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Dream > Believe > Pursue An Introduction to Social Entrepreneurship.

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Presentation on theme: "Dream > Believe > Pursue An Introduction to Social Entrepreneurship."— Presentation transcript:

1 Dream > Believe > Pursue An Introduction to Social Entrepreneurship

2 Dream > Believe > Pursue 2 An Entrepreneurial Revolution 1 million new ventures a year in U.S.1 million new ventures a year in U.S. 85% of the new jobs in small and start-up firms85% of the new jobs in small and start-up firms Product/service introduction rate higher than ever beforeProduct/service introduction rate higher than ever before Rate of wealth creation explodingRate of wealth creation exploding And it’s a global revolutionAnd it’s a global revolution

3 Dream > Believe > Pursue What Is Entrepreneurship? Process of creating value by bringing together a unique package of resources to exploit an opportunity

4 Dream > Believe > Pursue 4 The New Buzzword: Social Entrepreneurship So, is entrepreneurship basically entrepreneurship regardless of the context? Or is “social entrepreneurship” something truly different?

5 Dream > Believe > Pursue What Is Social Entrepreneurship? Nonprofits making money

6 Dream > Believe > Pursue What Is Social Entrepreneurship? Nonprofits making money For-profits doing things to show they are not evil

7 Dream > Believe > Pursue What Is Social Entrepreneurship? Nonprofits making money For-profits doing things to show they are not evil Process of creating value by bringing together a unique package of resources to exploit an opportunity, in pursuit of high social returns

8 Dream > Believe > Pursue 8 The only big difference between commercial and social entrepreneurship: Denomination of the returns Social and commercial entrepreneurship have most of the same characteristics

9 Dream > Believe > Pursue 9 The Process of Social Entrepreneurship 1.Find an opportunity 2.Develop a business concept 3.Figure out what success means and how to measure it 4.Acquire the right resources 5.Launch and grow 6.Attain goals

10 Dream > Believe > Pursue 10 The Main Difficulty: Measurement What is profit?What is profit? How do we count it?How do we count it? What is “social return o n investment” for venture philanthropists?What is “social return o n investment” for venture philanthropists? Can we compare investments?Can we compare investments?

11 Dream > Believe > Pursue 11 Three characteristics Social entrepreneurship meets needs unmet by commercial markets and (usually) the governmentSocial entrepreneurship meets needs unmet by commercial markets and (usually) the government Social entrepreneurship is motivated by social benefitSocial entrepreneurship is motivated by social benefit Successful social entrepreneurship usually works with, not against, marketsSuccessful social entrepreneurship usually works with, not against, markets

12 Dream > Believe > Pursue 12 Case 1: Housing Opportunities Made Equal (H.O.M.E.) ServicesServices –Core services in housing disputes and fair housing advocacy in Virginia –Special projects and lawsuits Opportunity: Educate people on fair housing before-the-fact, instead of fixing situations after-the-factOpportunity: Educate people on fair housing before-the-fact, instead of fixing situations after-the-fact Enterprise: Start fair housing training InstituteEnterprise: Start fair housing training Institute Returns: More housing for the disadvantaged, fewer complaintsReturns: More housing for the disadvantaged, fewer complaints

13 Dream > Believe > Pursue 13 Case 2: Boaz & Ruth Opportunity: Underused human capitalOpportunity: Underused human capital Endeavor: New businesses using former inmates in an aggressively faith-based settingEndeavor: New businesses using former inmates in an aggressively faith-based setting Social returns: Young people not returning to jail, peaceful neighborhoodSocial returns: Young people not returning to jail, peaceful neighborhood

14 Dream > Believe > Pursue 14 Forces on Social Entrepreneurship

15 Dream > Believe > Pursue 15 Social Entrepreneurs “Look” Like Any Other Kind of Entrepreneur

16 Dream > Believe > Pursue 16 Risk + Innovation High risk aversion Low risk aversion Highly- innovative DreamerEntrepreneur Not innovative StuckGambler

17 Dream > Believe > Pursue Opportunities vs. Threats Opportunities for social entrepreneurs look like threats and tragedies to others

18 Dream > Believe > Pursue 18 Myths about Social Entrepreneurship Social entrepreneurs are anti-businessSocial entrepreneurs are anti-business The difference between commercial and social entrepreneurship is greedThe difference between commercial and social entrepreneurship is greed Social entrepreneurs are nonprofit managersSocial entrepreneurs are nonprofit managers Social entrepreneurs are born, not madeSocial entrepreneurs are born, not made Social entrepreneurs are misfitsSocial entrepreneurs are misfits Social enterprises usually failSocial enterprises usually fail Social entrepreneurs love riskSocial entrepreneurs love risk

