Stakeholders or Shareholders?

 

 

 

When I’m asked what I do for a living, I invariably try different approaches to the same answer. People intuit I ‘do good’, or something, but they’re not quite sure how.

Many think (and have told me directly) that social enterprises are hustler-style businesses claiming nonprofit status to help all those orphans, while in reality callously pocketing doe-eyed donors’ cash and ruining people’s good intentions. Social enterprises are merry fraudsters.

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Indeed many NGOs or charities have been busted for donor fraud and financial misappropriation—corruption is found in many places. Conversely, others think that social entrepreneurialism is just the rich saving the poor, which is hardly the case when you’re a nonprofit.

 

Social enterprises integrate a social mission with an entrepreneurial approach. They can be for-profit, nonprofit or a mix of both. If it’s a nonprofit, for example, revenue earned through activities, like selling a product or services, doesn’t go to shareholders later as a dividend. Profits are reinvested to grow and improve that social enterprise’s project or program. Oh, and sorry, ‘buy one, give one’ marketing schemes don’t count for delivering impact. (I'm looking at you TOMS shoes.)

 

However, the bottom line increasingly does include 'social impact' and this pays out a return in so many other ways as well. Thus, social enterprises are not measured by income. They’re measured by the social change and the social impact they create in their communities. The point is to make it a permanent and lasting change.

 

A Picture of Change

 

So what might that look like? Social enterprise provides an alternative way to define, create and retain value. This model allows agents of social change to be completely ‘unreasonable’, a word beloved by social entrepreneurs because it means "This ain’t your Daddy’s way of doing things." Social enterprises focus on and respond to genuine need as opposed to manipulating or creating a faux need. And since the focus is on creating and sharing value, social enterprises tend to go to places where conventional businesses won’t.

 

But how is this different from traditional forms of ‘charity’? Typically, charities don’t aim to disrupt the status quo, nor have they been as interested in scalability or replicability. That’s not a criticism, but it is an acknowledgement that charities are also heavily dependent on fundraising and running programs that, whether they like it or not, can be largely donor-driven. This environment tends to produce one-off projects which too often reflect the agenda of the funder, not the community the money purports to be serving.

 

There is also increasing enthusiasm around ‘impact investing’, which is another route social enterprises can take in order to fund their mission. The regulatory environment in Vietnam for this is changing, but optimistic assumptions around profit margins will likely have to be tempered with a long view: running a nonprofit or a for-profit is challenging enough. Running one with the sole purpose of solving a seemingly intractable problem, like poverty, is even more so.

 

However, social entrepreneurs feel it is in our best interest—and yours—to want and demand nothing less than permanent positive change for social justice.

 

A worthwhile investment indeed.

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Photo: Christian Rosswag / unsplash.com

 

This article originally appeared in Word Vietnam magazine and has been adapted. To view the magazine’s online version  click here.