By Poorva

Edited by Madhavi Roy

With the insertion of social concerns into entrepreneurship, the entrepreneurial ecosystem has got another “Avatar”. Philanthropy is the new password, the social entrepreneur, the new age “Robin Hood”. Jacqueline Novogratz, the founder of Acumen, a non-profit social venture based in New York City, defines a social entrepreneur as an individual who wants to use tools for business to tackle social problems. Well, this makes her a social entrepreneur.

In the Indian context, the twenty-first century has witnessed a shift of focus of businesses from just minting money to spreading smiles. The Companies Bill, passed in 2013 by the Rajya Sabha, mandated Corporate Social Responsibility (CSR) for companies. The government has also invited companies to help it with improving access to toilets and public urination facilities in India. This has given a boost to the idea of a social entrepreneur. However, social entrepreneurship is not the same as CSR. CSR is just one element of any business. Social entrepreneurship generally includes an element of innovation, with the sole aim of serving society. ‘Normal’ businesses measure the results of their business success in terms of turnover and profits. Social entrepreneurs are also interested in the benefit that accrues to the society. Nobel Laureate Muhammad Yunus, founder of Grameen Bank in Bangladesh, is one of the most widely known social entrepreneurs. The advent of Grameen Bank has brought about a revolution in the microcredit situation in Bangladesh. Bharat Ratna Vinoba Bhave, the founder and leader of India’s Land Gift, had caused the redistribution of 28,000 km² of land, which is improving the conditions of several untouchables and the so-called ‘lower’ caste people. In contemporary society, Enactus is an example of social entrepreneurship. It connects students and empowers people to become entrepreneurs to operate successful and sustainable projects for themselves and their communities. These were just some of the examples of social entrepreneurship ideas.

There are various challenges facing today’s social entrepreneur. Raising funds is arguably the greatest of them. Most social entrepreneurs call their establishments “not-for-profit” organisations. The ones who can’t generate enough income through sales have no choice but to rely on donations and grants. In today’s competitive world, the competition for donations is also cut-throat. As a result, many budding social entrepreneurship ideas die an unknown death in their early stages due to lack of funds. Another challenge is sustainability of the project. It is not possible for a business to run on donations only. It is important for the social entrepreneur to have a long-term focus on sustainability of the business. Since these businesses measure their success in terms of benefit to society and work towards the objective they were setup for, their focus must not deviate from the purpose they were started for. They must remain true to their mission. Another challenge is to give quality services at a low cost. For instance, in India, we already have government-run schools and hospitals to provide services at a low cost. But low cost is often not accompanied by acceptable and ‘good’-quality services. The challenge is to combine low cost with high quality of goods and services. This requires the right kind of business model.

Talking about government regulations, most of the social entrepreneurships fit into “Small and Medium Enterprises” or “Not-for-Profit organisations”. Most of them, in fact, are an amalgamation of the two. They have social cause woven in their fabric. However, they are not entirely allergic to profit-making. Hence, there is a need to create a new category of “Social entrepreneurships” in the legal lexicon. Clear categorisation would lead to ease in getting donations, and minimal problems with government regulations. Naming them as per their nature of operations would lead to a wider social acceptance.

The renewed focus on philanthropy, combined with our technological prowess and its acceptance by the society has made social entrepreneurship a widely accepted idea. That said, there is still a long way to go in terms of social acceptance, rising from a tag of “not-for profit” to a “social entrepreneurship”, finding the right sources of finance, and finding the right kind of business model, different from the existing ones.

Poorva is a first year Economics student at Lady Shri Ram College, Delhi. She keeps herself abreast of all the current affairs and holds a firm opinion about everything happening around her.  She deems all forms of expression, be it acting, painting or writing, as a gift to the mankind. She is also involved in social service through two of her college societies, Enactus and NSS. 

Posted by The Indian Economist | For the Curious Mind