19 Dream > Believe > Pursue 19 Why does social entrepreneurship matter?

20 Dream > Believe > Pursue 20 A Nation of Social Entrepreneurs Immigrant stock with a high entrepreneurial orientation + Faith in own abilities + Vast ungovernable frontier = Citizens willing to meet their own social needs, without an excessive reliance on the state

21 Dream > Believe > Pursue 21 The Result: Nonprofit Nation 1.5m registered nonprofits1.5m registered nonprofits Something like 9m grassroots organizationsSomething like 9m grassroots organizations 30 nonprofit links per citizen30 nonprofit links per citizen

22 Dream > Believe > Pursue 22 A primer on nonprofit organizations

23 Dream > Believe > Pursue 23 What Is a Nonprofit? Tax & regulatory definition: an organization thatTax & regulatory definition: an organization that –Enjoys special tax status –Faces a nondistribution constraint (profit=0) Functional definition: an organization that forms toFunctional definition: an organization that forms to –perform “public tasks” environmental protection, social service provisionenvironmental protection, social service provision –perform tasks for which there is demand but no supply from for-profits or governments religious activity, art museumreligious activity, art museum –influence the direction of public policy political party, issue organizationpolitical party, issue organization 23

24 Dream > Believe > Pursue 24 International Facts U.S. is very largeU.S. is very large –represents more than ½ of all nonprofit activity worldwide ($600b) –has 45% of all world’s nonprofit employees Rich nations tend to have more developed nonprofit sectors than poor nationsRich nations tend to have more developed nonprofit sectors than poor nations –Government social spending is positively correlated with nonprofit sector size

25 Dream > Believe > Pursue 25 International Comparisons Source: Salamon, et al. 1999

26 Dream > Believe > Pursue 26 Size of the Nonprofit Workforce Holland Ireland Belgium Israel USA Australia UK France Germany Spain Austria Argentina Japan Finland Peru Colombia Brazil Czech Republic Hungary Slovakia Romania Mexico Percent of employees

27 Dream > Believe > Pursue 27 NPO Types in the U.S. 34 types: 501(c)(1)-(27), 501(d)-(f),(k),(n), 521(a), types: 501(c)(1)-(27), 501(d)-(f),(k),(n), 521(a), (c)(3): public benefit organizations501(c)(3): public benefit organizations –Religious, charitable, educational, scientific, literary, amateur sports promotion, prevention of cruelty to animals or children –Private schools, houses of worship, social welfare charities, hospitals, libraries, etc. 501(c)(4): mutual benefit organizations501(c)(4): mutual benefit organizations –Local civic leagues, social welfare organizations, employee associations –Volunteer fire departments, homeowners’ associations, social clubs, festivals, etc. 501(c)(6): Trade organizations501(c)(6): Trade organizations –Business leagues, chambers of commerce Ref.: Section 501, IR Code

28 Dream > Believe > Pursue 28 Nonprofits Are Proliferating in the U.S.

29 Dream > Believe > Pursue 29 The Nonprofit Sector Is Larger than Government

30 Dream > Believe > Pursue 30 Health Organizations Dominate the Sector Source: IRS 990 data, 2003

31 Dream > Believe > Pursue 31 Revenue Sources Vary a Lot by Subsector

32 Dream > Believe > Pursue 32 Health Organizations Tend to Be Huge Source: IRS 990 data, 2003

33 Dream > Believe > Pursue All Subsectors Are Growing (but Health is exploding) 33 Source: Independent Sector 2002

34 Dream > Believe > Pursue 34 Main Challenges at Present MoneyMoney CompetitionCompetition Demonstrating effectivenessDemonstrating effectiveness TechnologyTechnology TrustTrust Human resourcesHuman resources Public-sector relationsPublic-sector relations Ref. Salamon 2002

35 Dream > Believe > Pursue 35 Main Opportunities at Present Demographic shiftsDemographic shifts New philanthropyNew philanthropy Heightened awareness of sectorHeightened awareness of sector Increased social welfare spending through sectorIncreased social welfare spending through sector –Entitlement expansion –Welfare reform Ref. Salamon 2002

36 Dream > Believe > Pursue 36 Main Trends at Present Explosive growthExplosive growth Attention to marketing and management movementsAttention to marketing and management movements Commercial venturesCommercial ventures Development of umbrella organizations and formal educationDevelopment of umbrella organizations and formal education Effectiveness in competing economically and politicallyEffectiveness in competing economically and politically Ref. Salamon 2002

37 Dream > Believe > Pursue 37 Main Risks at Present Identity loss, “mission creep”Identity loss, “mission creep” Industry concentrationIndustry concentration Pressure on managers for resultsPressure on managers for results Loss of public trustLoss of public trust Ref. Salamon 2002


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