Social entrepreneurship & finance

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Concretely, what is social entrepreneurship?

In its special report on entrepreneurship published in March 2009, the British magazine The  Economist defined an entrepreneur as “someone who provides an innovative solution to a problem.”

On the basis of this definition — and although current debate on a precise definition of social entrepreneurship is strong between academics and leaders of the movement — a social entrepreneur can be defined as someone who brings innovative solutions to a social problem. A wide variety of social problems can be tackled by these entrepreneurs: environment, access to education, healthcare, food access…

Several individuals who stood out throughout history are now recognized as social entrepreneurs. One of the most common examples is that of Jean Monnet, for his role as architect of modern European Union. Over the past ten years, the trend has considerably accelerated, and initiatives from entrepreneurs aiming to solve the most pressing problems of our planet have multiplied and gained visibility. On their side, several organizations have been set up on a global scale to promote their development.

One of these is Endeavor: an organization that since 1997 has worked to help social entrepreneurs develop their activity in emerging countries by supporting their strategies and helping them gain access to capital. In 2008, the total revenue of entrepreneurs associated with Endeavor reached $2.1 billion (€1.5 billion)! In his book “The World is Flat”, writer and journalist Thomas Friedman referred to Endeavor as “the world’s best anti-poverty program of all”.

The co-founder and current CEO of Endeavor is Linda Rottenberg. This year, she was invited to open the Harvard Business School’s 10th conference on social innovation. In her optimistic and hopeful speech, Linda Rottenberg retraced the path taken by the movement’s pioneers. She identified three moments as decisive to the movement’s universalization, which she calls “the ‘Great Man’ theory of Social Entrepreneurship”:

-          When Bono, lead singer in the band U2, launched Product Red to fight AIDS in Africa, he morphed from rock star to social entrepreneur. In an instant, Social Entrepreneurship became cool.

-          When the Nobel Peace Prize was attributed to Muhammad Yunus for his pioneering work with Grameen Bank and his innovation in the field of micro-credit; the Norwegian Nobel Committee provided the movement a global icon.

-          When Bill Gates stepped down from his CEO position at Microsoft to devote himself fully to his foundation, and to promote a capitalism that will create “a market system that eases the world’s inequities”, he moved the movement mainstream.

These three key moments help understand the scale of the movement as well as the concept as a whole.

Even though these moments have a strong symbolic value, social entrepreneurship is more than a fashion or a tendency. As explained by the founder of Endeavor, the initiatives taken by Bono, Muhammad Yunus and Bill Gates demonstrate that social entrepreneurs are more “problem-solvers” than idealists: they are motivated by innovation rather than charity, and they use entrepreneurial strategies in order to achieve social change.

Social entrepreneurship is a reality that is accelerating. Through its success, it demonstrates that innovations should further serve social problems. Today, and although the model has proved its worth, Linda Rottenberg points to access to capital as one of the main issues at stake in order to bring social impact one step further. In effect, several leaders of the movement agree that donations induce dependence, and that there will never be enough donations to support all initiatives. However, by becoming a investment opportunity in its own right, the movement will be able to evolve much faster and to extend its impact considerably. Indeed, even though not every social entrepreneur seeks economic viability, many examples show that it is not only possible, but also beneficial, to reconcile economic and social interests.

As Kofi Annan said, paraphrasing Victor Hugo: “Social entrepreneurship is an idea whose time has come!”


Fair Street Team