An Introduction to Social Entrepreneurship
By Daniel Truran
European Baha’i Business Forum
Bill Gates mentioned in one of his World Economic Forum talks in Davos "I am an optimist
but an impatient optimist." That is perhaps one deﬁnition of a Social Entrepreneur, those
individuals who have created a new way of using their existing and latent entrepreneurial
skills to address as opportunities the challenges of social issues that surround them.
Social entrepreneurs act at very different levels, from the actor Paul Newman who has
created his own brand of food delicatessen (Newman's Own) with the entire 100% of the
proﬁts that his company makes going to speciﬁc NGOs addressing social issues to an
entrepreneur in Nigeria giving employment to troubled street kids by managing much
needed toilet facilities (DMT Social Toilets) to a Mexican entrepreneur organizing
weekends in the main squares of smaller Mexican cities offering free movies and the
opportunity to take part in self development courses and health, housing and microcredit
advice and training (CinePop). As Professor Greg Dees, the founder of the Centre for the
Advancement of Social Entrepreneurship at Duke University’s Fuqua School of Business
in North Carolina says "social entrepreneurs are driven by the desire to create value, a
blend of economic, social and/or environmental value.”
If you are wondering why a business school, notoriously attracting mainstream high proﬁt
driven individuals, has a Centre for Social Entrepreneurship you will now see that each of
the top business schools in the world enjoys at least one course in social
entrepreneurship. This is part of the growing need that many MBA students and
entrepreneurs of all ages are showing for more meaningful careers and many see the
creation of a social enterprise as the most meaningful way of earning a living.
A few key elements
If you want a more precise deﬁnition of social entrepreneurship, you can refer to the
Wikipedia Encyclopedia which states: "A social entrepreneur is someone who recognizes
a social problem and uses entrepreneurial principles to organize, create, and manage a
venture to make social change. Whereas business entrepreneurs typically measure
performance in terms of proﬁt and return, social entrepreneurs assess their success in
terms of the impact they have on society."
Or you can choose the Skoll Foundation's deﬁnition: "So-cial en.tre.pre.neur n, 1.
society’s change agent: pioneer of innovations that beneﬁt humanity".
We can identify some fundamental elements driving a social entrepreneur by selecting key
words from the deﬁnitions above: Innovator. Using entrepreneurial principles to address a
social problem. Success = impact on society. Change agent. Pioneer, Innovator,
All of these strong statements start to give you an idea of the passion and of the rapidly
growing scale of interest that social entrepreneurship is attracting at all levels: from a last
year student at university in Germany to a young potential entrepreneur in Africa to a
senior partner at McKinsey. One thing is true for all social entrepreneurs: there is no
geographical, age, or sector limitation to having a social change innovator take action.
If I was to pick the one key element that drives the efforts of all social entrepreneurs I
would pick the following statement:
"Regard man as a mine rich in gems of inestimable value. Education can, alone, cause it
to reveal its treasures, and enable mankind to beneﬁt there from." (Baha'ú'llah)
If you browse any social innovation project or organization you will ﬁnd the deep belief that
the potential to solve problems lies in the people, in their often hidden "gems of
inestimable value". The terms empowerment, development, capacitation are what allow to
switch on and ignite social change - change that usually starts locally with one individual
spotting a social issues and deciding to use her or his entrepreneurial ability to address it.
One drawback of the very generous and well intentioned actions of philanthropists and
donors is that all too often the resources are just given to the needy. If the action is purely
and only that of giving without any challenge or development linked to the donation we
may actually create dependency and a lack of self esteem in the individuals we attempt to
help. The hand will be put forward by the needy, their faces often hidden in the misery of
their situation and once the money or resources cease arriving they will be unable to pick
themselves up once again.
