Social venture

A social venture is an undertaking by a firm or organization established by a social entrepreneur that seeks to provide systemic solutions to achieve a sustainable, social objective.

Background

Social ventures may be structured in many forms, including sole proprietors, for-profit and not-for-profit firms, non-governmental organizations, youth groups, community organizations, and more. Typically, government organizations are not considered to be social ventures, yet even government organizations can adopt entrepreneurial practices, possibly partnering with independent organizations, to explore innovative methods for providing social services. Elkington and Hartigan define three models for social ventures: leveraged nonprofit, hybrid nonprofit, and social business.^[1] In the leveraged nonprofit venture the entrepreneur uses external partners for financial support in providing a public good. On the other hand, the hybrid nonprofit venture recovers a portion of its costs through sales of its goods or services. The social business venture generates profits, but rather than return those profits to shareholders, like commercial ventures, it reinvests those profits to further the social venture and the resulting social benefits.

The distinguishing characteristic of the social venture versus the commercial venture is the primacy of their objective to solve social problems and provide social benefits. The social venture may generate profits, but that is not its focus. Rather profits are a possible means to achieve sustainability in providing a social benefit. The problems addressed by social ventures cover the range of social issues, including poverty, inequality, education, the environment, and economic development. The context in which social ventures operate is very complex as they are trying to bring about solutions where markets or governments may have failed or actually impede solutions. Further, these ventures are trying to provide solutions where money is usually in short supply—often these ventures have little assurance that their services can be paid for by those they seek to serve.^[2] These conditions necessitate that the social entrepreneur be creative, adaptable, and determined in finding new solutions to problems.

Examples

• Kiva (organization), founded by Matt Flannery and Jessica Jackley in 2005, provides a web-based platform that allows individuals to loan money to developing world entrepreneurs.^[3] Kiva operates as a non-profit with its web-based platform provided as a public good. Yet Kiva partners with microfinance institutions (MFIs) to identify and establish loans with the developing world entrepreneurs. These MFIs can charge interest and make a profit.
• Victoria Hale founded The Institute for OneWorld Health (iOWH) in July 2000 to find cures for infectious diseases prevalent in the developing world.^[4] iOWH is a non-profit pharmaceutical company that performs research and development on drugs abandoned by other pharmaceutical companies due to their lack of profitability. iOWH also partners with the for-profit drug manufacturers to produce and distribute their medicines. These medicines are then sold at low cost to those that need them the most. The revenues, in turn, are used to further the mission of making effective, low-cost medications accessible.
• Beginning in 1977, Dr. Ibrahim Abouleish started a journey to establish SEKEM, a "garden in the desert."^[5] The strategy that SEKEM employed was to develop a community based on holistic and organic agricultural methods. The result was a group of commercial ventures to produce and market agricultural products. Yet these commercial ventures were a secondary motive used to foster human development—providing education, jobs, and social services for a thriving community.

References