Sustainability of Social Enterprise
Social enterprises have emerged as a means of addressing social, cultural, economic, and environmental needs that governments are unable to address in a timely and effective manner.
The economy is regarded as a critical pillar for societies to progress.
People have always been concerned about supporting social, cultural, economic, and environmental causes in order to create social value, both individually and collectively.
Social enterprise is a catch-all term for a variety of organizations that trade for a good cause.
Social enterprises are founded on a single vision to improve people's lives or a deep desire to give back to the community, but this can frequently overshadow the difficult issue of sustainability.
Few businesses, whether social enterprises or not, have a thorough understanding of sustainability. It refers to an organization whose actions and purpose are based on environmental, social, and financial concerns, but focusing equally on all three is difficult.
Sustainability of Social enterprise-funding and management
A social enterprise is a for-profit enterprise that provides goods and services to the market while also serving the community.
A "social enterprise" is a business activity that generates a profit in order to fund a social, educational, cultural, religious, or charitable cause.
A social enterprise is a type of hybrid organization that combines nonprofit and for-profit components.
The ultimate goal is to benefit the community rather than make a large profit.
Sustainability refers to a social enterprise's ability to withstand or meet the majority, if not all, of its operational costs.
Only those organizations that can maintain the following elements can ensure a more sustainable future for both the organization and its community. These elements are as follows:
- Take on the challenge
- Specialization
- Be forward-thinking.
- Concentrate on the business goal
- Reinvention and modernization
In the past, growth was just as difficult to achieve, but once mastered, it could propel businesses to heights beyond their wildest dreams - and relatively comfortably.
We live in a very different world now. The rate at which technology innovates leaves those who are slow to adopt without access to modern tools, while the scrutiny placed on banks following the 2008 crash has made financing difficult to obtain.
Your social enterprise has the potential to grow, but only if you accept that the road ahead will be bumpy. You must actively learn and embrace failure, but the speed with which you can recover from defeat and forge ahead with a new plan will determine the viability of your business.
2.Choose one area - and stick to it: It may be tempting to build an arsenal of products and services depending on the sector in which your social enterprise operates, but doing so will limit your ability to focus on one in particular.
By focusing your efforts on one area, you can concentrate your efforts on building an organization that is an expert in that area. Similarly, make sure your market is well-defined; a social enterprise can't be everything to everyone, but if it can combine a clear line of expertise with an equally clear target market, it will stand the test of time.
Don't try to be a big player or spread your business too thin. Instead, ensure that your offering can provide incremental value to both your customers and the business.
3. Begin with a big idea, but scale it down: Social enterprises work best when they descend from a big idea. While that big idea may be perfectly achievable, aiming for it from the start will limit the organization's sustainability.
Begin with your big idea, but break it down into manageable chunks. This will result in the creation of a social enterprise that can quickly deliver value, even if that value only scratches the surface of what you hope to achieve.
Approach your business as a journey, and invite customers to join you on the journey to raise awareness of your big idea.
4. Don't deviate from the business purpose: As the owner of a social enterprise, you're also the owner of a business, and if you want to build a sustainable organization, you'll need to remind yourself of its business purpose on a regular basis.
You must create value for your customers, but only if you focus on the value proposition. If you lose sight of your company's business purpose, its longevity will suffer significantly.
5. Don't be afraid to reinvent yourself: Running a successful, long-term social enterprise requires constant reinvention. That singular goal will only be attained if you dare to challenge your ideas, revise the original plan, and learn from the inevitable mistakes.
Your business plan from six months ago may no longer be relevant, but that doesn't mean the company has failed; it simply needs to reimagine how it might achieve that all-important big idea.
Leverage technological advancements and emerging marketing trends to change the way your company positions itself in the market, even if it means abandoning your original strategy entirely.
Funding and management of SE
Social enterprises are for-profit organisations that use innovation to address social issues. They include both non-profit and for-profit ventures, with returns that combine social benefit and financial revenue.
Social enterprises can be for-profit or non-profit, and they fall somewhere between a traditional corporation and a purely charitable organisation.
Some organizations can generate a sufficient income by selling socially beneficial goods or services, but many cannot.
Other sources of funding include corporate investment, donations, and government grants. Loan guarantees, quasi-equity debt, pooling, social impact bonds, program-related investments, mission-related investments, and similar instruments
Sources of funding to SE
Internal sources: During the early stages, SE can rely on internal sources to generate revenue by charging a fee for services rendered to target clients.
