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Social entrepreneurship: What it is and how to use it for change

Discover how 14+ social entrepreneurs and their organizations are shaping a new chapter in social change through moral leadership.
41 minutes
Social Entrepreneurship - Hero


Ask any young person today who is passionate about social change and you can’t deny that the discipline of social entrepreneurship has taken root in our society. However, there is a missing element in the global conversation about what it means to be a social entrepreneur: the practice of Moral Leadership.

What are the characteristics of successful social entrepreneurs? With the number of graduate programs offered through universities, it’s easy to assume that the makings of a social entrepreneur lie in mastering the business fundamentals: marketing, business model design, finance, branding, and more.
However, these skills alone don’t paint the full picture of the hard-edged skills we’ve witnessed in Acumen's community of investees, Fellows, and course takers.
These practices are often less visible than the flashy websites and Kickstarter videos on which most early-stage entrepreneurs are focused. The practices of moral leadership show up as courageous conversations that take place in meetings with colleagues. They are carefully-weighed proposals presented to board members to guide tough decisions and next steps. The practices are apparent in deeply thoughtful, well-researched ideas that are pressure-tested and refined over many teas shared with trusted peers. 

The rise of social entrepreneurship

Social entrepreneurship was sparked by those who realized that traditional capitalism was failing our most vulnerable, and decided that inequity and injustice could no longer be ignored. Boldly, they asked, ‘What is possible when we position people and the planet at the forefront of our decision-making?’

The energy around the need for and growth of social entrepreneurship is undeniable.

(Rate of social enterprise startups in the UK; number of social entrepreneurship courses.)

Traditional capitalism’s lack of humanity is more than just a social failure — it’s an economic failure, too. Acumen’s founder and CEO Jacqueline Novogratz points out in an interview with IKEA Foundation's "Ask an Expert" that in 2007, 150 years after Thomas Edison invented the lightbulb, 1.5 billion people — 22% of the global population at the time — did not have access to electricity.
Traditional markets didn’t see a reason to bring electricity to rural, low-income areas lacking infrastructure. And well-intentioned charities typically focus on providing help where they see the need, instead of fulfilling the pull of consumer demand, which scales much more effectively.
Social entrepreneurship sits between these two worlds and builds off of lessons learned in each sector to reimagine what’s needed to achieve tangible, lasting impact. 
D.Light is an example of a social enterprise that leveraged patient capital to serve over 100 million previously off grid communities with energy. D.Light builds low-cost solar lamps and solar energy systems to provide electricity while creating thousands of new jobs and working to eliminate reliance on kerosene.
Mario Gutierrez, Chief Growth Officer, School Frontiers and Founder, MEMA Social Innovations, reflects how social media has played a role in helping people around the world understand the magnitude and intensity of problems. Having information at our fingertips uncovers deeper complexities of the problems at hand as well as their true scope.
Ashish Shrivastava, Founder of Shiksharth, a nonprofit working to improve education in conflict-affected areas, and Acumen India Fellow, adds that our digitally connected world leads to growing empathy in a global economy. “If somebody is hungry or if somebody is unemployed, that is not just a problem of a different world. It's all interdependent and I need to do something about it.”
Ashish Shrivastava
India Fellow

Ashish Shrivastava

Ashish is the Founder of Shiksharth working in conflict affected tribal India in the state of Chhattisgarh. Shiksharth is a not-for profit educational research initiative focusing on education in rural and tribal India. Currently working towards engaging community and parents actively in excellent learning for their children by introducing contextual...

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Ashish’s work in conflict-affected tribal India is only one example of individuals building local solutions in response to social needs. Author David Bornstein cites social justice movements as the catalyst for interest in social entrepreneurship.
“...because of historic shifts like the women’s movement, the spread of political freedoms and access to education, and the growth of middle classes in many developing countries — the world has seen a marked increase in the number of people who have the capacity to be change-makers. …because of the pace of change and the information revolution, more people are aware that institutions — especially governments and businesses — are failing to address big problems in the environment, the economy and education.”
He goes on to recognize that, due to their complexity and need for responsive solutions, our societal challenges “demand innovation from many directions” — a challenge social entrepreneurs have risen to meet.

However, in the excitement of building scalable, innovative, customer-driven solutions, a crucial component has been lost: sustainable social enterprises require both a mastery of the business fundamentals and the practice of moral leadership.

Anyone dedicated to creating change needs to be guided by both a moral compass and business acumen –– what we coin ‘character and competence.’ This combination makes the most of tools and strategies, yet remains grounded in moral leadership. 
Armed with this wider lens of what it means to be a social entrepreneur, these social innovators redefine success, build inclusive organizations, connect across lines of difference, and persist in the beautiful struggle of contributing to a more just, inclusive, and sustainable world. As more people practice moral imagination, together we can develop economic models that make sense for all of us, not just for a chosen few.

What differentiates social entrepreneurship from traditional business

A social enterprise is defined as any organization that prioritizes transformative social impact while striving for financial sustainability.

In a perfect world, there won’t be a need to distinguish between ‘businesses that do good’ and ‘business that make money.’ Until then, defining what makes a social enterprise unique is worth understanding.

Common questions that come up when defining a social enterprise are:
  • Is a social enterprise a nonprofit that acts like a business? 
  • Is social enterprise a business with a triple bottom line? 
  • Can a business serving the environment be a social enterprise? 
  • Can a social enterprise earn a profit?
  • Does a social enterprise need to be a nonprofit entity or a for-profit entity? 
First, a social enterprise is not defined by its governance structure. It can run within a nonprofit, for profit, or hybrid business model.
As above, the key difference separating a social enterprise from a traditional business is that social innovators prioritize social impact over all else.
Social enterprises are also not defined by the type of funding they receive. Gregory Dees, a pioneer of the social enterprise field and a professor at Duke, explained that social entrepreneurship is deeper than just a funding strategy: “At its heart, entrepreneurship is about establishing new and better ways to create value.” 
A distinction worth underlining is the idea that social entrepreneurship is about creating social or environmental impact first and foremost. With this mind, if a business were to remove its impact-generating activities and still function, does it fit within the scope of a social enterprise?

