Making social enterprises financially stable is not easy, but it’s worth it


Sophie Hersberger-Langloh


While assisting the Global Social Entrepreneurship course of the Center for Philanthropy Studies (CEPS) last year, I had the great opportunity to meet inspiring social entrepreneurs from around the world. One of them is Bernard Makachia from Tanzania. To me, he and his project kuniSMART are a model of how entrepreneurial thinking, a social mission, and a sustainable business model can go hand in hand.

Social entrepreneurs use entrepreneurial methods to find solutions to social and ecological problems. They are often concerned with changing an existing socio-economic balance in order to help disadvantaged or marginalised groups. The entrepreneurial knowledge, innovation, and creativity of the people involved play a key role in identifying opportunities for such changes.

Social mission and financial sustainability
While the social mission is a central component of social enterprises, these projects must also be financially sustainable. Otherwise, the new socio-economic balance will depend on subsidies or non-profit donors, which is not necessarily sustainable in the long term. To achieve sustainability, the cost of a project should decrease as the number of beneficiaries increases, so that the dependence on philanthropic or governmental support can be reduced as the project grows. This sometimes requires thinking outside the box. A prominent example of this is Muhammad Yunus, who founded the very successful Grameen Bank by trying to provide microfinance to people experiencing poverty. As a pioneer in this field, he has inspired many other social entrepreneurs worldwide.

However, there are also smaller projects that have not (yet) achieved this global impact, but still promote social justice in a very innovative way and aim at financial sustainability. One example is the kuniSMART project in Mwanza, Tanzania, on which participants of the certificate course ‘Global Social Entrepreneurship’ worked last year. Bernard Makachia, the founder of kuniSMART and other social enterprises, had the idea to replace conventional firewood with organic briquettes that produce less harmful smoke and can be produced from waste. These bio-briquettes are produced by young mothers and the proceeds from the sale of the briquettes not only serve as a livelihood for these young women, but also finance the Education for Better Living Organisation foundation that Bernard established a few years ago. Its aim is to prevent teenage pregnancies through prevention and education in schools and thus help young women to complete their education and break out of poverty. A simple project idea at heart, kuniSMART has thus managed to successfully combine entrepreneurial thinking with both a social and ecological mission.

A financially sound project
A study by Harvard University for the Skoll Foundation summarised what is crucial for financial sustainability in social enterprises: integrating new economic actors and improving the technologies used.

New economic actors include, for example, new customers, i.e. people who are willing to pay for a service or product and thus subsidize other offers. The fact that these may exist is something that many NPOs do not even have on their radar. One of the new customer groups that kuniSMART reaches with the organic briquettes are state schools that want to create better working conditions for their cooks by reducing smoke.

A second way to bring about change is to improve the technology of a system while the current players stay in place. kuniSMART’s main focus in the first months was to develop a machine that is easy to operate and that can produce organic briquettes in an environmentally friendly and cost-effective way. Of course, technology does not always simply mean a machine, but can also involve optimising an existing process by having a closer look, for example, at one’s processes, software, and infrastructure. Small tweaks can significantly improve the work of a social enterprise.

Making social enterprises financially sustainable is not easy. But, as kuniSMART shows, using that entrepreneurial, creative mindset, can help you tap into new financial (re)sources and optimise the way you produce goods or services. I’m looking forward to seeing how kuniSMART achieves long-lasting impact and change – one bio-briquette at a time!

Sophie Hersberger-Langloh, Center for Philanthropy Studies (CEPS) | University of Basel

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