What is social entrepreneurship? How to help and earn at the same time
Social entrepreneurship - what is it, what are its main differences from commerce in the classical interpretation of this term?
The essence of social entrepreneurship, and at the same time - its main difference from classical commerce, lies in its focus - if ordinary business is primarily aimed at making a profit with its subsequent distribution among shareholders, management and employees of the enterprise, as well as with partial refinancing, then the primary task of social entrepreneurship is to fulfill a certain mission, which is useful to society in one way or another.
At the same time, attention should be paid to the possibility of making a profit in commercial companies that consider themselves socially oriented - but the funds received do not go to the shareholders (owners) of the enterprise, but are directed to the development of the organization (in other words, reinvestment is carried out 70 -90% profit - after deducting taxes and salary payments to staff). Although everything here is far from unambiguous, because there are several areas of social entrepreneurship - and, accordingly, several options for financing projects and distributing profits:
1. Purely non-profit organizations. For example, the Ashoka charity foundation, which finances other social projects, both beginners and very solid ones.
2. Hybrid forms of social entrepreneurship. First of all, it is necessary to mention here the largest social networks such as Facebook and Instagram. The main concept of these projects was to increase communication opportunities between people, but after a while, due to high traffic, social networks became universal advertising platforms and allowed their creators to receive colossal income (and Instagram initially did not plan to modernize at all). That is, in this case, a successful combination of a commercial project and a social mission is shown.
3. Commercial organizations that open socially oriented projects in parallel with their activities. Here you can cite almost any large corporation as an example, because practically all of them open all kinds of charitable foundations. Another question is the true purpose of the projects in this case. The thing is that most of these socially oriented projects are created either for money laundering or for the purpose of PR. But nevertheless, nobody removed the social component from them, and they bring considerable benefit to society.
4. Venture non-profit funds, the main purpose of which is to finance start-ups that have a more or less social orientation.
Social business in Russia
If in Western countries social entrepreneurship is a fairly widespread phenomenon that benefits everyone - both businessmen themselves, and society and the government, then in Russia business, aimed primarily at the implementation of a particular social mission, remains in "Embryonic" state, and because of significant economic problems, everything goes to the fact that in the near future the situation will not change in any way. No, there are many charitable foundations, individual entrepreneurs developing mobile applications that allow children to better absorb school material, as well as larger organizations that implement important social tasks related primarily to environmental issues, but altruistic business in Russia is not very popular ... The only serious non-profit organization is the Our Future Foundation for Regional Social Programs, founded back in 2021 by Vagit Alikerov. The main mission of the foundation is to help people create a business, whose fate cannot be envied - these are widows, single mothers, disabled people, war veterans and all those who, for objective reasons, need help, and even more so at the beginning of their entrepreneurial activity.
What drives entrepreneurs to implement social projects?
The motives that drive a businessman who decide to create a commercial project with a social focus can be very different:
1. Desire to make this world a better place. Quite vague motivation, but nevertheless, it confirms its high performance. Many American and British entrepreneurs are truly making the world a better place by raising the level of education of the population, improving the living conditions of those in need, and implementing important health projects. At the same time, they may not receive direct benefits, but they form a positive image of a “capitalist with a human face”, a kind philanthropist and, in general, a good person. Incidentally, this approach is the best PR in a political career.
2. PR company. In some cases, a businessman initially seeks to get an image, and not to change the world for the better, and therefore creates a "socially oriented project" for a while. But even that is better than nothing!
We often hear about social entrepreneurship, but we don't fully understand what it is. Sometimes it is confused with the vague phrase “social responsibility of business”, which officials like to mention in their speeches. Is building an effective company and charity compatible? Can you make money by solving social problems? The Impact Hub has been operating in Moscow for five years now, a platform designed to bring social entrepreneurs together and help them develop their projects. Together with her co-founder Yekaterina Khaletskaya, the "Shop" figured out the topic.
Social entrepreneurship is a way to solve social problems through business. This concept works in a variety of areas - helping people with disabilities, education, ecology, animal welfare and many others. “Of course, there are examples where entrepreneurship is impossible: a hospice can only work for charitable money and there is no mechanism for making money,” says Ekaterina Khaletskaya, co-founder of Impact Hub Moscow. "But overall, a charitable idea will be more sustainable and can last longer if a business model is invented for it."