We bring this up because there are several examples of organizations some might consider as social enterprises but that don’t necessarily prioritize impact as a core function of their operations. For example, a company like Warby Parker is commendable in making the eyeglasses industry more affordable, using smart business practices to manufacture and distribute eyeglasses at a reasonable price, and donating over five million eyeglasses to low-income customers through their buy a pair, give a pair partnership with VisionSpring. However, Warby Parker could stop donating glasses tomorrow and its core business would not change.

As mentioned, despite the word ‘entrepreneur’ and ‘enterprise’, the full scope of social entrepreneurship encompasses much more than applying business practices to social good.
David Bornstein clarifies that “the greatest strength of social entrepreneurs isn’t in the way they build ventures to deliver products or services, but in the way they connect people in new configurations...” This is precisely why social enterprises that embrace the practices of moral leadership––practicing courage, listening to voices unheard, navigating values in tension, and more––are able to bring about long-lasting, sustainable, change.

How to shift the status quo with social entrepreneurship

Magic happens when social entrepreneurs find the sweet spot where they generate value for the people they aim to serve, package that value in a way that people are willing to pay for, and do both in a way where each drives the other in a virtuous cycle. With every step toward a new, more fair system, the revenue model is fueled, and vice versa.

Finding this social innovation sweet spot is not easy, but there is a common theme shared by experienced social entrepreneurs that provides a big head start: imagining solutions that haven’t been tried before requires falling in love with the problem you aim to solve, not with the idea you think will solve it.

Daniela F. Gheorghe, SME Finance Lead at African Management Institute, Skoll Scholar, and Acumen Academy community social innovator recommends, “Remember to not fall in love with your idea, but fall in love with your mission and why you’re there.” Similarly, Ashish Shrivastava’s biggest learning as a social entrepreneur is to have close proximity to the problem. In order to leverage your moral imagination to envision what’s possible, Ashish reflects that having some experience of the pain or problem you wish to solve is what allows you to relate to it an authentic way.
With a dedication to understanding the problem and its context, social entrepreneurs can avoid the pitfall of creating solutions that aren’t truly needed, or worse, will cause more harm than good.
Another example is Programa Valentina, an organization addressing youth unemployment in Guatemala––where a third of young people between the ages 15 and 29 are unemployed––by growing from an all-girls coding program to a six-week intensive bootcamp on technical and soft skills. To Jessica Hammer, co-founder and CEO, the biggest mistake a social entrepreneur can make is to look for a solution without having a clear idea of the problem. “Social entrepreneurs usually start with an idea, and then think about how they could adapt that to a certain population,” Jessica explained. “But, it’s important to really understand your problem––otherwise you’re at risk of coming up with something that doesn’t fit the needs of the people you’re trying to serve”. 
When it came time to place coding program grads into jobs, the team found there was still a mismatch for the skillsets employers were seeking, Programa Valentina reoriented back to the problem they initially set out to solve––unemployment. Jessica and her team realized that youth weren’t married to the idea of getting a coding job; they cared about getting a quality job. Refocusing on the problem allowed Programa Valentina to retool their program with a curriculum that was more informed by employer needs, and thus better preparing youth to land a good job after graduation. 

Social entrepreneurship finds overlooked power in low income communities and then changes the system to tap that power.

JB Schramm
Co-Founder of College Summit

Why we need a socially-conscious approach to business

Without moral leadership, entrepreneurial strategies, tactics, and business models in pursuit of social aims risk being superficial band-aids. The principles of moral leadership give these efforts soul.

But what does this look like in practice?
When asked to reflect on what moral leadership means to him, Ashish notes how it requires, “persistence and courage: it’s not a one day thing. It’s not a one-month thing. It will take years and one needs to have persistence.” He goes on to reiterate the importance of contextualization when working in social change. “One size doesn’t fit all. You need to be brilliant at listening and observing.”

A more just, inclusive, sustainable world

Socially-driven initiatives bring us closer to a world we can be proud of. As Jaqueline shares often in interviews, when future generations look back at this time, we don’t want them to say, “look how blind they were.” We want them to say, “look how hard they tried.”It is our responsibility to make headway together on the issues that hold so many back from living a life of dignity and opportunity.

What makes a social entrepreneur

While famous examples like Muhammad Yunus, Nobel Peace Prize winner and founder of Grameen Bank, come to mind when thinking of social entrepreneurs, any person with a passion and commitment for creating change can be a social entrepreneur.

Common characteristics of social entrepreneurs

Comfort navigating uncertainty

Social entrepreneurs are flexible to adjust course as needed when new context or circumstances come to light. They embrace uncertainty as an indication of wide-open possibility.

Resilience

Social entrepreneurs view every failure as new information to inform the next decision. Running into setbacks does not stop them in their tracks but instead provides fuel to double-down and try again.

Grit

Social entrepreneurs are frequently told to never give up, even when they encounter rough patches. Acumen’s own manifesto reminds us that tackling problems of poverty “requires patience and kindness, resilience and grit: a hard-edged hope.” Want to grow skill? Acumen Academy’s Master Class instructor, Angela Duckworth, teaches practical steps to build grit.

