RUReadyND - Cluster Article

•

PDF

Social Entrepreneur

Helping others is society's hottest business trend. A select group of businesspeople called social entrepreneurs are combining nonprofit organizations with the latest management strategies -- and creating a powerful market niche.

These new entrepreneurs fill a needed role in the nonprofit sector. Traditionally, nonprofit groups rely on cash donations, grants and other external funding sources.

However, when grant money gets tight and donors aren't cutting checks, services fall by the wayside. Enter the social entrepreneur.

According to the National Center for Social Entrepreneurs, these businesspeople "are nonprofit executives who pay increasing attention to market forces without losing sight of their underlying missions."

Social entrepreneurs strategically sharpen a nonprofit agency's business focus, improve profitable services and generate additional income from new outside sources.

What does this mean to the nonprofit organization? New services and earned income means less reliance on fickle grant funds. With expert consultation, nonprofit groups can be lean, mean business machines and help their target population more than before.

It's a delicate balance between profit and people -- and social entrepreneurs balance it beautifully.

Social entrepreneurs aren't just a North American trend. They can be found promoting AIDS education in Brazil and providing education, training and counseling for recently released Nigerian prisoners. Helping people through profits is a worldwide trend.

Social entrepreneurship isn't for all people and businesses. Similar to a for-profit business, it takes time and market research to reach your goal.

Ashoka, a social entrepreneur consulting firm, believes fledgling entrepreneurs must dedicate 11 to 13 years towards their goal. First, future entrepreneurs spend eight to 10 years studying their field and developing ideas.

The second phase, which takes about three years, is the actual development and marketing. The key link between idea and marketing is cold, hard cash and savvy consultation -- and that's where groups like the Robert's Enterprise Development Fund (REDF) enter the fray.

The REDF realized it wasn't just money these organizations needed -- they also needed organizational help.

The REDF provides both venture capital and expert information management to participating nonprofit agencies. They provide both the method and the cash to carry it out -- ensuring a greater chance of success.

"Social entrepreneurship harnesses the power of the marketplace," says Jed Emerson, executive director of the REDF. A 25-year nonprofit veteran, Emerson has worked with the REDF since 1989 and spearheaded their social development efforts.

The REDF evolved with a clear purpose -- to expand the economic opportunity for homeless and very low-income people. "These are the people with no value in the mainstream labor market," explains Emerson.

Emerson scoured his community for entrepreneurs that shared REDF's vision. "I went out to community meetings and listened to folks," explains Emerson. "I went for people that had an idea. I talked to people and asked about their barriers."

Some social entrepreneurs jumped at launching a high-risk social strategy. Others preferred the more traditional, grant-funded approach. Now, the REDF has a portfolio of 10 nonprofit organizations operating 24 business ventures.

"Our ventures employ 480 people and touch 600 to 800 individuals each year," Emerson explains.

Entrepreneurial nonprofits are carefully handpicked by the REDF. The directors that spearhead these organizations have both a clear vision and a savvy business plan. They can conceptualize a destination and mission -- but they need help with how to get there.

"The people with the greatest potential for success are those that combine passion with profits. It's the double bottom line: financial performance and social impact," explains Emerson.

This "double bottom line" doesn't absolve the social entrepreneur from making hard choices. The REDF expects their partners to take their enterprises "to an appropriate level of scale."

Since the ultimate goal is profiting from the outside marketplace, increasing enterprise size, identifying target niches and serving the largest number of individuals are all necessary components.

The social entrepreneur doesn't have to make these hard choices alone. The REDF supplies two fantastic support systems -- cash and expert consultation.

"We bring $75,000 to $125,000 into the foundation as an entry grant," says Emerson. An MBA intern is immediately appointed to support the nonprofit, pursue focused projects and focus on goals.

In addition, the REDF spearheads the Partners for Profit (PfP) group, another support system for the fledgling social entrepreneur. The PfP consists of 10 to 20 savvy businesspeople who provide market-driven feedback and contract referrals.

"Venture philanthropy brings more resources to the table," explains Emerson. Suddenly, a possibly struggling entrepreneur is enveloped by financial, organizational and social support -- and poised for success.

Emerson has seen his share of REDF success stories. One example is Youth Industry, based in San Francisco.

Originally envisioned by a young doctor as a way to help homeless kids, Youth Industries now boasts $2.3 million in sales. Homeless kids can gain valuable work skills through what Emerson calls the "continuum of employment."

Kids enter the program by working at a low-stress bicycle repair shop.

"Their main requirement is to show up on time," says Emerson. From there, kids learn progressively more responsible skills -- from customer service to working a cash register.

"It gives these kids a chance to experience success," explains Emerson -- plus it creates valuable workers out of a previously "unemployable" population.

Want to make a difference and a profit? The social entrepreneur field is here to stay.

"This is an evolving field," says Emerson. "I receive about 60 e-mails a day asking for information."

Social entrepreneur conferences are converging in Latin America and Hungary. Universities teach social entrepreneur classes as part of their curriculum. "This is definitely not a fad," reports Emerson.

Despite its growing popularity, Emerson admits social entrepreneur salaries are low -- usually between $50,000 and $60,000 a year. Many successful social entrepreneurs hold MBAs and can command twice that amount in the for-profit sector.

However, being a social entrepreneur is not about the cash. It's having the necessary vision, business savvy and resources to follow a dream. Social entrepreneurs are changing the way the world does business -- while helping a lot of needy men, women and children along the way.

RuReady.nd.gov - Education & Career Planning

RuReady.nd.gov - Education & Career Planning

Social Entrepreneur

Links