I was struck by this one
image of Muhammad Yunus,
the founder of the Grameen
Bank and of the entire
concept of Microcredit that
has earned him the Nobel
Peace Prize in 2007. In the
photo you see Mr. Yunus
sitting in the middle of a
circle of women, newly
created small entrepreneurs
who have started their
"business" thanks to a small
loan (a microcredit) that was
handed to them to get their
entrepreneurial idea off the ground without any guarantee being asked at the moment of
the loan: a pure act of trust that the woman (the chosen gender in over 90% of microcredit
loans in Bangladesh) will do her best to make her entrepreneurial idea work and then pay
back the microloan.
Now these women sitting around Mr. Yunus and who up to only a few years ago were
begging for food or assistance in a state of total misery were now holding their heads high,
listening carefully to the course in entrepreneurship being offered by Yunus, with their mind
racing to see how they could apply some of those principles and further the development
of their micro enterprises thus allowing them to pull their entire families out of poverty.
They were now proud entrepreneurs and it all began with someone having faith in them
and in their "hidden gems" and in their ability to be entrepreneurs of their lives.
Muhammad Yunus offers us the perfect example of another of the key elements of a
social entrepreneur: starting to apply their idea on how to address a social issue locally
and then scaling up that idea and replicating it worldwide to address similar issues. His
invention of Microcredit started when he assisted one woman in Bangladesh who was
desperate for a few dollars that no bank would lend her to buy an animal whose milk she
sold to repay her debt. Yunus saw the opportunity to assist not only that woman but then
millions more with the same “entrepreneurial spirit” and now microcredit is present in pretty
much every nation of the world, including in our western high street banks where micro-
loans are now common.
Who are social entrepreneurs?
The names of Pierre Omidyar and Jeff Skoll who earned their fortune by creating and then
selling Ebay exemplify a modern day social entrepreneur: they amass fortunes and then
want to spend those fortunes and use their entrepreneurial talents to solve some of the
world's greatest social issues and empowering others to do so too. They created the most
advanced organizations in this ﬁeld, the Skoll Foundation and the Omidyar Network.
Other examples of social entrepreneurs are people who have been working in the Not For
Proﬁt sector who now feel a need to add a more sustainable approach to their mission or
perhaps to start to make a living out of their aim of doing good. A further example comes
from individuals who feel that their talents used to achieve the highest level of excellence
and proﬁt in corporations should be used for more meaningful purposes. Bill Drayton, a
former partner at McKinsey & Company, went on to found the leading organization
developing the skills and ﬁnancially supporting social innovators: Ashoka.
Social entrepreneurship is proving to be a magical solution to values-driven individuals
who at the same time need to earn a living. Another comment made by Professor Greg
Dees, the founder of the Centre for the Advancement of Social Entrepreneurship at Duke
University’s Fuqua School of Business in North Carolina says it all: “People have this idea
that the social sector is soft and squishy. But to make money and create social impact is
How Social Entrepreneurs Think
David Bornstein is the author of a book that I would deﬁnitely recommend reading, How to
Change the World: Social Entrepreneurs and the Power of New Ideas. In it, he has a
wonderful description of the social entrepreneur, "What business entrepreneurs are to the
economy, social entrepreneurs are to social change. They are the driven, creative
individuals who question the status quo, exploit new opportunities, refuse to give up, and
remake the world for the better."
You may be wondering what is different between the way
“traditional” and “social” entrepreneurs think and
operate? Let’s take the example of a major social issue,
that of the lack of sanitation and sewage in some cities.
You will see below the radical difference in focus betwen
the two forms of entrepreneurship. Whilst a traditional
entrepreneur would ask some initial basic questions
such as “what is the market that would pay for the
solution to this problem”, “what is the highest amount I
can charge for it” and “how low can my production and
running costs be”, the social entrepreneur has a different
perspective. She would ask “how can I solve the issue in
a sustainable way”, “who are the most needy people I
can employ”, “how can I empower individuals in the area and educate them to the need for
sanitation”, “how can I recycle the waste” and of course “how can I
achieve the maximum social / proﬁt impact”. And the solution has indeed been offered by
the Schwab Foundation for Social Entrepreneurship awarded fellow - DMT Toilets - that I
mentioned at the beginning of this article.