Commitment to impact

Social entrepreneurs are committed to the problem they wish to solve but are flexible in how they achieve it. They always prioritize impact outcomes over commercial or financial measures of success.

Creativity

Social entrepreneurs don’t let their thinking be limited by what’s been done before. They seek overlaps across diverse disciplines and sectors to see new, often surprising, ways to create, capture, and deliver value.

Courage

Social entrepreneurs are courageous to stand up for what they believe and take action that sometimes goes against the grain.

Willingness to lead

Social entrepreneurs embrace leadership challenges, large and small. Even when they don’t formally lead a team, they recognize leadership moments when they may need to make tough decisions, or speak up even if it’s unpopular or uncomfortable.

Humility

Social entrepreneurs recognize they do not have all the answers. They are quick to listen and slow to jump to conclusions.

Change is the domain of all of us.

Jacqueline Novogratz
Founder & CEO, Acumen

What the practice or moral leadership looks like when it hits the ground

The practices of moral leadership are just that – practices. Each is an exercise to be undertaken over time. Manifesto for a Moral Revolution explores each of the 12 practices in detail, but for the purposes of this guide, we grouped them into four categories:

1. Redefine success with moral imagination

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Our capitalist society has established a set of rules that govern our economic system and also present unavoidable realities. The choice to take a high-paying consulting job that affords disposable income to donate to causes you care about, might be contrasted with the community organizer role that pays half as much, leaving you with less to spare––but has potential for exponentially more impact.
Only you can make the final call on decisions like these. However, the practice of (re)defining what success means, not only in your personal life but at the global level, is well within the rights of our collective conversation about social change.

Unequal systems persist, yet they can be reimagined and reformed when people muster enough awareness and collective determination to do something about them.

Jacqueline Novogratz
Founder & CEO, Acumen
Jacqueline describes moral imagination as, “the basis of an ethical framework for a world that recognizes our common humanity and insists on opportunity, choice, and dignity for all of us.” She clarifies that moral imagination takes the idea of empathy a step further because, “empathy without action risks reinforcing the status quo.” Moral imagination is like a muscle that needs exercise; it is grounded in the immersion of another’s point of view but requires more than imagination––it requires action.

2. Build inclusive organizations

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Ideas that change the world are rooted in networks of people who are willing to be wrong.
Inclusive organizations are willing to operate differently than the norm. They often work within existing economic markets without being seduced by wealth or power, listen deeply to customers, partners, influencers, and markets, don’t assume they have the answers and co-create solutions alongside the people they serve, and build trusting partnerships with the understanding that one individual or organization can’t create change alone. 
Social entrepreneurs are motivated by the possibility of creating long-lasting, positive impact that is fueled by our economy, not hampered by it. 

3. Connect across lines of difference

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While our connected world exposes divisions across ideologies, values, and priorities, it also yields a richness in the sheer volume of perspectives to learn and grow from.

Sometimes, being close to a challenge is an impediment to progress. In these moments, it’s beneficial to have an outside perspective. Jacqueline describes this phenomenon as ‘accompaniment’, where each of us has a role to support one another and bear witness to both suffering and light throughout the journey. 
Understanding the importance of connecting across diversity and accompanying each other is the first step. But how do we actually do it? 

One way to connect across lines of difference is to use the power of story. Storytelling is a non-negotiable skill for any social entrepreneur because stories give voice to the arguments that drive decisions and to the thoughts that drive action. Nothing is more powerful for shifting the status quo than speaking to mobilize people toward a shared vision for change.

The task of telling stories that matter runs much deeper than the conversations we see taking place at kitchen tables and across the media. Our beliefs are reinforced by the stories we tell to others and ourselves; they end up shaping our perception of ourselves and of others.“We are the stories we tell,” explains Jacqueline, “and our decisions around the narratives we tell end up defining who we become.”
As with any undertaking to connect across lines of difference, tension is inevitable. Social entrepreneurs recognize that, in these moments, neither side is ‘right’ nor ‘wrong’. Both possibilities can exist equally and in tension with each other, like a self-balancing counterweight. An often-cited line from Acumen’s Manifesto is an excellent example of values in tension, where the work of creating change requires, “The humility to see the world as it is, and the audacity to imagine the world as it could be.”
greenface trading

How intentional relationships help green face trading grow beekeepers and business

Green Face Trading started as a one-man operation and, in only two years, grew into an international supplier of organic and sustainable honey that aims to further conservation efforts. Acumen Academy Accelerator participant, and Founder and General Manager Jony Girma, credits much of his success to building meaningful connections.

When bringing his business to new villages across Ethiopia, Jony takes time to set up learning centers and meet the community. He is personally invested, explaining, “I am from a rural area, so I understand, and I know how challenging and painful being unemployed is. That's why I'm really happy to create jobs and work with villages.”

Jony sits down with the local youth to talk about their employment challenges, and how by working to conserve natural resources together, they can create more job opportunities for themselves and their peers. Early adopters who join Green Face Trading end up serving as ambassadors, spreading their success and knowledge through word of mouth. He is proud to see how youth succeed, explaining that one of his high school self-employed beekeepers covers, “all his school fees and books from the honey sales.”

“Being inside the community helps you to understand the problem, and easily follow and develop strategies to solve the problems.”

During the beekeeper training process, building connection and bridging identities remain central for Green Face Trading. Not only do they support technical training, they also weave in motivational training by bringing in local elders. “We ask older people to compare their living, the forest coverage of the area, and the impact of deforestation to their livelihood, income, and health … This creates an opportunity for this generation and the youth to understand the impact of deforestation.”

