Part 1 of this series defined the vital need for an ecosystem to enhance social enterprise with organizations (“ecosystem builders”) at the nucleus and defined the parts needed for the ecosystem to thrive. Part 2 illustrated the diversity of ecosystem builders around the world. Part 3 will critically assess the vitality of ecosystem builders, as well as suggest ways stakeholders can strengthen the ecosystem.
Critical Analysis
Much like their for-profit counterparts operating incubators and accelerators, social enterprise ecosystem builders provide many advantages. By their very nature, ecosystem builders work on an overall system rather than one individual part. Some critical questions addressed are:
- How do we attract capital?
- How do we build strong social enterprises?
- How do we turn consumers into customers of social enterprises?; and
- How do we attract policymakers to our cause?
To these ends, an ecosystem’s individual components interact with each other as they build a stronger system of support. These organizations also fill a void – those interested in social entrepreneurship can join the movement and engage at many levels. They can volunteer for, invest in, or study social enterprises. Ecosystem builders are able to leverage this breadth and depth of support to produce a more efficient model of support for social enterprises.
Revenue model still a challenge
However, as with any intermediaries, social enterprise ecosystem builders are challenged with their revenue model. In this emerging field, some support themselves with providing place-based services, while others provide consulting services to cross-subsidize other mission-based work. Either way, because they are often dealing with entrepreneurs with little money to pay for services, the model is economically constrained. The result is that ecosystem builders often rely on some outside support from philanthropists who believe in the value of social entrepreneurship.
This is amplified by the difficulty social entrepreneurs typically have receiving access to capital to support the start-up and growth capital needed for their enterprises. For now, investors are cautious and sometimes unaware of the value of social investment. While the tides are turning with the increasing attention being given to impact investing, social entrepreneurs still find themselves constrained by lack of capital support, and ecosystem builders are constrained by their ability to pay for support services.
Promising trends
While the movement has been around for over two decades, mainstream society is just now focusing on alternatives to traditional charitable structures. Social enterprises fit in our new economy – whether it is called an impact economy, a purpose economy, a social economy or an idea economy. This new awareness will allow markets to open and inspire consumers to buy from social enterprises.
While the movement is still in its infancy, it is attracting many groups that have traditionally been outside the social sector. Hundreds of universities are now teaching courses on social entrepreneurship and graduating a new generation of social change agents. Social enterprise can benefit from new sources of talent, such as millennials looking to make a difference and baby boomers searching for meaning.
However, social enterprises do face emerging challenges. Currently there is a dearth of multi-talented consultants to assist social enterprises with their growth strategies. These consultants need business acumen across many industries, the ability to weave social impact into revenue models, and strong consultation skills. In addition, as social entrepreneurs are building ecosystems to support themselves and grow the movement, for-profit entrepreneurs are building their own systems and supports to sustain their growth. How will these systems work together? Should they be parallel tracks, the same track, or intertwining tracks that overlap and support one another? For the movement to be successful, these questions need to be addressed.
Read Part 1 of the series: Engineering an Ecosystem to Amplify Social Enterprise
Solutions
As more social enterprise ecosystem builders evolve to meet the growing need in communities, there are roles that different groups can play to support them and ensure that social enterprise as a whole thrives:
- Policymakers can introduce legislation that supports access to capital and markets through purchasing preference. They can also conduct research that quantifies how social enterprises can drive economic development.
- Funders can use philanthropic dollars to fill funding gaps. It is impossible to independently generate revenue for some necessary support services, such as introductory workshops and online marketplaces. Funders can address those needs.
- Investors can dedicate part of their portfolio to social investments and leverage ecosystem builders to find solid investments.
- Universities can teach courses on social entrepreneurship and provide social enterprises access to their talent pools.
- Traditional business support organizations can diversify their service models to meet social enterprise development needs and encourage social impact within all business models.
- For-profit businesses can enhance their employee engagement models to provide pro bono expertise in business skills and practices, legal support, and other core competencies.
Read Part 2 of the series: Mapping the Social Enterprise Ecosystem: A Primer
Even though social enterprise ecosystem builders are searching for their own sustainability, the movement continues to grow and impact becomes more certain and obtainable. Ecosystem builders strive to adequately address the needs of the entire ecosystem without sacrificing any one element. Much like nonprofit management support organizations and other intermediaries, to achieve this equilibrium they will need multiple streams of funding and support from people who not only believe in their mission, but also believe that they are good investments in the future of social entrepreneurship.
Please contact the authors if you know of other ecosystem builders or collaborative efforts so we can continue to map the landscape.
David LePage is the Team Manager at Enterprising Non-Profits, enp, supporting the development and growth of social enterprises. He has been blending practice and policy in the nonprofit arena for over 35 years. David is a member of the Social Enterprise Council of Canada (SECC), the Policy Council of the Canadian Community Economic Development Network (CCEDNet), the Social Enterprise World Forum Collaboration, the Board of the Social Enterprise Alliance (North America) and the BC based Partners for Social Impact.
Kelly Ramirez is the CEO of SVPRI, a leading social enterprise support organization. She is co-founder of Buy with Heart, the first online marketplace for social enterprise in the US. Previously, she directed the Social Enterprise Initiative at the William Davidson Institute (WDI) and was an adjunct lecturer in Social Entrepreneurship at the University of Michigan’s Ross School of Business. Previously, Kelly worked as a political analyst for the U.S. State Department’s Foreign Service, an election monitor for the OSCE, and served as a Peace Corps volunteer in Slovakia. She was named a 2011 Woman to Watch by the Providence Business News.
Suzanne Smith, MBA (Dallas, Texas) is a serial social entrepreneur and bridges many disciplines, including serving on the National Board of the Social Enterprise Alliance, coaching nonprofits as Managing Director of Social Impact Architects, and Co-Founder of Flywheel: Social Enterprise Hub, and educating future leaders as Adjunct Professor at the University of North Texas. She holds an MBA from Duke University, where she was a CASE (Center for the Advancement of Social Entrepreneurship) Scholar and continues to serve as a Research Fellow.