When a social entrepreneur creates his business project, he focuses not on profit, but on an efficiently working model. The main thing here is not earnings, but social returns. “Money is just a mechanism to include your target group in the economy. If a foundation helps people with mental disabilities financially or provides free carers - this is one thing, but when these same people are involved in work, it gives a completely different result. Their wards become real members of society, included in everyday life, ”explains Khaletskaya.
Social entrepreneurship has not yet become mainstream. Globally, less than 3% of the population is employed in this area. In Russia, a new initiative is often confronted with a misunderstanding: is it possible to earn money in the social sector and how to maintain an ethical and financial balance? “When people see our projects, they cannot always understand that these are the sprouts of a new economy. Many people believe that it is impossible to create a successful business project in this area, - says the co-founder of the center. "To convince people otherwise, we show how charitable initiatives can make money."
successful social business projects
A charity store that sells used brand name clothing at discounted prices. The proceeds from the sale of goods are used to pay for the rent of the store and the salaries of employees, the rest of the funds are donated to charity. Today, there are more than 30 reception points and four stores in Moscow, where anyone can leave their unwanted clothes.
An open space in St. Petersburg, where adults with mental disabilities, together with professional mentors and volunteers, work in ceramic, graphic, sewing, culinary and carpentry workshops. All manufactured goods can be bought in the project shops and some cafes of the city. This year, "Simple Things" are planning to open their own inclusive cafe.
An online service where users help stray animals from shelters across the country. In real time, they can observe cats and dogs, feed and care for him remotely through intermediaries, paying for all services with special points. When the selected service is provided to the animal, the user will receive a report on the funds spent.
Social entrepreneurship is a unique, in its essence, quite young line of business, combining classic entrepreneurship and charity. The key business idea of this area is the solution of any important social problems. That is, social entrepreneurs, using various practices and innovative approaches to business, help people, regional groups, and the economy. But this business should not be confused with ordinary charity. Despite many similarities, social entrepreneurship can be a very serious and long-term source of income.
There are many shortcomings of the domestic economic model, therefore, such entrepreneurship oriented towards solving certain problems is very relevant and positively perceived by society, receiving all kinds of support.
Social Entrepreneurship Criteria
Although this is a fairly new and unexplored area for Russia, social entrepreneurship has already gained momentum throughout the world. There are even educational programs in the field of social entrepreneurship in some of the famous foreign universities.
What traits an entrepreneur must have to be successful in this area:
- Belief in people and the ability of everyone to contribute to the economic and social development of society.
- Desire to simplify life, change a certain field of activity and make it better.
- Unlimited social boundaries and determination to take risks.
- A certain amount of impatience is not to sit idly by, but to make real changes in the world around us.
Areas of social entrepreneurship
There can be many types of social entrepreneurship. This area of business is not limited by the framework, and interesting, original ideas are brought to life every day. But the most relevant areas are:
- Environmental business. The incredibly acute problem of environmental pollution creates huge scope for activities aimed at improving and preserving the ecological situation. It can be anything from finding alternative “clean” fuel sources to recycling waste.
- Innovation in the lagging spheres of economics or science.
- Helping people in difficult living conditions. Topical solutions for low-income, lonely, indebted banks, unemployed, sick people will definitely receive enough investment and support from the population.
- Creating jobs for people with disabilities or certain social groups (nationalities, age groups, etc.).
- An environmental goods or food business.
- Organization of useful leisure. Organizing events, hikes, sections, construction of important infrastructure facilities (sports grounds, city greening, etc.), by creating you can not only benefit, but also make good money.
- Business in education. Specialized training courses, children's thematic circles, etc.
Some Social Business Ideas
It is no longer easy to build a business that would bring good income, but to organize a business that also brings benefits to society is even more difficult. Nevertheless, there are several areas in which you will definitely receive support from investors, and possibly the state.
The names of the leaders in this field are well known in the business community. Our portal has already told about some of them. Today we decided to compile a top list of the most interesting examples of social business. Perhaps these stories will inspire someone to start their own startup.
The credo of this Australian company lies in the name itself. In the literary version, it sounds something like this: "Who doesn't give a damn?" The literal (and not entirely decent) translation is directly related to the scope of the WGAC - toilets and everything connected with them.