Connected to that statement I would like to end this short introduction to Social
Entrepreneurship with another of the key elements of any good project: measuring its
effectiveness. The challenge here is to measure two seemingly contrasting priorities: the
social impact, often called the SROI (Social Return On Investment) and the ﬁnancial
impact, that is, the ROI (Return on Investment). Just take a look at one of the most
advanced funders of social entrepreneurs, the Acumen Fund. They insist on putting
numbers to determine the social as well as the ﬁnancial impact of their investments.
Now different social enterprises put different emphasis on either the proﬁt or the social
impact elements. For example in the case of Newman’s own products that I mentioned at
the beginning of this article you can see how his entire enterprise is driven to make as
much proﬁt as possible as that means more ﬁnancial resources that they can then donate
to social causes and solving social issues. In the other example mentioned earlier,
Cinepop, 90% of Mexicans cannot afford to pay the ticket for a movie so they are attracted
to these main squares in their towns by the offering of free movies. Companies pay
Cinepop to present their products aimed at low income buyers and this generates the
proﬁtability element and it attracts an average of 3,000 people who attend the weekend
show. While there they receive self development, microcredit and housing beneﬁt training
that often means the beginning of a new life for them. In this case the emphasis is
balanced by getting sufﬁcient funds from the sponsors and sufﬁcient people whose lives
they affect and improve.
In other ﬁelds of social entrepreneurship such as Human Rights we go to the other end of
the balance between SROI and SRI. It is rather complex to create proﬁt streams from
defending the rights and often the lives for example of women who are abused in the
homes. Thus the main form of income will remain that of grants and sponsorships by
companies who want to include in their corporate social responsibility priorities that of
curbing this very present social issue. If you look for example at the Tahirih Justice Centre
you can see how they do leave the door open to small income generating opportunities by
selling merchandise. This has of course the double objective of opening some revenue
streams but mainly to have people wearing / using Tahirih merchandise thus affecting the
perception of people around them that a solution exists to ﬁght domestic abuse but also
highlighting the existence of this often forgotten social issue. Also in the case of the Tahirih
Justice centre, donations and grants remain the major source of ﬁnancial sustainability.
What can be more fulﬁlling than earning a living by addressing a social issue, ﬁnding
innovative solutions and opportunities for that problem, developing the latent talents in
individuals, applying new entrepreneurial models that can be replicated “to enhance the
wellbeing and prosperity of humankind” on a worldwide level?
You can ﬁnd more detailed information, links and bibliography on Social Entrepreneurship at
EBBFʼs Knowledge Centre dedicated to this topic:
Links to organizations and companies mentioned in the article:
Acumen Fund (http://www.acumenfund.org/)
Ashoka Foundation (http://ashoka.org/)
DMT Toilet (http://www.dmttoilet.com/about.htm)
Grameen Bank (http://www.grameen-info.org/)
Newmanʼs Own (http://www.newmansown.com/)
Schwab Foundation for Social Entrepreneurship (http://www.schwabfound.org/)
Skoll Foundation (http://www.skollfoundation.org/)
Tahirih Justice Centre (http://www.tahirih.org/)
The European Bahai Business Forum (EBBF) is a community that sees an opportunity and a
responsibility to contribute to the well-being of humanity, and then looks for practical ways to act
upon it, giving each of the members an opportunity to make a difference.
Rather than looking at what is wrong in the world today, EBBF's aim is to show how organizations
and most importantly the people in those organizations can adapt from an old to a new world order
underlining the virtues and opportunities of human beings and the way they relate with each other.
What began in 1990 as a small informal network is now a professional non-proﬁt association of
approximately 350 business people, women and men from over 60 countries with diverse
backgrounds and beliefs.
Members of EBBF are united in recognising the importance of sustainable, socially responsible
and ethical practices in management. EBBF promotes ethical values, personal virtues and moral
leadership in business as well as in organizations of social change through conferences,
networking, counseling, publications, and projects. EBBF is a non-proﬁt association registered in
Paris in 1993, For further information, see its website at www.ebbf.org.