Social Entrepreneurship by Dr. Peter Frumkin

Ten years ago, as the excitement about social entrepreneurship began to take off, I decided to do a little field work. I compared the syllabi at major research universities where both classes on nonprofit management and social entrepreneurship were taught and looked for differences and similarities between the two. There turned out to be a lot of overlap, from defining mission and establishing a defensible competitive position, to marketing and stakeholder management, and encompassing such things as building boards and measuring performance. In other words the differences between the conceptualization of the two fields were small, at least in terms of what was being taught to students. It was easy thus to dismiss the whole social entrepreneurship movement as a fad grounded largely in a few clever new terms and phrases that simply obscured ideas rooted in the old and familiar field of nonprofit management. This early judgment proved false. 

Over time, the concept of social entrepreneurship grew, became more distinctive, and spawned a vast new literature, teaching programs and degrees. Harvard anchored its work in the concept of ‘social enterprise,’ Stanford opted for ‘social innovation,’ Wharton branded around ‘social impact’, and Duke latched on to ‘social entrepreneurship.’ Whatever they call it, these programs, centers, and initiatives have grown stronger and more defined. It is useful to think of these related concepts as part of a continuum. Social entrepreneurs are the actors who do the work, social enterprises are the organizational forms that are used, social innovation is the theory of change that guides the process, and social impact is the end result that is achieved. 

But what is social entrepreneurship really and how is it different from nonprofit management? I have concluded through my own teaching and research that the essence of the special identity of social entrepreneurship lies in three necessary elements. 

For something to be a manifestation of social entrepreneurship, it must first involve a new and innovative way of solving a public problem. Innovation is at the core of the work of a social entrepreneur who looks at the world, identifies a problem, and then advances a new solution. Social entrepreneurship cannot simply involve dutiful replication or adaptation of models already in use and accepted as mainstream practice. It must represent a new combination of ideas and initiatives that promise to address a pressing problem by bringing something new to the table, be it fresh technology, a new theory of change, or an insight transferred from an allied field. 

The second element of social entrepreneurship requires that any solution be designed from the outset to be part of a financially and organizationally sustainable model. Social entrepreneurs do not write concept papers and endless foundation proposals, and then sit around waiting for someone to authorize them to act. Instead, they design their enterprises so that are capable of running on their own engine and surviving in a turbulent sea. Whether it be through a stream of related or unrelated earned income or built on volunteer labor, social entrepreneurs are designing and building organizations that are financially and institutionally viable from the start and over the long haul.  They take seriously the challenge of ensuring that the organizational design and financial model are not second thoughts, but part of the core calculus of pursuing lasting social change. 

The third and last essential element of social entrepreneurship is scale. Social change may start locally, but ambitious social entrepreneurs think through and know how their ideas and programs can spread broadly. They design their operations in a way that they can be grown or replicated so as to reach more and more people.  This focus on scale differentiates the social entrepreneur because they know that the scale of complex and enduring problems is such that no small-scale solution is enough. The essence of change requires a commitment of scale. 

Innovation, sustainability and scalability can be achieved using both nonprofit and for-profit organizational forms. In fact, social entrepreneurs are agnostic on sector and view it as a contingent decision that is dependent on the problem that is being addressed and the best auspice for supporting innovation, financial sustainability and scale. In some cases, nonprofit forms may be best, while in other contexts for-profit forms may be most appropriate. No matter the sector, social entrepreneurship demands a value-seeking imagination, a high degree of comfort with risk and uncertainty, and a willingness of adapt and iterate over time.

Social entrepreneurs and nonprofit managers start with very different assumptions and work through different means, albeit in the same general direction of social impact. At Penn School of Social Policy and Practice, we teach both social entrepreneurship and nonprofit management, and on top of that we add the third paradigm of nonprofit leadership. The field of practice that Penn seeks to shape is, I believe, rendered richer by virtue of the open battle of ideas between these fields, the way they complement and challenge one another, and the special skills and tools that all three fields contribute to the challenge of creating social impact. 

By:  Peter Frumkin, PhD, who is a Professor of SocialPolicy, Faculty Director of the Center for High Impact Philanthropy, and Director of the Nonprofit Leadership Program at SP2.