One of the major differences between social entrepreneurial start-ups and those in the commercial world is that many social enterprises tend to be started by one person. In the commercial world, venture capital companies give funding as much to the team as to the idea. In a situation where ‘Great Idea, Good Team’ versus ‘Good Idea, Great Team’ it is more than likely that the great team gets the funding. As the external environment changes so quickly, the venture capital company prefers to put their faith in the team. In social enterprises, due to the nature of the vision and mission, it is often started by one well meaning person. This person has the passion and drive to develop the idea into something more substantial. Unfortunately this has led to one-person start-ups, which leaves the new entity with a number of risks. The first risk is that it becomes totally dependent on that one person. If personal circumstances change, then the new entity’s future may be in peril. The other big issue is that without a mixture of abilities that a great team can offer, the start-up is actually hindered by it’s founder. This leads to a ‘cult of personality’ within the entity, even if there is more staff now working there. Like many small and medium enterprises it is totally dominated by that one person in terms of strategy and direction. Those who may suit a start-up environment in the early part of its development may not be the one to lead it to growth and further enlargement. This may be one of the reasons why so many social enterprises stay small and why the sector is so fragmented. While there is a lot of support for start-ups in the commercial world (incubators like INVENT, Enterprise-Ireland), there still is not the infrastructure to support the development of such an important part of the (social) economy.
It is in times of crisis, like the recent weather conditions be they floods or snow, that social enterprises shine. The RTE news carried a story about the Drimnagh Community Network a few nights ago and how they were ensuring that elderly people in their area were being checked on.
Although weather extremes and the aftermath are times when many social enterprises really show how they fill the ‘market gaps’ and poor government support (and in many cases planning) it also causes huge issues. In the UK many social enterprises and charities are seeing higher costs attached to delivering services, or indeed higher-than-normal levels of service. Earned income strategies can also be effected.
Those organisatiosn involved in working with the elderly in particular see much higher demand than normal. Age UK (previously called Age Concern and Help the Aged) have reported a £500,000 shortfall in lost trading income as their chain of shops have been effected by the weather and collection vans have had issues getting out. The fact that such organsiations are so much in demand yet again shows how important the social sector is to the overall fabric of society.
One of the biggest issues for the social enterprise sector in the coming years will be funding. It is not surprising that much of the sector has relied heavily on government funding, as can be seen by the Wheel’s survey from 2009. This is an issue in many Western countries, as the move towards both venture philanthropy and earned income has been slower particularly in Europe than in the U.S. The creation of the European Venture Philanthropy Association in recent years is a welcome development, as now there is a central point for the development of this important sector. In Ireland there are a small number of organisations that use the Venture Philanthropy ethos including Social Entrepreneurs Ireland and the One Foundation.
Although there are some funding opportunties from other organisations, such as Clann Credo, there is still a deficit of financing options. The Irish Small and Medium Enterprises Association (ISME) has been tracking credit to SME’s from the banking sector, or lack of credit as it turns out. What chance then for a small or medium sized social enterprise, or a social entrepreneur trying to start a new organisation? Ireland has been the leader in the Credit Union movement for a very long time, but isn’t it time that there was such a movement for both the SME sector and the Social Enterprise sector? Is there a way for some of the Credit Unions to move towards small scale financing of organisations that the larger banks won’t support in these post-Celtic Tiger days? It is difficult to see how many social enterprises will survive into the future if something doesn’t change.
This is one of the reasons why the Ryan Academy has called on the government to create a Social Enterprises Strategy. The aim of the strategy should be to stimulate this sector of the economy which not only provides urgently needed services to the less well off but also is a major provider of jobs. The UK and Wales have had Social Enterprise strategies for a number of years, and issues relating to financing could be addressed in the development of such a strategy. Innovative ideas to address this shortfall, including the creation of Earned Income strategies, is the only way forward.
There is a review of a book on women in social enterprises in the latest edition of the excellent periodical Stanford Social Innovation Review called “Half the Sky: Turning Oppression into Opportunity for Women Worldwide.”
This book highlights the harrowing stories of women who have turned adversity into opportunity for themselves and other women. The book highlights the author’s view of the solutions to the human rights violations described, one being access to (investment in) education, which is something that the Ryan Academy and Dublin City University are also strong believers in.
The other solution identified is that of microfinance, which is interesting as Grameen Bank, the originators of microfinance on an organised and large scale, loan mostly to women. In fact from a cursory look at the social entrepreneurship field it seems to have more women leading social enterprises than in the ‘normal’ world of for-profit start-ups.
Is this really the case and if so is there a reason why women are more involved in social enterprises than men, or is it just that the percentage is higher relative to the commercial sector? Although the glass ceilings in many sectors have been slow to be breached, can the social sector lead the way by showing the high level of entrepreneurship, innovation and leadership by women that other sectors have been lagging?
There is a hindi word ’Jugaad’ which is very applicable to many social innovations. The words literal meaning is innovation particularly innovation from very little resources. The word has started to get some interest in the West, but has been applied in India to social innovations. Out of interest, the word is also a slang term for the cars and trucks that one can see on the Indian subcontinent that are made up from parts appropriated from several vehicles.
Professor Anil Gupta of the Society for Research and Initiatives for Sustainable Technologies and Institutions tracks such social innovations through his Honey Bee Network, which ‘carries stories of local ingenuity’ and in doing so acknowledges the local provider of the solution. These knowledge providers include innovators, farmers, scholars, academicians, policy makers, entrepreneurs and non-governmental organisations (NGOs). The network now has a presence in seventy five countries and counting. At a time when many social entrepreneurs are cash-strapped, it is worth taking a moment to look at how innovative solutions to social problems are progressed in other countries. As the saying goes, it is alright to steal once you steal from the best.
As the recession starts to really bite, those who have difficulty at the best of times getting a job, whether through issues of education or previous lifestyle choices, find it almost impossible. One of the most interesting trends in social enterprise particularly coming out of the US are those social enterprises that are developed to create jobs. For too long we have been caught in a cycle of training and retraining this part of the adult population. New social enterprises (and some older ones) are instead developing a philosophy best summed up by one bakery in the US: ‘We make muffins to employ people, we dont employ people to make muffins.’ Such companies, employing a double or even treble bottom line, are filling a gap or a ‘market failure’ by creating employment in employment blackspots or for those whose backgrounds make it impossible for them to find decent employment. In these dark times for job creation, we need more social entrepreneurs who are willing to take a risk in creating exciting new start-ups that can help the rejuvenation of our communities, not just for the pursuit of profit but for the profit of people and communities.
There is some debate beginning in the social sector about where social entrepreneurs come from or more specifically where they should come from. Many believe that social entrepreneurs should come from within the community, from the grassroots. But many social entrepreneurs are increasingly coming from outside of communities. In some cases these people are those who have already made it in their own careers and now want to ‘give something back’ to communities in need. Some of these individuals set-up entrepreneurial entities while others are creating venture philanthropic organisations. Some of our colleagues are uncomfortable about such individuals, asking whether outsiders should set the agenda for a community, region or country. They point to organisations like the Gates Foundation and ask why a small group of wealthy individuals should set the agenda for an entire continent. Other colleagues feel that good comes in many forms, and that the wealthy or comfortably well off can set their own agenda in the 21st Century. This debate is set to continue
The DCU Ryan Academy is committed to helping entrepreneurs of all types and while there is a lot of support in Ireland for commercial entrepreneurs, there is not as much support for those involved in the social enterprise and non-profit sector. This blog is part of the commitment of the Ryan Academy to developing the area of social enterprise, social innovation and the social entrepreneurs who bring real social value to our communities everyday.
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