SOCIAL ENTERPRISES Definition Elements Social Enterprises as a Fourth Sector Examples Future of Social Enterprises

The Definition Social enterprises are social mission driven organizations which trade in goods or services for a social purpose.

Definition: Social enterprises are social mission driven organizations which trade in goods or services for a social purpose. Elements Purpose of its activities must be to ‘realize social missions’  not to maximize their profit Main activities must be the production and sale of goods or services

Social Enterprises as a Fourth Sector by American sociologist Amitai Etzioni in 1973 FIRST sector- Government SECOND sector- Civilian Enterprises THIRD sector- Non-Governmental Organizations FOURTH sector- Social Enterprises

Social Enterprises as a Fourth Sector Gain profit Pursue social benefit 1.Government: Generates revenue through tax 2.Civilian Enterprises: Main purpose is to maximize revenue, and does so by trading goods and services 3.Non-Governmental Organizations: Main purpose is pursue social benefit, but does it by accepting donations 4.Social Enterprises: realizes social missions by production and sale of goods and services 2) Civilian enterprises 4) Social Enterprises 3) NGOs

EXAMPLE: ‘Institute for One World Health- A Nonprofit Pharmaceutical Company’ Considered as a social enterprise because… OWH manufactures and distributes new medicines for disease disproportionately affecting developing countries FIRST element- realize social missions: Works to fight against disease active in lesser developed parts of the world, ultimately fighting to decrease the gap between the rich and poor parts of the world SECOND element- production and sale of goods or services: Manufactures and distributes medicines

EXAMPLE: ‘Institute for One World Health- A Nonprofit Pharmaceutical Company’ Also… ‘Innovative’ Business Model –Innovations in Technology: Developing medicines for disease such as ‘leishmaniasis,’ prevalent in underdeveloped nations. –Innovations in Management: Investing in underdeveloped areas where there is less chance of competition against other pharmaceutical companies, and transferring manufacturing techniques to indigenous factories to cut costs.

EXAMPLE: ‘Institute for One World Health- A Nonprofit Pharmaceutical Company’ Also… ‘Social Venture Capital’ –Instead of receiving ‘donations’, OWH recieves ‘Venture Philanthropy’ or ‘Social Venture Capital’ –As investors consider ‘return on investment (ROI)’, venture philanthropists such as Bill Gates, Jeff Skoll, and Pierre Omidyar consider ‘social return on investment (SROI)’ when they invest in social enterprises

Other Examples Muhammad Yunus and the Grameen Bank: –‘Microcredit’ is giving small loans (microloans) –to those who lack collateral, steady employment, and a verifiable credit history (people who are not considered ‘bankable’) –so they can engage in self-employment projects to generate income, begin to build wealth –and finally exit poverty

Other Examples Ruth DeGolia and Mercado Global: –DeGolia started Mercado Global as an undergraduate student at Yale, and the company –provides a market for the handicrafts of the indigenous women of Guatemala –(contracts with companies such as Levis to design and provide accessories on its garments) –The profit garnered from sale of the handicrafts are invested back in indigenous societies of Guatemala –Educates women in business and in growing self- esteem –Overall, improves social status of women and living standards in Guatemala

The Future of Social Enterprises In the 2008 World Economic Forum in Davos, Switzerland, Bill Gates spoke of ‘Creative Capitalism’ a new form of capitalism that works both to generate profits and solve the world’s inequities, using market forces to better address the needs of the poor which is most effectively embodied by social enterprises

The Future of Social Enterprises Founder of E-bay, Jeff Skoll invested 250 million dollars in 1999 and started the Skoll Foundation which supports social enterprises Former Microsoft employee John Wood started ‘Room to Read’, and organization dedicated to building education infrastructure in developing countries to end the cycle of poverty Father of ‘modern management’, Peter F. Drucker considers social enterprises as growing and a leading field David Gergen, director of Center for Public Leadership at Harvard John F. Kennedy School of Government called social enterprises as ‘The New Engines of Reform’

The new engines of reform… SOCIAL ENTERPRISES!!!

The End Definition Elements Social Enterprises as a Fourth Sector Examples Future of Social Enterprises