How Social Entrepreneurship Is Unique

All entrepreneurship is, at its essence, creating something new. Entrepreneurship is making something that hasn’t been there before but is nevertheless perceived as needed. It quenches a demand.

What distinguishes social entrepreneurship from tech entrepreneurship is where the demand comes from. Tech entrepreneurs seek a demographic that will pay for their product/app etc. For them, sufficient demand means enough paying consumers who want their product to recoup the costs of making it.  

Social entrepreneurs, by contrast, care about a different kind of demand. They ask not who will buy their product but, rather, who needs it (or the byproducts of it). Indeed, in all likelihood, the beneficiary of their product is unable to pay for it. Someone who’s unemployed, for example, probably can’t afford a job searching product or a resume writing business precisely because she’s unemployed. Thus for social entrepreneurs, sufficient demand refers more to societal need. 

In short, other kinds of entrepreneurs have something material and desirable give: a new app, a cool or useful product. And they have someone to buy.

Social entrepreneurs may not have either, at least at the outset. Novice social entrepreneurs, in many cases, have nothing but time to offer the nation’s most pressing problems. And their beneficiaries have little to give in thanks.

If you think social entrepreneurship is starting to sound a lot like non-profits, it’s true they have a lot in common (and of course many social enterprises are non-profits). Like non-profits, social entrepreneurship looks outward and asks, “What does our society need?” “How can we solve this problem?” They both recruit community to aid their efforts.

Their solutions, however, often differ. Non-profits are less revenue-oriented, whereas social entrepreneurship must, by definition, be able to sustain itself without grants. For this reason, non-profit solutions make take the form of short-term fixes or services. Social enterprises, by contrast, must apply a sustainable market solution to a societal problem. Non-profits serve fish; social entrepreneurs teach people how to fish with market incentives and products that solve their problems without burdening the economy.

But non-profits meet an essential need of any society: they often offer the best possible short-term solutions to acute problems. They’re the first to feed starving children and offer humanitarian relief. Their power comes from a donor base predictably spurred to action by tragic related events.

Non-profits also have the advantage of a singular focus. They focus on revenue only as it relates to their primary social mission. Social entrepreneurship is inherently less “social” than non-profits, because its other priority—profits—will inevitably conflict. The downside of this singular focus for non-profits is, if their funding dries up, both the organization and their beneficiaries are out of luck.

For these reasons, I believe that social entrepreneurship is a more sustainable solution for chronic societal problems, like unemployment, education and inner city problems.

Social entrepreneurship doesn’t have the resource-fueled innovation of tech startups or the simple priorities of non-profits. But it does reframe problems in a model our entire society can participate in, not just those rich and kind enough to donate. It stimulates the economy, incites public awareness or offers new solutions to centuries-old problems.

Social entrepreneurship draws on the hungry business-savvy of entrepreneurship, on the altruism of non-profits and on the industriousness of capitalism. Social entrepreneurship is equal parts innovation, economy and mission. It takes the very best of America’s businesses and combines them into something as equally productive as it is compassionate.