It’s important to Jony that Green Face Trading doesn’t have a traditional business relationship with the beekeepers. When he visits local villages, it’s often in people’s homes, sharing tea and listening to their stories. “This all helps me to develop a family connection with them … I feel like I'm going to visit my own family.”

Maintaining close relationships with his beekeepers also proves to be good for business. “If they get poor quality honey, they're not going to sell to me,” Jony explained. And having familial relationships makes it easier to give and receive feedback that improves the business. “Every time we discuss, they are open and tell me what to do for them to improve productivity and to improve the quality [of honey].”

Based on their interactions, the beekeepers also advise Green Face Trading about trustworthiness and reliability of potential supply chain partners. Jony explained that opening up these paths of communication has, “helped me to improve my supply chain because of the feedback I have from them.” By accompanying the beekeepers and valuing their input, Green Face Trading has created a culture in which beekeepers also serve as the eyes and ears of the company with it’s best interest in mind.

"Listen, and try to really build relationships and strong networks into the business."

Accompaniment, building meaningful connections, and listening have proved monumental for Green Face Trading’s growth. Jony believes these are the key hard-edged skills needed for any entrepreneur. “When I'm talking with the beekeepers or with buyers, I listen to everything and … I try to find a solution for their problems. Especially when we're working with our rural communities,” Jony explained, “there should be a good partnership — a good relationship beyond the business — like a family relationship.”

His success with building relationships extends beyond his beekeepers, too. “This principle is not only with our community, it’s even with my buyers … because of this approach, my buyers pay me advance payment, so this helps me to develop my business.”

By building genuine relationships, accompanying all stakeholders across his organic honey ecosystem, and bridging identities, Green Face Trading continues to foster a trustworthy and thriving business.

4. Persist in the beautiful struggle

The work of social entrepreneurship has a honeymoon phase, during which sheer optimism can go a long way in weathering the ups and downs, leaps and failures. Progressing past the turning point from honeymoon to ‘real life’ does not lessen the appeal of a career dedicated to social change, but it is not for the fainthearted. 
It takes time. There will be setbacks. But that doesn’t mean the journey has to be draining.
Going up against deadends, rejection, failure, and setbacks requires a solid dose of courage. Like any ability, summoning courage takes recognizing when you need it and honing your skill through practice.

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Courage is needed especially when going against the grain and boldly deciding to do things differently. It might be tempting to bypass responsibility in the spirit of not rocking the boat, or think that your individual contribution isn’t enough but, as Jacqueline Novogratz warns in Manifesto for a Moral Revolution, “if you dare to act on dreams of change, you must find the guts to stand apart while also building the relationships needed to design better systems.” Finding the guts to do what’s right often starts by catching yourself going with the flow because ‘it’s the way it’s always been done’ or finding justification to take shortcuts because ‘it’s for a good cause’. 
Short-term fixes don’t cut it. Social entrepreneurs aspire to a long-term vision for change, and they recognize that arriving at a new status quo will oftentimes be the work of a lifetime. 
uzuri

HOW UZURI K&Y REDUCES WASTE AND CREATES OPPORTUNITY - FASHIONABLY

While in college at University of Rwanda, Acumen Academy Accelerator participant Kevine Kagirimpundu realized that there are very few job opportunities available upon graduation. That means even fewer opportunities for those without a degree.

In 2017, unemployed youth — including Kevine and her university classmates — made up 60% of Africa’s unemployed population. On top of the staggering unemployment rate, the local environment was also suffering. Kevine was appalled to see discarded tires — that serve as breeding pools for mosquitos and emit water and air pollutants — becoming more prevalent in her community.

Eager to create change for the local economy and the environment, Kevine teamed up with her business partner, Ysolde Shimwe, to launch UZURI K&Y.

“If I can't be employed, and I'm one of the top students in my class, and I'm one of the few girls in school, can you imagine someone who doesn't have such an opportunity?”

UZURI K&Y is an African-inspired eco-friendly footwear brand that recycles waste — like old tires — into fashionable and functionable shoes. Initially, peers tried to dissuade her from starting the company, believing that fashion wasn’t an economic priority. But that didn’t stop Kevine and Ysolde. They remained ambitious and resilient, not letting naysayers get them down. “Creating job opportunities really was a huge driver for me — to create jobs for myself and other people like myself,” explained Kevine.

Despite being without skilled labor, business insight, and sufficient raw materials and funds, the two put out an ad over the local radio. Hoping to get 50 applicants, they ended up with over 300. This validated the need for employment, but it also posed a problem — how could they help those they couldn’t afford to employ?

Thinking fast, the two decided to pivot and launch a training program to teach excited community members technical and design skills. They partnered with German organization, Senior Expert Services, to provide attendees with the soft skills needed to help them navigate the job market — even if it meant leaving to start their own business. In fact, UZURI K&Y encouraged it.

With creating employment opportunities at its core, UZURI K&Y’s emphasis on professional empowerment triggered unintended benefits. One of their former employees, Eda, left the company to start her own successful footwear business. Now, trainees of UZURI K&Y’s program visit Eda’s workshop to learn from her, creating a cycle of support, training, and empowerment. “She has become a success story to tell in my trainings everywhere. She has done an incredible job … and she's also playing as a role model for other young people, especially young women,” beamed Kevine.

“We grew from one table working with one employee to now having a whole team of over 85 people. But it started from the idea of just a hungry young woman trying to create change in her own community.”

Since 2013, UZURI K&Y has impacted the careers of over 1,060 people — 70% of which are women — and have helped 10 former employees launch their own businesses. By persisting in the face of critics, trusting their intuition, and building a truly impactful enterprise that promotes an eco-friendly, sustainable, and community-centered mission, UZURI K&Y has redefined how a business can create change.

