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What is Social Entrepreneurship?

Social entrepreneurs increase equality through the profitable sale of goods or services directly to poor or underprivileged populations.  These products enable customers to unlock capital, which generates quantifiable change in society.

Social entrepreneurs generate revenue, seeking to create business models that are self-sustainable and profitable in the long term.  Although the Omidyar Network identifies several types of actors that impact industry sector growth, not all of these actors can be considered social entrepreneurs.  Only for-profit businesses, selling goods or services that directly help poor populations unlock capital, should be considered social entrepreneurial ventures.  MIX, which sells data to microfinance institutions, should not be considered a social entrepreneurial venture. Although MIX’s data enables social entrepreneurs to accomplish their jobs more effectively, the product does not directly enable poor people to unlock capital.

Social entrepreneurs must unlock capital specifically for their customers. Waveborn used to provide a pair of prescription glasses or a cataract surgery to a person in need for every pair of sunglasses that they sell.  Although the prescription glasses and surgeries unlock human capital for poor people, the poor people are not Waveborn’s customers. Therefore, Waveborn cannot be considered a social entrepreneurial venture.

Kevin Starr believes that real impact is the value of change.  Social entrepreneurs must create quantifiable changes in society that generate greater equality.  In Impact Investing, Antony Bugg-Levine and Jed Emerson discuss how impact investors focus on “impact reporting” and “blended value” to target ventures that uplift the poor.  “Blended value” includes economic, social, and environmental factors.  Although Paul Polak thinks that quantifiable change should be measured by poor peoples’ income levels, social entrepreneurs can create changes that are quantifiable in other ways, consistent with the “blended value” concept.

Sarvajal sells clean drinking water to people in rural India.  Although Sarvajal does not overtly increase customer income levels, this social entrepreneurial venture can quantify change in terms of health benefits, such as decreased death or disease rates.  Sarvajal keeps people healthy who would otherwise be prone to disease, which simultaneously unlocks human capital and creates greater equality.  A mother who is sick and bedridden from drinking unclean water cannot care for her family as well as a healthy mother with access to clean water.

This definition of social entrepreneurship excludes non-profit organizations, government programs, and businesses that give charitably.  Organizations, businesses, and investors that assist social entrepreneurial ventures are also excluded.  Although these actors contribute to goals of increased equality, they cannot be considered social entrepreneurial ventures.  These external actors play important roles in the social entrepreneurial ecosystem by assisting social entrepreneurs, targeting similar populations, and shaping emerging markets.  Social entrepreneurs, distinct from these external actors, serve on the frontlines in the fight to combat inequality through capitalism.

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