Social
entrepreneurs drive social innovation and transformation in various
fields including education, health, environment and enterprise
development. They pursue poverty alleviation goals with entrepreneurial
zeal, business methods and the courage to innovate and overcome
traditional practices. A social entrepreneur, similar to a business
entrepreneur, builds strong and sustainable organizations, which are
either set up as not-for-profits or companies.
A social entrepreneur is a leader or pragmatic visionary who:
- Achieves large scale, systemic and sustainable social change through a new invention, a different approach, a more rigorous application of known technologies or strategies, or a combination of these.
- Focuses first and foremost on the social and/or ecological value creation and tries to optimize the financial value creation.
- Innovates by finding a new product, a new service, or a new approach to a social problem.
- Continuously refines and adapts approach in response to feedback.
- Combines the characteristics represented by Richard Branson and Mother Teresa.
The Schwab Foundation employs the following criteria when
looking for leading social entrepreneurs: Innovation, Sustainability,
Reach and social impact.
Social entrepreneurs share come common traits including:
- An unwavering belief in the innate capacity of all people to contribute meaningfully to economic and social development
- A driving passion to make that happen.
- A practical but innovative stance to a social problem, often using market principles and forces, coupled with dogged determination, that allows them to break away from constraints imposed by ideology or field of discipline, and pushes them to take risks that others wouldn't dare.
- A zeal to measure and monitor their impact. Entrepreneurs have high standards, particularly in relation to their own organization’s efforts and in response to the communities with which they engage. Data, both quantitative and qualitative, are their key tools, guiding continuous feedback and improvement.
- A healthy impatience. Social Entrepreneurs cannot sit back and wait for change to happen – they are the change drivers.
What is Social Entrepreneurship?
Social entrepreneurship is
- About applying practical, innovative and sustainable approaches to benefit society in general, with an emphasis on those who are marginalized and poor.
- A term that captures a unique approach to economic and social problems, an approach that cuts across sectors and disciplines grounded in certain values and processes that are common to each social entrepreneur, independent of whether his/ her area of focus has been education, health, welfare reform, human rights, workers' rights, environment, economic development, agriculture, etc., or whether the organizations they set up are non-profit or for-profit entities.
- It is this approach that sets the social entrepreneur apart from the rest of the crowd of well-meaning people and organizations who dedicate their lives to social improvement.
About organizational models
Leveraged non-profit ventures
The entrepreneur sets up a non-profit organization to drive the
adoption of an innovation that addresses a market or government failure.
In doing so, the entrepreneur engages a cross section of society,
including private and public organizations, to drive forward the
innovation through a multiplier effect. Leveraged non-profit ventures
continuously depend on outside philanthropic funding, but their longer
term sustainability is often enhanced given that the partners have a
vested interest in the continuation of the venture.
Hybrid non-profit ventures
The entrepreneur sets up a non-profit organization but the model
includes some degree of cost-recovery through the sale of goods and
services to a cross section of institutions, public and private, as well
as to target population groups. Often, the entrepreneur sets up several
legal entities to accommodate the earning of an income and the
charitable expenditures in an optimal structure. To be able to sustain
the transformation activities in full and address the needs of clients,
who are often poor or marginalized from society, the entrepreneur must
mobilize other sources of funding from the public and/or philanthropic
sectors. Such funds can be in the form of grants or loans, and even
quasi-equity.
Social business ventures
The entrepreneur sets up a for-profit entity or business to provide a
social or ecological product or service. While profits are ideally
generated, the main aim is not to maximize financial returns for
shareholders but to grow the social venture and reach more people in
need. Wealth accumulation is not a priority and profits are reinvested
in the enterprise to fund expansion. The entrepreneur of a social
business venture seeks investors who are interested in combining
financial and social returns on their investments.
Criteria for Selection into the Schwab Foundation Network
1. Transformative Social Change
The social enterprise achieves transformative social and/or
environmental change through the application of innovative and practical
approaches to benefit society in general, with an emphasis on
underserved populations.
The innovation can take the form of:
- A new product or service;
- A new production or distribution method;
- A new labour supply;
- The reformulation of an existing product for an underserved population; and/or
- New organizational structures or funding models.
2. Organizational Sustainability
We interpret ‘organizational sustainability’ in the broadest sense,
meaning the organization is not only financially sustainable but that it
can also demonstrate a sustainable business model and a proven track
record. For example, we do not accept start-ups or pilot projects.
Candidate organizations should have at least three years of operations
at the time of their application and should clearly be able to
demonstrate they have graduated beyond the “proof of concept” phase.
We consider the social enterprise’s business model to be sustainable
if it exhibits several of the following salient characteristics:
- It applies business methods and practices to generate impact, regardless of whether it is for-profit or non-profit.