 

Just start and let the work teach you.

Jacqueline Novogratz
Founder & CEO, Acumen

Prepare to start a social enterprise

If you have an idea for a social enterprise but haven’t yet started, what’s stopping you? 

Is it because you’re not sure what the first step is or that you'll make a mistake? Is it because you feel you need more planning before starting?

Some people sit on an idea for years and never take the leap to ‘just start.’ 

Reframe your mindset

While the thought of building a new social venture can feel like an surmountable wall of questions, what if’s, and uncertainties, there is a secret: those who go on to build world changing social enterprises –– like D.Light mentioned earlier –– had no more answers or information than you have right now. (In fact, you might be ahead of the game since you’ve read this far!)
What they did have was the courage to just start.
Daniela F. Gheorghe, SME Finance Lead at African Management Institute, Skoll Scholar and Acumen Academy community member, suggests starting by writing down, “one thing you care about and that connects to your personal experience: something that you've truly seen in your life, that you felt is injust. Maybe something that you're angry about.” When you think about your mission in this context and remember how you felt, it’s probable that others have experienced it as well. This indicates there is a possible gap in the marketplace that can be addressed with your solution.

If you feel overwhelmed, it also helps to break down your goals into smaller steps.  It’s much easier to complete small actions, and once you do, you’ll gain added clarity and momentum to keep going.

Get out of the building

Steve Blank, a startup educator in Silicon Valley, famously advises that entrepreneurs ‘get out of the building.’ Ideas planned out in basements and garages might sound like the norm, but they’re not grounded in real life.
A simple first step is to speak with a few people who are doing similar work to what you have in mind. Daniela suggests turning to your LinkedIn network to find 10 people that you can connect with. Not only will these conversations help you bounce your ideas off others who are knowledgeable in the sector, but you will also learn about mistakes they made getting to where they are. 

Come up with a social enterprise idea

Building a social enterprise around the problem and need, rather than a solution or idea, should be clear by now. But there is another critical element to consider when pinpointing the direction of your social initiative.
Social enterprises have the greatest chance of success when they build off existing strengths or assets. That could include personal strengths, experience, and expertise of the founding team, or core capabilities of an existing organization that wishes to start a new social venture.
Acumen Academy’s Social Entrepreneurship 101 course takes course takers through a ‘Life Map’ exercise, where they reflect on the noteworthy events and experiences that brought them to where they are today. One example of building from strengths is the story of Dr. Venkataswamy, who cared about humanity overall and hoped to help eliminate suffering. More practically, leaning into his strength as a surgeon and expert in eyecare and ophthalmology inspired him to found Aravind Eye Care System to focus specifically on eliminating needless blindness. As Aravind’s Executive Director, Thulasiraj Ravilla, shares this story, he explains how value is created at the intersection between problems in the community and practical knowhow.

Watch below: How to identify a problem to solve

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Define success on your own terms

One of the most important exercises you can do as a budding social entrepreneur is to define what success looks like to you (and not based on industry norms or what society expects of you). 
Wainright Acquoi, Co-founder and CEO of Tribe, suggests asking, “What is success for me? And if I don't meet it, would I be satisfied? For example, if I impact only two people a year, would that make me happy?” This perspective helps frame decisions you’ll make, and will influence your strategy, how you prioritize your time, and even how you approach funding. “Because at the end of the day,” Wainwright summarizes, “it's not about pleasing who is investing in the venture. It’s about ... are you satisfied with the work you're doing and the impact you’re creating?”
With a deep understanding of your customers’ experience and pain, an analysis of personal strengths you can call upon, and clarity on how you will define success, you’re ready to start building your social enterprise.

How to build an inclusive social enterprise

The goals of a social enterprise need to go beyond delivering a good to make money or maximize shareholder value. The very design of the organization and the decisions made by leadership need to embody the values of social entrepreneurship.

Inclusive social enterprises start with the customer, use innovative business models to deliver value in unique ways, and use markets for good while keeping them in check.

We miss many opportunities by assuming we have the answers.

Jacqueline Novogratz
Founder & CEO, Acumen

Co-create with your customers

As natural problem-solvers social entrepreneurs are quick to see a potential path forward. But how often is this path informed by personal experience or habits, rather than the perspective of the ultimate end users?
To find long-lasting solutions, you need to better understand the problem by getting to know your customers or clients inside-out. Human-centered design is our favorite method to accomplish this. 
During the process, customer interviews and prototyping are helpful to unlock clues about what customers value in a solution, how they will interact with it, and most importantly, if it’s something they want to trade valuable time or money to receive.
Co-Founder of College Summit (now Peer Forward), JB Schramm, discovered a surprising insight once he got to know his customers better:
“We thought the problem was getting young people to college. And certainly that’s key but what we started to realize was that there was a mindset problem... High schools didn’t think that that was their job. High schools thought their job was to get young people to graduate from high school. 
It became clear that in order for us to be true to our mission, we had to work with high schools, districts, states and the Federal Government to get schools focused on and seeing post secondary success as their goal.”
Leila Janah, the late founder and CEO of Samasource, a social enterprise that provides dignified work and job training to combat poverty, describes how in the early days of building Sama, she spent a lot of time in rural areas and slum communities speaking with people. “That was really important in understanding how we could create a solution that would appeal not just to our customers buying our services in the West, but also to the customers who are our beneficiaries”.
Human-centered design has three phases––inspiration, ideation, and implementation––to guide social innovators through a methodology that specifically seeks out knowledge and insight from potential customers. Since social enterprises are often serving the needs of those for whom the markets have failed, it is doubly important to create space in the innovation process to hear from them.
One of the first steps in the process is customer discovery. This is the process of soliciting input from potential customers early on while building a new idea in order to test key assumptions that, if proven wrong, could cause the entire offer to fall flat. Conducting customer discovery according to best practice in the social sector will ensure your program or enterprise is truly delivering value in the ways you expected. Insights gleaned from the customer discovery process are invaluable for informing pivots and adjustments before you consume all of your time and money building a solution that doesn’t work or that people do not want!
With a solid understanding of what your organization will offer, and that it’s needed and well-designed for your potential customers and beneficiaries, it’s time to explore business models to embed that value proposition into the organization as a whole.

