Social entrepreneurship and the next generation of giving

In the late 1970s, Drayton developed his own phrase, “Innovators for the public,” while an English entrepreneur named Michael Young introduced what he called “social innovation.”

Drayton’s phrase was meant to describe individuals who merge entrepreneurial instincts with a deeply-rooted commitment to social change. The term itself did not stick, but the idea did.

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“Society needed to unite ‘social’ and ‘entrepreneur,’” Drayton said. So, around 1980, when he founded his nonprofit, Ashoka: Innovators for the Public, Drayton coined a new term: “social entrepreneur.” In the 20th century, a movement of socially motivated individuals might also have been described as volunteerism or charity. Today, however, the movement reflects a changing view of humanity’s role in the world, said Shah.

“I think the world is moving from wanting to own and earn things to wanting to feel and belong to something bigger than ourselves,” said Shah.

A need for widespread innovation

The rise of nonprofit collaboration stems from a society-wide sense that social problems need innovative solutions that are not likely to emerge from the government, said Greg Dees, co-founder of the Center for the Advancement of Social Entrepreneurship at Duke University during a phone interview.

“We see our government struggling, and that’s true around the world,” continued Dees. “We need private resources and private resourcefulness.”

By “private resources,” Dees means more than just money. Social entrepreneurship, as a field, focuses more on people and their new ideas than traditional philanthropy alone, according to Kriss Deiglmeier, executive director of Stanford’s Center for Social Innovation.

“Philanthropy is just the money side,” Deiglmeier said. “To drive a social innovation to scale, it takes a person with the right skill set — people who are systems thinkers, collaborators, empathetic innovators.”

But innovators and entrepreneurs do not work in isolation. They require teams and structures in order to be effective, said Dees. In social entrepreneurship, however, particular organizational structure can vary.

For example, some social ventures, such as Kiva, emphasize the innovation aspect of entrepreneurship. Others, like Ashoka, emphasize the enterprise, or the business side.

This distinction forced entrepreneurs to support one of two schools of thought in the field for many years, according to Dees. Now, though, most people see that the business model and the innovative solution itself are inextricably and delicately intertwined.

“It is inherently challenging trying to run a for-profit model embedded in social innovation,” said Deiglmeier. “It’s hard on a day-to-day basis. The capital markets have not evolved to a point that’s real supportive of social innovations.”

Part of the difficulty lies in trying to apply universal metrics to all social ventures, according to the Center for Effective Philanthropy’s Buchanan. In the for-profit business sector, there are universal measures, such as financial profitability or growth that allow very different companies to gauge performance using the same measures. In the nonprofit sector, that uniformity does not exist.