In a time where inhibited growth and revenue decline are the norm, it is hard to envision a segment that manages to derive value from a trying economic climate. Social entrepreneurship – involving ventures which place emphasis on addressing a social issue over turning a profit – has actually been viewed as increasingly favorable during the recession. In stark contrast to the negativity, there is inherent value for a brand that remains focused on doing good on a local, regional, or global scale. Businesses dealing with helping the impoverished, improving a community, or preventing social delinquency are all models, along with others, that constitute the industry. Ecopreneurship also falls under this category.
Social entrepreneurs are somewhat of a misunderstood group. In order to make an impact, social enterprises require equal if not greater effort than for-profit businesses and are costly to initiate. At a minimum, social enterprises struggle to maintain a universal goal of sustainability. Some may be initially or later become profitable, but how a social business chooses to reinvest its profits varies substantially from conventional businesses.
TOMS, a footwear retailer, embodies the principles of a successful social enterprise. Blake Mycoskie, the founder, created the business, which matches every pair of shoes with a pair donated to a child in need, as a means of addressing an issue which he personally witnessed while traveling in Argentina. With a boom in popularity from media exposure over the positive change the company was enacting, the company has now sold and donated more than 1 million pairs. TOMS is profitable, but utilizes its proceeds to support its mission.
Sarvajal, a franchised business which leverages water filtration technologies to bring clean drinking water to rural areas, is an example of another type of social enterprise: a highly profit-driven company which maintains an aspiration of social change. The model offers franchisees the potential to profit hundreds of thousands of dollars annually while dramatically improving the lives of the people they serve.
There is money to be made, but profitability doesn’t influence the decisions of these businesses on the same order of magnitude as their responsibility towards their mission. Sometimes, as in the case of Kiva, a vastly successful micro-lending website hailed by many as the ‘poster child’ for modern social enterprise, they come under great scrutiny due to common conceptions of business ethics derived from the behaviors of for-profit companies.
Building a successful business in a poor economy is a daunting endeavor. Then again, so is changing the world. With strong support to help tackle both, social entrepreneurship remains a durable and meaningful industry.