Is Social Entrepreneurship a Distraction?

Social Enterprise Distraction

A leader in the social enterprise field, Pamela Hartigan, has written a compelling blog entitled, “Why Social Entrepreneurship has become a distraction: it’s mainstream capitalism that needs change”.  It is a clarion call.  See what you think.

Ms Hartigan is Director of The Skoll Centre for Social Entrepreneurship at Oxford’s Said Business School.  Previously, she spent eight years as Managing Director of the Schwab Foundation for Social Entrepreneurship.  She has deep experience in social entrepreneurship.

She has developed serious concerns about the viability of social enterprise sector as it is evolving, especially since government has gotten on the bandwagon, especially in the UK.

At the same time, Ms. Hartigan suggests that a complete reconstitution of capitalism has the potential to drive system’s change in a way that underfunded, struggling social enterprises are unable to do.  To do so, companies must place mission and community at the heart of their mandates along with reasonable profits.  She has faith that youth will affect this change when they attain leadership roles in business.

I share some of her concerns.

First, social enterprises may become primarily dependent on government funding. As government is opening up procurement to social enterprises, those ventures risk becoming dependent on government funding.  The funding has simply shifted from grants to procurement contracts.  There’s nothing more risky for a business to be dependent on one, primary customer.

Second, social enterprise is not a panacea.  There are only so many mission-driven organizations who can generate revenue from selling products or services and drive their mission.   e.g. employment-focused social enterprises.  I agree with Ms. Hartigan that the sector will be small in size.  Consequently, it will be difficult for the sector to drive system’s change along.

Third, large corporations can indeed have an outsize and positive impact on social and environmental issues and, in so doing, can affect system’s change.  They can do so when they’re clear on their mission and objectives, when leadership insures that mission lives at the heart of its culture and is inherent in all decision-making, when it collaborates with communities it’s affecting and when it invests significantly in those Shared Value initiatives.  See Michael Porter’s and Mark Kramer’s Harvard Business Review article on Shared Value.

However, I believe social enterprises have a strong future, albeit with a difficult journey.  I also believe that corporations  will increasingly contribute to positive impact beyond CSR but that it will be limited in terms of effectiveness because of the lack of real commitment on the part of corporate leadership.

I have faith in the viability of a hybrid model where social enterprises have multiple revenue streams, some from grant revenue and most from business activities. It is critical that government opens access to private and foundation capital for social enterprises through applying a more progressive regulatory regime e.g. government providing catalytic first loss capital.

 

This entry was posted in Challenge, Innovation, social enterprise, Social Entrepreneur, social impact, Social Venture. Bookmark the permalink.

One Response to Is Social Entrepreneurship a Distraction?

  1. Yanique.B says:

    Interesting opinion and I see why she came to believe as she does especially in the UK context. It is mainstream capitalism that needs to change, for sure, but I feel that social enterprise is one way to stoke that change if done correctly.

    I think of socent as capitalism with a conscience. A social enterprise is supposed to make a profit or be financially sustainable otherwise it’s not much of an enterprise. Think Tom’s Shoes. Socent is dead if impact can’t scale and what makes scale possible is the capitalist element. Social enterprises should be treated like regular startups and not like charities. The government may not fully understand the concept either which is why they pump money into them at a loss when they should perhaps be seeding based on performance and for the purpose of growth ie investments and not merely grants.

    So no, I don’t think it’s a distraction. I think people don’t get it yet and they’re doing it wrong in a lot of cases. As with any new concept, the learning curve is steep. That’s no reason to give up though.

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