When this author was young(er), one of the many mistakes she made was to get an MBA degree. However, one of the few good decisions while getting that degree was to opt for the social entrepreneurship course in her second year. The teacher was a fairly well-known personality in Indian academic circles and came into semi-prominence thanks to the RTI Act. What made his classes interesting though wasn’t the insightful titbits into life as a social entrepreneur but his irreverence for his students, whether they be confused 20-something younglings or those with 15 years of work experience. The only thing this author remembers were the multiple visits to an NGO as part of the graded assignments in the course. While it was good to spend time with the children, the actual whys and hows of social entrepreneurship still remained a mystery. And one can (correctly) surmise that this holds true for most people when they are confronted with the mystical beast called the social entrepreneur.
Being an entrepreneur may be the coveted ‘job’ of this generation (much like the IAS till the 90s) but a growing trend in this space is social entrepreneurship or socialpreneurship, for the sake of brevity. Simply put, it is a venture designed to create and implement innovative solutions to social, economic and environmental issues. It can take the form of a traditional nonprofit (but financially sustainable), a hybrid model wherein cost recovery is essential, or a pure for-profit venture that seeks the difficult goal of substantial social and financial returns on investment.
The underlying idea remains same – solve the many problems plaguing this world through a mix of entrepreneurship zeal and ideals, modern-day business gospels, and generous investors. The modus operandi of the intervention is usually a product or a service that has the potential to change the target beneficiaries’ conditions for the better and deliver necessary—and hopefully long-term—relief. Cynicism aside, social entrepreneurs can make a tangible, sustainable difference in their target communities much like the typical NGO, if the right strategies, objectives and commitment are applied. At the same time, like the archetypal NGO, they are also constrained by their outsider status, funding requirements and long-term viability, along with the undeniable fact that for real, lasting change, state support and some good timing are indispensable factors. Even then, within some limited, defined criteria, social entrepreneurs can build and foster solutions.
A major difference between NGOs and social enterprises is the revenue model. Whereas the former is usually focused on social benefits without any accompanying deliverables related to creating income streams, the latter places equal emphasis on achieving both. Social enterprises are like your regular businesses with the additional disclaimer of creating social value along with a steady stream of incoming revenue. Hence, while the success of an NGO is highly dependent on fundraising drives, donors, charity, etc., for social entrepreneurs it is the idea behind their ventures and the execution. Their model, after all, is designed to be self-sustaining. Investment is required though, at least in the initial years, much like any other start-up.
Google ‘social entrepreneurs’ and depending on the website, you will find different results featuring some of the more promising ones. While there are a few common names, what is quite striking is the lack of innovation or radical new ideas in these ventures (there are exceptions, of course, like Amul and Selco), which is not to undermine the work being done. It simply means that the word ‘entrepreneurship’ in this context may be a misnomer insofar as these are your ‘typical’ NGO kind of work with the slight twist of having to bake in sustainable revenue models. Quite a few foundations, philanthropic organisations and incubators are providing grants and assistance to these fledgling enterprises. Of course, some have been around long enough to actually opt for an IPO, the most famous case in India being SKS Microfinance. There are supporters and detractors of each model. NGOs spend much of their time and energy in wooing, and then being beholden to, potential donors but are exempt from monetary returns, which leaves them free to focus on the actual mission at hand. Socialpreneurs, on the other hand, don’t really have to answer to anyone so long as they are getting returns. But striking that balance between being social do-gooders and canny business operators is difficult and requires an extraordinary degree of nimble-footedness.
Socialpreneurs happen to be the toast of the developed countries. A cursory look at some of the lists maintained by magazines such as Forbes throws an abundance of white faces interspersed with a few Asians and Indians (big surprise). Like many myths, the legend of the white saviour is hard to get rid of. Then there is the latest fad of stamping the label of socialpreneur on anyone who claims to solve a ‘problem’. Whether that problem is related to dire poverty or providing services to people who can’t be bothered to do their own laundry is a separate matter altogether. For instance, when the super rich like Sean Parker and Joe Green devise Causes.com, which is nothing but an online campaigning platform for nonprofits and activists, does it mean that they are socialpreneurs? For that matter, shouldn’t the founders of Change.org also qualify as one? Then there are some who regard corporate czars like Mark Zuckerberg and Bill Gates as socialpreneurs even though the correct term for them would be opportunistic philanthropists. While their generosity is to be lauded (we will avoid the questions related to a system that actively enables the hoarding of so much wealth by a singe person), it is contingent upon what the donor perceives to be worthy and unworthy causes, the returns that he expects in terms of tax breaks, enhanced reputation and return favours, and the power that comes with it. Creativity, innovation and execution are outsourced to social ventures and NGOs who are tasked with solving problems of the poor and the needy, while the more onerous questions as to why poverty and oppression occur are carefully ignored. The fact that a Bill Gates has the ability to heavily influence matters related to public health and education of many countries is deeply concerning. After all, there are no checks and balances on him; he is a private individual using his legally legitimate wealth to whatever ends he deems fit, even if that means supporting patent laws that make medicines unaffordable for most poor countries. Similarly, Zuckerberg (by the way, whatever happened to private letters to loved ones?) wants to ‘fund nonprofit organisations, make private investments and participate in policy debates.’ With billions of dollars waiting to be given away, one would be a fool to assume a two-way debate. If anything, it is likely to be a battle of one-way powerpoint presentations and desperate propositions. The LLC (limited liability company) structure favoured by him has come into vogue for many tech billionaires like eBay co-founder Pierre Omidyar and Laurene Powell Jobs, widow of Steve Jobs. An LLC is a cross between a corporation and a business partnership which gives more control to the owners and requires lesser disclosure.
In India, while socialpreneurship is yet to reach the giddy heights of an e-commerce start-up, it probably won’t be long before many such aspiring entrepreneurs find their place in the sun and newspaper columns. Social innovation competitions are already organised by MNCs like Citibank and Dell and foundations like Action for India, while others like Marico Innovation Foundation enable socialpreneurs to access investors, CSR foundations and other experts. A few social ventures, particularly in the microfinance space, have gone public and seem to have fetched reasonable returns for its investors. These include SKS, Equitas and social investment funds like Aavishkaar, India Financial Inclusion Fund and Lok Capital. Of course, with microfinance’s reputation as the saviour of the poor taking a huge battering in recent years, especially with the Andhra Pradesh crisis, it is interesting to note that while loans have been growing steadily, corresponding infrastructure has not—possibly this has to do with the mandate of increasing revenues. Which raises the obvious question: when you are in the business of creating positive social impact, how do you reconcile ‘business’ with the ‘social impact’? And is it even possible? When the objective is to change the lives of others for the better, does making money through it make sense? Should it even? Working with the poor, the marginalised, the environment, endangered animals isn’t akin to creating apps and selling beauty products and cars, and ideally, the rules of capitalism shouldn’t apply to the former. But perhaps this is inevitable at a time when even basic public services like water, health and education are gradually being privatised. Next, the air we breathe might be up for monetisation.
When something sounds too good to be true, it probably is. While social ventures can be a force for good, one should be sceptical about anyone self-styling themselves as socialpreneurs or being anointed as one. The jury may still be out on the effectiveness of such ventures but this author feels that the noble goals of transforming lives and communities shouldn’t have to jostle for priority and space with the year-end P&L statement. However, if socialpreneurship is here to stay, let it result in new and innovative changes that aren’t possible through a traditional nonprofit. Else it is difficult to understand their incremental benefits when an NGO might be doing the same work without having to generate wealth for the owners or investors. The world already feels like a huge marketplace; the sufferings of others shouldn’t be added to the list of available products.