Design innovative business models

There are several established business models that help social enterprises create change while striving for financial sustainability.

Sales, fee-for-service, or earned income

This social enterprise business model is perhaps the simplest and what we’re most familiar with. An organization packages their products and services and sells them directly to customers who are willing to pay because it fulfills an unmet need in the marketplace. One example is Acumen investee, Burn Manufacturing.

Microfranchising

In this model, an organization offers community members an opportunity to license and run a “business in a box”. These new entrepreneurs are supported with infrastructure, capital, and inventory to get their business off the ground. Revenue is generated through a percentage of the franchisee’s sales. One example is VisionSpring.

Cross-subsidization

This model has one set of customers paying a higher rate for the same product or service provided to all customers. This allows the segment of customers with less ability to pay to receive the goods for free or at a highly subsidized rate. An example of this model is Aravind Eye Care System.

Market linkage

Social enterprises with this business model connect entrepreneurs to marketplaces. It could be via the purchase of their products at market rates and then reselling to international markets at a higher price point. This allows the social enterprise to earn a profit while providing the entrepreneurs they purchase from to benefit from a steady stream of sales. Another option is for the social enterprise to provide a value-add service to the entrepreneurs, such as marketing, technical assistance, or financing, to support their reaching new markets. One example of this type of social enterprise is One Acre Fund.

Microphilanthropy

This model, made popular by organizations like Kiva, uses crowdfunding strategies to pool smaller amounts of money from several contributors. The business costs are covered via donations from crowdfunders or built in fees to use the platform.

Employment generation

This model provides employment for populations who may face  opportunity barriers or require additional support, like the social enterprise Samasource. Employees are the beneficiaries of the social enterprise, and are a core contributor to the organization by way of the creation or delivery of the enterprise’s products and services.

Use markets for good

One critique of social entrepreneurship is that it uses capitalism to fix problems, when capitalism is the same system that caused many of the problems in the first place. Anand Giridharadas, author of Winners Take All: The Elite Charade of Changing the World, cautions that ‘MarketWorld’ assumes that social problems can be solved with the tools of capitalist markets. He points out that people “believe they are changing the world when they may instead –– or also –– be protecting a system that is at the root of the problems they wish to solve.” This is why it’s so critical to listen to voices unheard and keep markets in check.
Because when markets are used to fuel sustainable change, it can have a dramatic impact. Jacqueline writes in Manifesto for a Moral Revolution, “imagine if more of us allocated our resources, placing social and environmental impact on an equal footing with (or higher than) financial returns. Everything would change.” 
Systems are designed and upheld by the decisions people make, which means new decisions can change the system. Seeing our existing system fail Colombian coffee farmers inspired Tyler Youngblood to reimagine how markets could instead contribute to economic prosperity. 
Due to a complicated global coffee supply chain that favors domestic buyers and exporters, the majority of coffee farmers in Colombia, roughly half a million people, live in poverty. Tyler was struck by the fact that farmers were beholden to fluctuating global commodities prices, when consumers consistently paid the same for their morning lattes. 
And so Tyler envisioned a new way of leveraging the market. He believed smallholder coffee farmers could stop falling victim to commodity prices, and instead, finally start profiting from their coffee production. To meet this mission, Tyler started Azahar, an intermediary coffee company that negotiates long-term fixed-price contracts to give farmers consistent, reliable income. Azahar is able to pay twice the price of global commodities prices thanks to its network of buyers who care about how the farmers producing their coffee are treated and compensated.
Part of using markets for good is understanding what types of capital support the mission,  and what types reinforce profit maximization. There is no one-size-fits-all solution for funding structure, but social entrepreneurs need to understand the pros and cons of each option available to them, and choose wisely.
As long as social entrepreneurs resist being overtaken by the allure of profit-maximization, markets can be used for good. We must prioritize purpose, take all stakeholder needs into consideration, use mission-aligned capital, hire values-aligned teams, and measure what matters.

Partner with humility and audacity

Learning how to partner effectively is a key skill for any social entrepreneur.
Founders, Vivek Kumar (Kshamtalaya Foundation), and Daisy and Aaron Rosales (Brio), all met as members of Acumen Academy’s community. Soon after attending an event together, they discovered a shared desire to respond to upheaval caused by COVID-19. The result was launching a new 21-day program to help teachers in India overcome stress and anxiety using mindfulness tools.
When asked about building this partnership, Vivek shared how valuable it was to have the Brio team’s expertise of evidence-based methods for building resilience and overall well-being. This informed a podcast based program that covers three critical skills: building self-efficacy to focus on what you can control, learning how to regulate emotions, and finally, taking those skills to apply to relationships and interactions with others. All together, the daily 10-15 minute episodes and accompanying workbook support the listener to pay attention to what can be controlled and not let fear of the unknown lead to anxiety and stress. 
Kshamtalaya Foundation and Brio are now in the process of formalizing a long-term partnership where they will focus on organizational strengthening, capacity building, and product development.
Vivek Kumar
India Fellow

Vivek Kumar

Vivek is Co-founder and CEO of Kshamtalaya Foundation, an organization supporting communities to revive the spirit of learning in and outside of schools. Core to the organization’s program is a curriculum that provides space for self-directed learning, systems thinking, and mindfulness. Its learning manifesto and learning festivals aim to make education...