This company produces paper for the retreat. And at the same time, along the way, he manages to save the world. The point is not only that WGAC toilet paper does not contain chemical dyes and is made from already recycled raw materials. The ambitions of the company's owners are much larger. They took up the fight against unsanitary conditions in third world countries.
More than 2.5 billion people in developing countries do not have access to proper toilets. And the worse things are with hygiene there, the higher the rate of morbidity and mortality - especially among children. Three guys from Australia decided to regularly donate half of the profits from the sale of toilet paper to improve sanitation in poor countries.
The money for creating a business was obtained through crowdfunding. One of the founders of the company, Simon, locked himself in a toilet in the warehouse and refused to go out until the required amount came up. Thanks to this eccentric action, the guys instantly became famous and easily raised 50 thousand dollars to open a business.
Can T-shirts change the world? Sevenly owners are sure they can.
The company was founded in 2021 by Dale Partridge and Aaron Chavez, who decided to awaken consciousness and generosity in the younger generation.
Boys and girls who buy Sevenly T-shirts know that $ 7 from each sale will go towards good causes, such as fighting cancer or supporting people with autism. More than $ 2.7 million has already been donated to charity.
Kiva is an online platform where you can get microloans to start your own business. "Micro" means an amount from $ 25. In many countries, residents do not even have such a negligible amount for a mini-startup. Kiva helps a person escape from poverty by offering him not fish, but a fishing rod - and to some in the literal sense: sometimes applicants ask for money for fishing tackle in order to feed a family and start a modest business.
Philanthropists who wish to donate through Kiva browse the history of applicants on the site and select those to whom they could lend money. Microcredits are returned to lenders in 99 out of 100 cases. The online platform itself does not charge interest on donations. Kiva is financially supported by various corporations, national institutions and individual citizens.
The so-called organic clothing made from natural fabrics is produced under this fashion brand. The founders of the company emphasize that the history of their products can be traced "from seed to counter." By the way, Rapanui clothes are sewn in a factory that is powered by wind energy.
A company promoting eco-fashion is solving another social problem: it transfers funds to help young people find work or start a business.
Many legendary business projects had an apartment registration. Take Alibaba Group, for example. The founder of this empire, which includes the well-known AliExpress, Chinese billionaire Jack Ma, had no money for an office, and he opened it in his apartment! Amancio Ortega, the founder of the Zara fashion brand, sewed linen for sale in his living room. In fact, the minimum required to start a business is a computer, a telephone, of course, an idea and indomitable faith in your business.
Allocate a room for yarn
In 2021, Natalya Bazil and Lyubov Yangulova launched a joint project in Krasnoyarsk for the production of charming hats "The Hat rules!" decree.
"We had a great desire to start a business, but there was no money, so a home office became the only possible option," says Natalia Bazil. "The first time was testing a business idea, and we minimized costs. Directly mothers came to the house on maternity leave, sometimes with children, we taught them, conducted interviews, stored finished products and yarn. "
Demand, and with it the business, was gaining momentum, and Natalia and her friend went to courses on social entrepreneurship.
"And when we painted what we wanted and how much we needed for this, it turned out that all the necessary yarn would take up an entire room! It was then that we realized that the time had come for a separate workshop," says Natalya. - Now we meet with the girls in it twice a week, we all have tea together, the administrator accepts ready-made hats, right there you can knit something or slightly finish it. In addition, for girls this is an opportunity to "walk" a new lipstick or hat. a kind of status: "Mom went to work," they say to the family. After all, for a woman on maternity leave this is also important. "
Equip a home office
The main advantage of implementing a business idea at home is the minimum investment: you do not need to pay rent and utility costs. The entrepreneur does not risk losing money and being penniless. At the same time, you can go about your business without following a rigid schedule and without being distracted from household chores. This is exactly what Natalia Kazakova thought when she opened her social business - the center of industrial tourism and vocational guidance "Profi-Tour" in Kaliningrad.
"I started a business at home, six months later I rented a workshop in the suburbs of Kaliningrad. But then I moved the" office "home anyway. Our excursion activities still take place on the bus, and I can do all my business from home ", - says Natalia.
That was three years ago. The savings are substantial, it took 15,000 rubles a month to rent a workshop from Natalia. Employees of "Profi-Tour" also work from home.