Social Enterprise is not Social Change: A Response

SSIR recently published an article stating that social enterprise does not work enough in a collaborative, political or systemic way that engenders real social change. The article’s authors challenge social enterprise and supportive funders to re-think their support of social enterprise development. In the non-profit world, where funding tends to be a zero-sum game, this throws down the gauntlet indeed.

So, to start off, I find ‘holy grail’ perspectives to be tiring. We lurch from one panacea to the other, looking for a magic bullet to solve our social problems. Funding either tries to lead or follow these trends, and funds lurch around, causing instability in the sector. Social enterprise is still fairly new in its current approach; it adds another tool to the toolbox of social change that organizations can use to help create employment, economic development, additional streams of revenue and/or solve an issue that currently the private market doesn’t solve but could within a non-profit structure.

Social enterprise doesn’t solve everything, but what it does solve, it has the potential to play its part really well and create significant impact. It seems like the author’s are taking an ‘either/or’ approach rather than ‘yes/and’.

It is evident that the authors of this article are approaching this topic from an academic perspective—a ‘wouldn’t it be great if’ view of the world and social change. I am curious as to whether they have operated a non-profit or social enterprise, or have led any of the social movements they list.

It is very easy to say what non-profits should or shouldn’t do, or assume the reasons why—we face this from academics and funders all the time. Once in and operating a non-profit or try to lead a social change movement, and the ‘should’s’ fade quickly as reality makes itself known. Here is what is specifically problematic about this article:

  1. The myth of the solo social entrepreneur is so very past its prime. No one creates change on their own, and no business entrepreneur succeeds on its own. Ashoka knows this and getting recognition for their incredible work helps provide inspiration to others as well as gives the energy to keep going.
  2. The second point just seems strange to me… such black and white thinking. Entrepreneurial thinking and acting compliments systems thinking and acting, which compliments person-centered thinking and acting, and so on. This is not either/or but building full toolbox with many different options for creating change.
  3. Social enterprise is not grounded in a desire to minimize government’s role. Government has decreased its funding and interventions, leaving the non-profit and social enterprise sector left holding the bag. In the chasm that exists between need and resources, non-profits have worked to build bridges. Social enterprise is an important plank of this bridge. If government wants to reinstate its funding levels and change their policies and approaches to effectively address huge systemic issues… fantastic. Call me when that happens and I will take a loooong holiday and rejoice. However, to address the other point in this paragraph, governments tend to be slow moving, political and bureaucratic. It is harder for them to test and innovate—they are better as systems and scaling actors. Social enterprise sometimes can demonstrate a better way to do things, that then can be adopted and create systems change.

Popularity without proof? Hmm- social enterprises are usually operated by or as non-profits. They are subject to the same reporting standards.

All illustrations by Rob Wilson

And at this point, I am giving up responding to this article. It makes so many assumptions, picks few examples to make its point and obviously does not understand what a social enterprise is— Play for Pumps is a development project, not a social enterprise, and development projects have a long track record of building infrastructure that then doesn’t work.

Let me address their solution—abandon social enterprise investment and ‘join our fellow citizens to do the educating, organizing, and mobilizing that is needed to reclaim the power of public voice.’

Yes, I agree that multi-stakeholder collaborations where passionate people across sectors take the time to map the system, identify lever points, innovate change, test, refine, measure and scale would be the ideal. And, perhaps this approach would get us to where we need to get to if full funding, support, and commitment were guaranteed over the decades it takes to realize these results. After seeing the rise of this type of approach, and playing the backbone role for a couple such initiatives, it has become glaringly apparent that investment and commitment are hard to come by. Funding for collaboration, at least in Canada, is hard to get and very hard to sustain over the decade (at least) required.

Which brings us back to social enterprise. A big reason for social enterprise is that the financial model for non-profits is broken. There is never enough funds from foundations and governments made available to meet the breadth and depth of needs that non-profits are trying to address. Non-profits must change their business model and open up to new ways of creating change and being able to resource that change. Social enterprise is a way to continue to create change and address local challenges while building in revenue streams that mean an initiative is not subject to 1 year funding cycles.

Social enterprise also opens up new streams of investment that non-profits can access, and new ways of thinking about money and impact. Social enterprise changes the way non-profits operate and that entrepreneurial thinking begin to weave its way through other programs and approaches.

Because many of the challenges faced by our communities are a result of economic inequality, growing non-profit, community-owned businesses begin to get to the heart of this inequality. What kind of social change will occur when there is a linked up, powerful sector of these types of businesses? Business is a powerful force for change in our world— big corporations and big money get to dictate a lot at global, national and community levels. How will things be different when big corporations and big money are owned by and beholden to the needs of communities?