The goal of a social enterprise is to maximize the positive impact on those who benefit from their business.Business surplus are principally reinvested in the business or community rather than mainly being paid to owners / shareholders

1. A BUSINESS CASE FOR
SOCIAL ENTERPRISE
Mellissa Riddle
Harvard University, HES (2017)
mriddle@g.harvard.edu

2. “The most powerful tool in economics is not
money, nor even algebra. It is a pencil. Because
with a pencil, you can redraw the world.
~Kate Raworth

3. THE NEED
FOR NEW
ECONOMIC
THINKING
Multi-dimensional
Approach

4. OVERHAUL OF ECONOMICS
Disconnect between global economic stability and the narrow theoretical framework of
learned economics
• Outdated Economic Theory (Late 1800’s - Early 1900’s)
• Unaccounted for productivity and outputs
Fixation on growth vs equilibrium
• GDP - poor measure of prosperity and unreliable gauge of production
• Equilibrium required for a thriving society
Address growing macro needs
• Increased inequality
• Aging population
• Automation
New ideas to contend with multi-dimensional needs of today
• Economics is the mindset that changes our world
• Markets are not the answer to everything

5. NEW ECONOMIC THINKING
Historically ventures were founded upon two business models
1) A commercial enterprise established to maximize financial
returns
2) A charity or not-for-profit created to maximize social and
environmental returns
New models
• Address underserved needs
• Value proposition redefined
• Equilibrium leads to sustainability
• Real costs of doing business
• Realizing standards of human needs and ecosystem

6. SOCIAL
ENTERPRIS
E:
SOCIAL
PURPOSE
BUSINESS
Social Impact Approach

7. BROADLY DEFINED
• A commercially viable business that generates significant social impact
• SEs / SPBs are not intended to monopolize or replace competition, but
add new dimension with social objectives at their core
• The goal of a social enterprise is to maximize the positive impact on
those who benefit from their business
• Business surplus are principally reinvested in the business or
community rather than mainly being paid to owners / shareholders
• Growing popularity because activities demonstrate concern for human,
society and planet, commonly ignored in for-profit enterprises
• Contribute to both economic and environmental sustainability
• Operate locally, and work with a social mission that drives them

8. SOCIAL PURPOSE MODELS
Business Models
• Non-government organization (NGOs) and Charities
• Employee owned trading enterprises, collectives, or co-operatives
• Credit unions, micro-credit organizations, co-operative banks and revolving loan funds
• Community membership organizations
The B Corporation
• For-profit
• Must meet B Labs' standards for social and environmental performance, accountability and
transparency
SE Modern Classifications
• It must not pay more than 50% of profit or surplus to owners or shareholders
• It must not generate more than 50% of income from grants and donations (or, equivalently, it
should generate at least 50% of income from trading)
• No social enterprise ought to decrease the employment of others in favor of their “target”
population, or diminish the value of for-profit colleagues in the marketplace.
• ‘A business with primarily social/environmental objectives, whose surpluses are principally
reinvested for that purpose in the business or community rather than mainly being paid to
shareholders and owners’.

9. “ The B Corp movement is one of the most
important of our lifetime, built on the simple
fact that business impacts and serves more
than just shareholders—it has an equal
responsibility to the community and to the
planet.
~Rose Marcario, CEO of Patagonia

11. HISTORY
The concept of social enterprise emerged because traditional models are ineffective in
serving and protecting public welfare
Created to widen the market by giving consumers a new option
Ashoka (1987)
• Leading network of social entrepreneurs with 3,300 Fellows spanning over
88 countries
Skoll World Forum (1999)
• Forum delegates representing 65 countries
The B Corp movement (2007)
• 2,391 B Corps, 50+ countries, 130 industries, 1 unifying goal
Muhammad Yunus, Grameen Bank (2009)
• Banker to the Poor coined “social enterprise”
• Microfinance $65 billion market, serving 90 million borrowers in some of the
poorest countries

12. FUNDING
• Private Investment
• Government subsidies — resources allocated by government or tax reductions to
support socially valuable projects
• Charitable organizations allocations or investments — may not require
repayment
• Private donations — allocated by individuals
• Loan guarantees — commercial debts at low rates
• Pooling — portfolios incorporating resources from numerous micro-lenders, with
different return rates and risk levels
• Social impact bonds – selling bonds to private investors with a provision of
paying returns upon success
• Quasi-equity debts – purchasing securities that perform the functions of equities

13. METRICS
Quantify results and report social value creation to customers,
stakeholders, and assure funders that mission is adhered to
Performance milestones
• customer feedback, market response, complaint tracking, and
collecting qualitative data
Triple bottom line approach is based on three bottom lines:
• Corporate profit – amount of loss and profit (measuring
financial responsibility)
• People – the volume of progress achieved and changes made
(measuring social responsibility)
• Planet – the volume of environmental changes made
(considering environmental responsibility)

14. INCENTIVES
• Consumers increasingly expect brands to have a social purpose
• social-purpose brand programs
• SEs ingrained social objective
• Role of Social Enterprise in Economic Development
• Helping society to enjoy shared and durable prosperity
• Bypassing government association and the confining structure of the
nonprofit classification
• Option to form B Corporations allowing company directors to weigh
social missions over financial returns
• Booming sector of economy

16. SOCIAL ENTERPRISE STATISTICS
• AUSTRALIA — Estimated 20,000 social enterprises, 34% have been in operation for
between 2-5 years and constitute 2-3% of GDP (2010)
• EUROPEAN UNION —1 out of 4 new enterprises set-up every year are social enterprises
(2016)
• MIDDLE EAST — 75% of universities teaching social entrepreneurship (2009). Estimated
78 globally recognised social entrepreneurs operating in the region (2010). 20-30% of
business plan competition submissions are social enterprises (2013)
• SCOTLAND — 42% formed in the last 10 years, 54% generated half or more of their
income from trading and 60% are led by a woman (2015)
• UNITED KINGDOM — Primarily led by women and minority ethnic groups (2014). 7%
of all small businesses. 68,000 enterprises. Over £24 billion revenue. 50% reported profits,
73% earn more than 75% of their income from trade, and 27% public sector as main source
of income (2015)
• UNITED STATES OF AMERICA — 22% have over $2 million in revenue, 89% were
created since 2006 and 90% focus on solving problems locally. SE sector employs over 10
million people, revenues of $500 billion—roughly 3.5 percent of total U.S. GDP (2012)

17. SOCIAL ENTREPRENEUR RESOURCES
• http://b-lab.force.com/GIIRS/BCorpRegistration — impact assessment
tool.
• http://www.ashoka.org — $30 million budget, granted more than
2,000 fellowships, supplies free information and aggregates resources
• https://uncharted.org partners with more than 20 impact-investment
foundations, selecting 25 entrepreneurs for a six-week mentoring
program to take ideas from concept to operation
• http://skoll.org/about/programs/
• http://socialcapitalmarkets.net
• http://socialenablers.co

18. THANK YOU