External sources: free cash refers to grants, donations, and prize money, all of which are non-repayable types of funding. Grants and donations are typically made by the government and/or philanthropists.
Impact and performance of SE
Measuring the impact and performance of businesses provides managers with the information they need to make decisions, which can then be used to make better decisions.
It also aids in monitoring and improving the efficiency and effectiveness of business operations.
It provides accountability and transparency regarding the company's performance in relation to various internal and external environmental factors.
Impact and performance measurement reveals what the entrepreneur has accomplished thus far, where the challenges lie, and where areas of improvement are needed to maximize impact.
Tools available to measure the impact of SE
“What gets measured gets attention”
The major tools are:
- Balanced Scorecard (BSc)
- Social Return on Investment (SROI)
- Social costs-benefit analysis (SCBA)
- Poverty social impact assessment (PSIA)
- Ongoing assessment of social impacts (OASIs)
Balanced Scorecard and adaptations
Kaplan and Norton (1996) developed the Balanced Scorecard (BSc), which can serve as both a strategic management and a performance measurement tool by incorporating different dimensions to balance financial and non-financial success measures, as well as short-term and long-term success measures.
Four dimensions have been identified for the BSc in order to develop objectives, measures, targets, and initiatives.
Social Return on Investment (SROI)
The main idea behind the concept of SROI is to assign monetary values to social and environmental outcomes, and it can be defined as a "outcomes-based measurement tool that aims to quantify organizations' non-financial outcome's
SROI seeks to reduce environmental issues while also improving well-being by incorporating costs and benefits from three perspectives: social, environmental, and economic. SROI is a performance indicator for social enterprises that aims to express social enterprise performance in a single unit.
An SROI analysis is carried out in six steps (Nicholls et al., 2009): (1) establishing scope and identifying key stakeholders, (2) mapping outcomes, (3) evidencing outcomes and assigning a value to them, (4) establishing impact, (5) calculating SROI, and (6) reporting, using, and embedding.
Social costs-benefit Analysis
SCBA was created to measure the social return on an investment as well as the (social) returns to specific groups in society, such as taxpayers or investment beneficiaries'
This method outlines the monetary costs and social impact of a firm's activity or investment.
These values are assessed using one or more of the three metrics listed below: benefit-cost ratio, net present value, and internal rate of return.
Ongoing assessment of social impacts (OASIs)
OASIs is intended for internal use to assess the social impacts of non-profit organizations in a company's portfolio, which can lead to an agency-wide, 13 cutting-edge client tracking system that provides insights into real data and social management information.
This method consists of four steps: assessing organizational client-related information needs, designing the client-tracking system, automating and implementing the system, and going beyond.
Poverty social impact assessment (PSIA)
PSIA assesses the social and distributional effects of policy reforms on the well-being of various social groups, particularly the poor and vulnerable.
This method emphasizes the importance of establishing the analysis by institutional structures and relevant stakeholders.
Policymakers are constantly looking for better solutions to development problems, which includes analysing and considering various policy options. All reforms have costs and benefits that are usually distributed unequally among different groups of people. Such analyses can aid in mitigating potential negative consequences and identifying paths to more inclusive reforms.
PSIA is a flexible analytical approach for assessing the distributional and social consequences of policy reforms on various groups, with a focus on the poor and vulnerable. It seeks to inform policy and programme design in four ways:
Providing evidence on the effects of reforms on poverty, socialization, and distribution;
Proposing changes and course corrections to a policy or programme, as well as identifying mitigation measures for any negative consequences;
Identifying alternative approaches to poverty reduction and positive outcomes; and
Creating a forum for public debate on reforms by involving stakeholders.
Creating and spreading innovation and change through social enterprise
While innovation and entrepreneurship have traditionally been viewed as drivers of jobs and competitiveness, we believe they can also be important drivers of inclusiveness and social development.
As it continues to drive the majority of significant improvements in quality of life, developing countries are beginning to see innovation and entrepreneurship as a solution to their social challenges.
The Social Enterprise Innovations programme demonstrates the potential for scaling inclusive businesses, grassroots innovations, and social entrepreneurship to address development issues such as sanitation, clean water, early childhood nutrition, and health-care services, among others. In our portfolio, we have examples of social enterprises providing low-cost TB treatments in impoverished communities, providing clean water to urban and rural poor, and providing educational opportunities for girls.
