If you were to ask a random selection of business owners what their company’s main goal is, most answers would likely relate to doing what’s best for the enterprise itself. Whether that’s purely profit-driven, or takes the development of employees, customers or other stakeholders into consideration, the majority of companies are predominantly inwardly focused. And this applies even if they do practise corporate social responsibility.
But not all of them have this mindset. As more citizens take an increasing concern with making a positive impact on the world, social entrepreneurship has taken off as a business model in its own right, combining capitalism with an altruistic mindset. Social enterprises are companies that primarily exist for a social purpose, though unlike charities, they do keep profits. However, making money isn’t their primary objective, and much of what they do earn will be re-invested into achieving their philanthropic aims.
All in all, there are likely millions of social enterprises across the world, with almost 500,000 in the UK alone. Incredibly, such companies contribute over 15% of the GDP of countries like Italy, Netherlands and Belgium. Here we look at three reasons why social entrepreneurship is the way forward.
1. It makes the world a better place
Quite simply, investing so much time and money into social causes can make the world a better place. The planet is facing countless issues, from climate change and poverty, to unemployment and social injustice, and social enterprises can help tackle these challenges and make a significant difference to people’s lives.
For example, there are many environmentally-focused social enterprises out there helping to fight climate change, such as TerraCycle, an innovative recycling business. The company makes it easier for individuals and companies to recycle difficult-to-recycle items such as toothbrushes, cigarette butts and crisp packets. People can send waste directly to them in exchange for credits, which can be redeemed for cash, or donated to the nonprofit of their choice.
Many social enterprises also act as catalysts for social change. For instance, companies like BuildHer and Tiwale aim to give women more work and educational opportunities in typically male-dominated fields like construction and music. Others, such as Olmec and The Diversity Trust, champion racial equality through means such as offering employment opportunities and diversity training.
2. It’s easier than ever to succeed
More consumers than ever are aware of social and environmental issues, and as a result, are actively looking to engage with businesses that do good themselves. In fact, 63% of consumers prefer to purchase from purpose-driven brands, with many willing to spend a bit more on products or services if it means helping others or the world in some way. As such, social enterprises are better placed to thrive, considering the groundswell of public support for them.
Furthermore, there is so much financial help for social enterprises nowadays, with investors increasingly re-evaluating their traditional portfolio approaches and turning to more altruistic projects. Take SAP, the German-based software giant who lists jobs across the country and in over 140 nations overall, and recently launched their “5 & 5 by ’25” initiative. This aims to direct 5% of the company’s addressable spend towards social enterprises by 2025. Similarly, in early October Salesforce established a $100m Impact Fund for cloud startups with a social cause, following its first, $50m Impact Fund in 2017.
More governments are also providing support for social enterprises too, such as the UK’s social investment tax relief scheme, the US’s Social Innovation Fund and India’s Maharashtra State Social Venture Fund.
3. It’s rewarding on a personal level
For many people, working solely to earn money is no longer enough. While doing a job they enjoy generally offers entrepreneurs a greater sense of purpose, working towards altruistic goals that they’re passionate about is the only way they can feel truly rewarded by what they do. Social entrepreneur Matt Saunders perfectly explains his own personal eureka moment when this clicked into place for him, as he suddenly realised that his “skills can be used to do something that has social value, rather than just to make money for someone.”
Speaking to Forbes, Melissa Levick, co-founder of social enterprise Honeycomb summed up the fulfilment this business model gives entrepreneurs like herself day-to-day. She said: “Having social impact built into your business model…[is] a genuine mechanism to solve social problems while feeling connected to a higher purpose.” This can be remarkably rewarding, and gives entrepreneurs all the motivation in the world to keep pushing on once they’ve achieved the level of success they dreamed of when starting a business.
