What Is Social Entrepreneurship? 4 Core Characteristics

The field of social entrepreneurship encompasses any type of business—from startups and small businesses to large corporations and nonprofits—embarking on an impactful social mission. This might mean pursuing profit at the same time as social justice goals or forgoing the profit motive entirely. Social entrepreneurship causes included mitigating poverty, improving sustainability, making education more inclusive and equitable, solving environmental issues, and more.

The primary difference between business entrepreneurs and social entrepreneurs is how much emphasis they place on the profit motive versus increasing the level of social good in the world.

Traditional entrepreneurs aim to sell products and services to turn profits for themselves and shareholders as their primary motivation. Social entrepreneurs start initiatives to generate social goods that might or might not also make profits. Both types of businesspeople possess the entrepreneurial spirit of meeting people’s needs through the marketplace.

Consider the difference between a traditional entrepreneur and a social entrepreneur in developing an app for popular consumption. The former might focus on how they can create an attractive user experience, market their app well, and make money off their creation. The social entrepreneur might hope to do all these things, too, with the caveat that sales from their app will siphon off into funding a social cause and making a positive impact on the world.

The definition of social entrepreneurship is malleable, depending on which type of business models a socially minded company uses. Consider these three key types of social entrepreneurship organizations:

1. 1. For-profit businesses: Traditional corporations and businesses occasionally include social entrepreneurship initiatives in their business plans. While they might still primarily operate in accordance with the profit motive, they might also create initiatives to solve social problems or seek out partnerships with organizations that do. This sort of corporate social responsibility manifests in a litany of ways. As one example, certain banks might offer microcredit and microfinance lending to disadvantaged people to help them get on their feet and achieve their goals.
2. 2. Hybrid companies: Some companies use a hybrid for-profit and nonprofit model to make a difference when it comes to social issues. For example, consider a nonprofit job training program for those who could use a leg up that also runs a for-profit company to provide employment for those who go through the aforementioned program. One cofounder might run the shelter itself, while another runs the restaurant. Alternatively, think about a healthcare provider that sells prescription drugs to one person and then donates the same drugs to someone who can’t afford them in a one-for-one transaction.
3. 3. Nonprofit organizations: Plenty of social enterprises still operate entirely as nonprofits—these organizations forgo all profit-seeking to focus solely on social justice. Nonprofit organizations help people gain access to clean drinking water, achieve educational goals, and address other social concerns in either direct or roundabout ways.

Social entrepreneurship upsets the status quo and creates positive social change. Here are four core characteristics you can expect from most social ventures:

1. 1. Ethical: Pursuing social justice means operating within strict ethical parameters. For instance, implementing initiatives meant to create positive change in the world requires the appropriate handling of funds. If people think you’re empowering the most vulnerable only to discover you’re pocketing the money yourself, it can do major damage to your alleged social venture overall and your own moral credibility in particular.
2. 2. Motivated by more than profit: In traditional entrepreneurship, the profit motive is the bottom line—this stands in clear contrast to social entrepreneurship. So long as you’re clear about where profit-seeking begins and ends for your company, you can pursue your company’s success at the same time you try to foster positive social innovation. For example, a business could start an initiative in which twenty percent of all their profits will go toward mentoring young people in the heart of New York City.
3. 3. Socially impactful: As the name suggests, social entrepreneurship creates a social impact. Groups of people come together as changemakers in this field to create real-world positive impact with their business for those who need it most. To operate as a social entrepreneur, you need a clear goal as to what social needs you hope to address.
4. 4. Targeted: Most social ventures focus on specific issues or areas of the world (like Bangladesh or India). It’s far easier to contribute to the well-being of the world in a direct, specific, and targeted sense than generating social value in a nebulous and vague sense. Identify the stakeholders whose lot in life you want to improve and target your entrepreneurial efforts on helping them specifically—in doing so, you’ll make a concrete impact on the social ecosystem as a whole.

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