Social Entrepreneurship is NOT About Self-Fulfillment

I participated in an event and discussion recently that really brought to the forefront something that I have already been thinking about for some time. What I’m seeing and hearing is social entrepreneurship being “pitched” as a means to self fulfillment, and a way of doing something meaningful and feeling good about what you are doing, in your career or otherwise.

Well I think we need a reality check here. While it’s great to want to do something that is “meaningful” and I’m glad that this drives many young people to social enterprise, doing good is not as fulfilling and glamorous as some make it out to be. In reality, what I see in my own work and hear from other social entrepreneurs is that it’s a thankless task. But what makes these people amazing is that they do it anyway.

I was talking to a social entrepreneur in the Philippines a few years ago, and something she said stays with me even today.

“You have to be prepared to have mud slung in your face by the people you are trying to help” 

This is so true and I’ve reminded myself of this many times since this conversation. It’s not that people don’t appreciate when you are trying to help them, but efforts to change a system or to do good can often be misinterpreted. You should not try to do good to get thanks for it or to find self-fulfillment, you should do it because you really believe that it is important, and are willing to deal with the negative consequences that can come from trying to instigate change or challenge the status quo.  

A recent article titled “A Letter to a Young Social Entrepreneur: Why the Poor are not Raw Material For Your Salvation” speaks to this point. We are not the first to have ideas to make the world a better place. Our efforts will not always be rewarded. But we should do it anyway. Be prepared to go broke, to have mud slung in your face, and to face numerous other challenges. Don’t expect to get thanks or appreciation or awards. Don’t do it for “badges” or recognition. Do it because you believe it’s right and do it no matter the consequences.

The Danger of Funder-Driven Social Entrepreneurship

I work with start-up social entrepreneurs and people often talk to me about new ideas they are hatching up. These conversations are usually full of energy and excitement, with the aspiring entrepreneur talking a mile a minute about a great idea they have for a venture and why it will be a great solution to a particular problem.

These individuals are passionate about the impact they want to create, but also passionate about starting a business to do so. Their excitement and willingness to take on the challenges that come with launching a venture shows.  

Recently, however, I’ve had some conversations that don’t follow this pattern. Instead of the usual excitement, I sense hesitation and reluctance. I ask these “aspiring entrepreneurs” why they want to start a business.  “My funders suggested I start a business and use the profits to help my nonprofit organization be more financially sustainable” is the answer.

Somehow, it seems, social entrepreneurship has gained the reputation of an easy solution to a nonprofit organization’s shortage of donor funds. Instead of funding the nonprofit’s work, some funders now see it a better use of their funds to help the organization start a side business that will then continuously fund the nonprofit.

In theory it sounds simple, if the donations aren’t coming in start a business and supplement your revenue with the profits. Unfortunately, it’s not simple at all. Entrepreneurship is not for everyone. It takes a certain personality, someone who is knowledgeable and passionate about a particular industry, is stubbornly persistent, and has an appetite for risk and an ability to deal with many ups and downs and constant uncertainty.

Early-stage investors say that it’s all about the people and the idea is secondary. You can have a great business idea, but the wrong people will not be able to implement it. Or you can have an average business idea, and the right people can make it a great business. As with everything else, some people are suited for entrepreneurship, some are not.

Because the right entrepreneur is such a key factor, we cannot assume that every nonprofit organization will have the right person on the team to launch an enterprise. Most in fact will not.  Starting a business, social or not, is very risky, and the failure rate of start-ups is incredibly high. Many successful entrepreneurs succeed not on their first try, but on their second, third, sometimes fifty-sixth.

Even if a nonprofit organization has someone on the team who has an entrepreneurial drive and the right skills and experience, launching an enterprise will take time and resources. For most businesses that do become profitable, it is a matter of years and many resources invested.

Funders encouraging a nonprofit to become enterprising must consider how much of their time staff will need to devote to the effort (or how much it will cost to hire a good management team) as well as the financial resources needed.

In addition to the risk of failure, another potential negative consequence is the effect on the nonprofit’s core activities if staff are devoting time to starting a business.  There have certainly been examples of nonprofit organizations that have established business ventures that have become profitable and contributed back to the revenues of the parent nonprofit.

Important factors for success, however, are the right people to lead the venture, and a business opportunity that can leverage a core competency of the parent nonprofit organization. A social enterprise is a powerful tool when used in the right circumstances. But expecting it to be a sure way for a nonprofit to add to its revenue streams is almost sure to result in a stressed out entrepreneur and funder, lost funds, and a loss of focus on the primary work of the nonprofit.