The convergence of grassroots social entrepreneurs, technologies, connectivity, and platforms may provide an unprecedented opportunity to democratize and harness innovation and entrepreneurship in emerging economies.
As a result, we advocate for the innovation and entrepreneurship agenda to be positioned as a key driving force in development.
According to the World Bank Group, we would need to collaborate across the boundaries of technical expertise on social issues (such as health, sanitation, and education) and expertise in private sector development (Trade and Competitiveness, IFC, MIGA).
In addition, social entrepreneurship is based on outcomes rather than revenues. Social entrepreneurship is about combining new services, improving the quality of what is already available, producing products using new methods, reorganizing the firm, or entering new markets (Dees, 1998; Defourny & Nyssens, 2012).
As a result, social entrepreneurship offers society continuous social innovation. For example, social enterprises were among the first to hire people who were socially excluded. This action can be classified as a type of social innovation (Defourny & Nyssens, 2012)
Characteristics of Social Enterprise
Social enterprises contribute to our society by promoting an economic, social, cultural or environmental mission for the public’s benefit.
Having clear social goals that serve and benefit the public;
Operating as a non-profit with surpluses reinvested (rather than distributed to shareholders);
Using various legal forms;
Having economic value in the production of goods and services that incorporate elements of social innovation and address social needs, distinguishing themselves from corporate social responsibility; and
An autonomous entity with a strong participation component.
Constant activity in the production/sale of services
High degree of autonomy
Significant level of economic risk
Explicit aim to benefit the community
Initiative launched by group of citizens
Decision-making power is not based on capital ownership
Participatory nature
Limited profit distribution.
The process of social innovation
Prompts, inspiration, and diagnoses: All of the factors that highlight the need for innovation, as well as the inspirations that spark it, are included. This stage entails diagnosing the problem and framing the question so that root causes, not just symptoms, are addressed. Finding the right solution begins with framing the right question.
Proposals and Ideas: This is the stage where ideas are generated.
Formal methods, such as design or creativity methods, can be used to broaden the menu of options available. Many of the methods aid in gathering insights and experiences from a variety of sources.
Citizens, service users, communities, front-line staff, other sectors, or other countries all contribute ideas. In this section, we will look at how to tap into these sources as well as how to involve citizens, users, and others in the design and development of solutions.
The first step in finding the right answer is to ask the right question. However, once the appropriate question has been posed, a variety of methods for locating and suggesting solutions are available.
Some of these methods, such as competitions and prizes, online platforms, and idea banks, are specifically designed to encourage creativity and new ideas. Others have been adapted from related fields, such as the arts and product design.
Prototyping and pilots: Once a promising idea has been proposed, it must be tested in the real world.
Ideas emerge through trial and error, as well as constant refinement. It is uncommon for an idea to emerge fully formed.
There are numerous methods for testing and refining ideas, ranging from formal methods such as randomised control trials to pilots and experiments. Social entrepreneurs frequently dive into practise in the hopes of learning quickly without the use of formal evaluations or tests, and one of the common themes of contemporary social innovation is that it often works best by moving quickly into practise rather than spending too much time developing detailed plans and strategies. This section also examines various funding options for new ideas and prototypes.
Sustaining: This is when the concept becomes commonplace. It entails honing (and often streamlining) ideas, as well as identifying income streams to ensure the long-term financial sustainability of the firm, social enterprise, or charity that will carry the innovation forward.
In the public sector, this entails determining budgets, teams, and other resources, such as legislation.
Scaling: There are a variety of strategies for growing and spreading an innovation at this stage, ranging from organizational growth to licensing and franchising to federations and looser diffusion. Emulation and inspiration are also important in spreading an idea or practice.
Systematic Change: The ultimate goal of social innovation is systemic change. Systemic change typically involves the interaction of numerous elements, including social movements, business models, laws and regulations, data and infrastructures, and entirely new ways of thinking and acting. Systemic change typically entails new frameworks or architectures composed of numerous smaller innovations. Social innovations frequently face barriers and hostility from the old order.
New technologies, supply chains, institutional forms, skills, and regulatory and fiscal frameworks are examples of these conditions. Systemic innovation frequently involves long-term changes in the public sector, private sector, grant economy, and household sector.