- It has moved away from a donor-dependent model and has a diversified funding base.
- It charges fees for its products and services or for some subset of them, even if the fees are less than market-rate and/or the cost is wholly or partially subsidized by third parties (e.g. governments).
- It has strong partnerships with key stakeholders, such as the public and private sectors. These partnerships can take the form of in-kind support or fee-for-service contracts.
- It leverages partnerships, technology, and/or social media to open-source its method or approach to spread the innovation through a “multiplier effect” faster than it could alone.
With respect to financial sustainability, social enterprises
incorporated as non-profits should ideally demonstrate a diverse funding
base. In addition, they have incorporated some degree of cost-recovery
(at least 10-20%) into their model through one of the business model
methods above. We expect social enterprises incorporated as for-profits
to optimize financial value creation as a secondary objective and a
means to reach more beneficiaries, not as an end in itself. This
“non-dividend” ownership structure should be codified in the social
enterprise’s governance structure or by-laws. The organization’s
leadership should be willing to share information about its profit
margin, how it uses its profits and specific metrics such as the salary
ratio.
3. Proven Social and/or Environmental Impact
Given the complex and interrelated nature of social and environmental
problems, we recognize that attempts to evaluate the impact of one
organization’s intervention are costly and imperfect. After all, on the
most basic level, social enterprises are trying to create more inclusive
societies – and that is not easy to measure.
However, social entrepreneurship is a learning process by its very
nature. Starting with conceiving a more effective way to address a
poorly met or emerging need, the social entrepreneur must then test and
refine the initial concept, mobilize the resources and partners
necessary to scale the model, and continually improve the offering
through rigorous impact measurement and an openness to incorporate
feedback.
For this reason, we expect candidate organizations to have a
monitoring and evaluation system in place and be able to not only cite
quantifiable data when discussing their impact but also explain how the
information is used to improve the organization’s product or service
offering. These systems can be internal but ideally the impact can be
verified by an independent third party. Even if the social enterprise is
not able to prove causality between the impact of its activities and
transformative change at the system level, the candidate should be able
to explain how the organization’s approach transforms traditional
practice using the impact measurements that are collected.
4. Reach and Scope
The social entrepreneur’s initiative has spread beyond its initial
location and has been adapted successfully to other settings in the
country or internationally, either by the entrepreneur him/herself, or
through others who have replicated or adapted elements of it.
5. Scalability
The initiative has been or can be adapted to other regions of the
world to solve similar problems. Because the Schwab Foundation is a
global community, social enterprises that demonstrate high potential to
replicate their solutions can best leverage the network. The
entrepreneur is open to sharing with others the tools, approaches, and
techniques that are critical to the adaptation of the initiative.
6. The Candidate as Ambassador
We evaluate not only the candidate organization but also the
individual(s) leading it, for the very simple reason that the Schwab
Foundation network of social entrepreneurs is a community of people. At
regional and annual meetings of the World Economic Forum, Schwab
Foundation social entrepreneurs interact on a peer-to-peer level with
CEOs and public figures and act as ambassadors of their sector and of
social entrepreneurship more broadly. In addition, social entrepreneurs
are expected to commit their time and energy to building the social
innovation field through various taskforces and working groups managed
by the Schwab Foundation.
Benefits
Selected winners will be included in the Schwab Foundation network of
social entrepreneurs. This includes access to a peer network of social
entrepreneurs, special benefits such as pro-bono consulting services and
scholarships to executive education courses at world-class institutions
such as Harvard Business School, Stanford University and INSEAD.
The winners will be invited to the regional meetings of the World
Economic Forum which are relevant to their work. They are highlighted as
leading social entrepreneurs in a plenary session with heads of state
and/or corporate leaders. Excellent finalists or winners under 40 will
also be nominated to the Young Global Leaders network of the World
Economic Forum. Worldclass social entrepreneurs will be invited to join
the global social entrepreneur community, which includes the possibility
to be invited to the World Economic Forum’s Annual Meeting in Davos and
to contribute to the Global Agenda Councils of the Forum.
The Search and Selection process was established to recognize
outstanding social entrepreneurs around the globe, an initiative of the
Schwab Foundation for Social Entrepreneurship.
The Global Selection is open to all organizations based in
- ASIA / ASIA Pacific (except India)
- AFRICA
- EUROPE (except France)
- LATIN AMERICA (except Brazil, Chile, Venezuela)
- MIDDLE EAST and NORTH AFRICA
- NORTH AMERICA
Having read the criteria for selection, if you believe you qualify as a candidate, please download and complete the application form and return it to us by e-mail (global@schwabfound.org) along with the requested documentation by 15 July 2013.
