts
• New philanthropy
• Heightened awareness of sector
• Increased social welfare spending through
sector
– Entitlement expansion
– Welfare reform
Ref. Salamon 2002

20. Main Trends at Present
• Explosive growth
• Attention to marketing and management movements
• Commercial ventures
• Development of umbrella organizations and formal
education
• Effectiveness in competing economically and
politically
Ref. Salamon 2002

21. Main Risks at Present
• Identity loss, “mission creep”
• Industry concentration
• Pressure on managers for results
• Loss of public trust
Ref. Salamon 2002