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Of the partnership, Vivek credits their shared mission as a reason why the project went so well and prompted them to continue collaborating.
If partners have shared values and also arrive at a shared vision for what they’d like to accomplish together, deciding what to offer becomes clear. Collaborating on a shared vision can take time but starting slow allows you to clarify the need and design an offering that is well-aligned. Once there is agreement on a shared approach, Vivek stresses the importance of trusting the team. The vision setting process will build a mutual understanding and response, where all parties involved gain insight into each other’s work and communication styles.
“Once you’ve started,” Vivek recommends, “just trust. Being critical and being curious is amazing but, at some point in time, you just need to trust the process.”
Brio

HOW BRIO OFFERS AN INCLUSIVE APPROACH TO MENTAL HEALTH

In order to truly help communities, we need to meet them where they are. But how do we adapt programs with a high barrier to entry — like mental health care — and make them more inclusive, accessible, and community-centered?

After seeing the power and trust harnessed by local organizations, Brio co-founders and Acumen Academy accelerator participants, Daisy and Aaron Rosales, knew the best way to create change and break down mental health barriers would be to accompany these communities rather than provide prescriptive answers.

The journey toward inclusive accompaniment began when Daisy and Aaron were volunteering in Quito, Ecuador. They were aware of the high rate of domestic violence and its close relationship to alcohol use — in fact, they later found that 98% of the families they served reported incidents of alcohol-related domestic violence.

Knowing that survivors often stay silent about the abuse, Daisy was shocked to find one of the women opening up about her experience after only a few weeks. “Building that trust was a sign that, when it comes to thinking about mental healthcare and working with communities to develop effective models, the local organization — those spaces that people trust —are going to be really important.”

Building partnership models is not the norm for mental health support — and it definitely isn’t the easy route. In order to adequately support communities, Daisy and Aaron felt it was important to accompany existing local, trustworthy organizations. With Aaron’s PhD in Clinical Psychology and Daisy’s background supporting social movements and addiction care, the two launched Brio. Brio set out to provide quality mental health care in low-resource communities through their partnership and toolkit model, starting in Ecuador. Brio equips local human service organizations with the tools needed to provide effective, sustainable care.

“We’re not in the business of going to communities and saying, ‘we believe that half the people here are depressed, so we’re here to offer you a solution for depression.’” - Daisy Rosales

Building a model that partners with local organizations helps overcome additional barriers, too. Although government mental health programs exist in regions where Brio works, some are in foreign languages, rendering them useless. The cost for support and supply of trained professionals — especially in Latin America — isn’t practical nor sustainable. And the stigma around mental health and its prescriptive, scientific language can be daunting to community members. Through a partnership model, Daisy and Aaron address these issues by creating affordable, community-centric programs with attention and sensitivity to language and message.

In 2018, Brio launched their community-owned approach — with accompaniment and people at its core. By listening to local community members and empathizing with their pain, Brio partners with organizations to design solutions that address specific community needs.

“We don’t just offer skill-building or just consultant work, but it’s more about the way we relate, the way we show up, the way we work alongside our partners that is really essential.” - Aaron Rosales

Brio accompanies local leaders — from Mexico to India — and empowers them to build and scale their mental health programs. After discussing community pain points, Brio provides leaders with the tools needed to take action, evaluate, and iterate. “Essentially, what they end up with is a highly responsive program that they’re able to administer and train others in that is specifically designed for the problems that they see,” Daisy explains. Ultimately, Brio’s goal is to build a network where local leaders and organizations can share successful and effective models with communities impacted by similar problems.

Brio also provides free access to a library of resources. In August 2020, Brio launched their Mental Health Design Toolkit, sharing the same processes, research, and design-thinking brought to community partnerships. As Brio grows, they plan to continue analyzing impact in the communities they work with to ensure shared tools remain relevant and helpful.

By listening empathically to the communities they set out to serve, creating meaningful partnerships, and building a bold and inclusive business structure, Brio is redefining how we can better serve communities in need.

 

How to lead a social enterprise

Even the most well-laid plans will run into obstacles. Leading a social enterprise requires grit, resilience, perseverance and adaptability. 

There will be times when progress moves quickly, when plans get executed as expected, and the organization seamlessly hits the next major milestone. But there will also be moments that make the leadership team wonder if they’re doing the right thing: funding will fall through, suppliers will delay production, staff will need extra attention.

But social entrepreneurs are committed to the long-term vision of what’s possible. They call in courage to navigate values in tension and to have difficult conversations. They tap into their community to help guide them. And they remain focused on the metrics that matter and persevere to carve out new norms and show others new visions are possible.

Embrace leadership moments

While there is a familiar image of high-powered leaders relying on wit and charisma to rally for change, challenging the status quo daily looks quite different. To make progress on today’s most pressing issues it will require each and every one of us leading every day.
The practice of Adaptive leadership provides tools to bring your attention to the bigger picture, so you have a better perspective to determine what to keep from past practices, what to let go of, and how to invent new ways to build on what works.
Eric Martin, Managing Partner of Adaptive Change Advisors, talks about ‘leadership moments’. A leadership moment is a time when you need to make a tough decision in the face of the stubborn status quo. It could result in taking a stand on a polarizing issue, speaking up when it’s unpopular and uncomfortable, or doing what’s right instead of what’s easy. To help, Eric recommends using the practice of ‘getting on the balcony,’ which is a skill that helps you reflect in the midst of action, reconnect to your purpose, and think strategically about your next step.

Video: Getting on the balcony with Erin Martin

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Have courageous conversations

Sheila Heen — co-author of Difficult Conversations: How to Discuss What Matters Most and Thanks for the Feedback: The Science and Art of Receiving Feedback Well (Even When It’s Off-Base, Unfair, Poorly Delivered and Frankly, You’re Not in the Mood) — advises that the best way to handle conflict is to find the third story. The third story is the version of the situation that is neither ‘yours’ nor the ‘other person’s.’ Instead of an either/or (or right/wrong) perspective, the third story gives you the opportunity to find the ‘and.’ 
As Sheila explains, “the ‘and stance’ is when I have a view, AND you have a view, and these are both part of this conversation.” The third story is presented the way a neutral party might describe the situation where both sides agree.
When emotions run high, getting to this perspective can be challenging. Sheila recommends coming at it from a place of curiosity, where you are listening to understand, not to debate. If you find yourself needing to vent, take some time before so that you’re able to approach the discussion from a learning — rather than defensive — point of view.

Join like-minded community

Leading a social enterprise means that you’re probably deeply engaged –– with the cause, customers, and the team. As a result, being so close to the day-to-day runs the risk of losing sight of the bigger picture.
Enter: the power of community. Connecting with peers who are similarly charting new territory opens up the opportunity for accompaniment. Finding a values-aligned community or mentorship doesn’t have to be formal. It could be as simple as planning a monthly call with two to three peers who work in the same sector. 
Questions from peers can also recenter the conversation to help navigate tough decisions. As Vivek Kumar, founder of Kshamtalaya Foundation, shared of his collaboration with Daisy and Aaron Rosales –– co-founders of Brio, a community-centered mental health nonprofit –– they helped by asking the right questions. Vivek goes on to say, “most of the time, we need questions more than answers. We need to be more clear about the why.” These types of conversations in community help clarify the ‘why’ and allows us to more easily determine the ‘what’ and the ‘how’.

Measure what matters

Measuring impact is more than a project for funders. It fundamentally serves your customers and helps you better create value in your business. 
Solar Now is a solar home system manufacturer based in Uganda, where over 85% of the population doesn’t have access to energy. Solar Now prides itself on product quality and useability, which is why the founder was shocked to learn during a 2016 research project that customers weren’t getting the full impact of the solar products. The research uncovered that some customers were experiencing technical issues, didn’t know how to use the products, or didn’t fully understand what they were buying.
With this information, Solar Now had the insight required to make strategic changes to improve customer satisfaction and ultimately achieve greater impact across Uganda.
While financial health is easier to measure with well-established metrics such as profitability and return on investment, collecting measurable proof of social change is much harder. One reason is that relevant metrics are different for every social enterprise, depending on the sector and who is being served.
Lean Data is a tool that can help you to better understand and measure social impact through data collection and analysis.
If you can answer the following, it’s likely your social enterprise is measuring what matters:
  • Who are you serving?
  • What changes are happening in their lives? Are the changes positive?
  • How much are lives changing?
  • How many people are you reaching?
The Lean Data process serves to provide actionable insights that can be used to directly improve customers’ experience and more effectively drive change.

Persevere through failure

Founder and Executive Director of Hello Future, Charlie Grosso, likens the job of a social entrepreneur to that of a pioneer. “You are out there forging a path in an industry or a sector,” she explained, where you’re “asking people to put profits second and people first and to put our collective good first.” Sometimes it will be smooth, and sometimes asking people to change ‘the way things are done’ is too much. Social entrepreneurs are sure to encounter resistance to change and experience moments of doubt.
In these instances, Wainright Acquoi, Co-founder and CEO of Tribe, a social enterprise and edutech incubator working with young people in Liberia, recommends being quick to adjust course if something is not working. Identifying what doesn’t work is one of the biggest lessons he’s learned. 
Part of persevering is listening to the customers and shifting paths to better meet their needs. Village Energy, founded by Acumen East Africa Fellow, Abu Musuuza, is a social enterprise that provides solar solutions to Ugandans. When Abu first started the business, his focus was to build a recycling process to remove discarded water bottles from local waterways and use them as source material for solar energy systems. However, after observing Ugandans travelling miles from rural areas to find mobile phone charging stations, Village Energy pivoted to distributing products manufactured by existing solar companies, such as Acumen investee, D.light. While shifting, Abu discovered another unmet need: local businesses, such as hotels, were not receiving sufficient reliable energy to thrive. To serve this more specific target market, Village Energy began to offer a pay-as-you-go program for high energy use businesses, too. 
Abubaker Musuuza
East Africa Fellow

Abubaker Musuuza

Abu is the Co-Founder and Chief Executive Officer of Village Energy Limited a social enterprise that is building a network of rural solar shops that deliver quality products and ensure effective access to skilled solar technicians, repairs and solar parts. Village Energy runs a rural solar academy that is training youth in technical and entrepreneurship ...

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Today, Village Energy is entirely focused on providing solar product design and installation for business and industrial customers. The company’s efforts are improving environmental outcomes, saving over 100 tons of carbon emissions per year, and the economic impact of boosting energy reliability for businesses is significant, with 79% of Village Energy customers experiencing revenue increases. 

Considering this level of impact is possible thanks to one entrepreneur’s perseverance through failure, imagine the possible collective impact of every entrepreneur who refuses to give up.

Got a specific social issue or challenge that you want to focus on tackling? FREE course Start Your Social Change Journey will help you take the first steps to sustain your social impact efforts and keep your goals on track.

Hear four Acumen Academy social innovators share their thoughts on social entrepreneurship and the role of moral leadership:

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