‘Other actors that should be supporting social entrepreneurs haven’t caught up with this emerging field,’ explained Pamela Hartigan, Schwab Foundation for Social Entrepreneurship Managing Director, at the beginning of the Schwab Fourth Global Summit in Campinas, Brazil in early November.
‘We want to look at what these other sectors can do to build the field, and what the priorities are for each sector.’ Another speaker captured the purpose of the meeting in a popular saying, ‘The strength of the fish is in the water.’ In many countries the water for social entrepreneurs isn’t that good. How can the different sectors help improve it?
Representatives of governments, companies, foundations, international development organizations, policymakers and academics from all around the world joined Schwab Social Entrepreneurs and Ashoka Fellows to try to come up with some concrete answers to the question of what needs to happen if the field of social entrepreneurship is to live up to its promise.
The first two days of the Summit included a range of sessions looking at different ways social entrepreneurial initiatives can scale up and different factors that contribute to the success of these initiatives – government policies, appropriate business models, succession planning, existing financial mechanisms.
The third morning featured a series of votes on the priorities for the different sectors. The aim here was not to look at the needs of particular social entrepreneurs but to focus on the needs of social entrepreneurship as a field and develop a common advocacy agenda. The task of the plenary was to prioritize these needs.
So what do social entrepreneurs need?
The overwhelming emphasis, throughout the voting and indeed throughout the conference, was on the practical – often the financial. When asked to choose their top two priorities out of five for ‘supporting social entrepreneurs and stimulating social entrepreneurship’, 64 per cent of Summit participants voted for access to working capital beyond seed funds and 61 per cent for organizational capacity-building, with only 25 per cent, 20 per cent and 18 per cent opting for legitimacy (improved access to decision-makers and greater recognition for the work that social entrepreneurs do), networking opportunities and access to markets, respectively – the latter perhaps surprisingly, as access to markets seems a fairly practical matter.
When asked to choose the three different stakeholder groups that are potentially most important in promoting social entrepreneurship, government came out in front (59 per cent), followed by financial and development institutions (56 per cent) and business (49 per cent). Interestingly, social entrepreneurs themselves scored only 39 per cent, with foundations and philanthropists and the education sector bringing up the rear with 35 per cent and 30 per cent, respectively.
Looking at the potential contributions to be made by the different sectors, the emphasis remained firmly practical. In each case people were asked to vote for three priorities out of a possible six.
Perhaps predictably, 82 per cent of voters agreed with the initial proposition that governments need to recognize that social entrepreneurship is a valid field of endeavour and set up taskforces to help facilitate it. For government, simplifying regulations (eg removing burdensome red tape) and reviewing (ie improving) tax incentives were the clear frontrunners, at 64 per cent and 65 per cent, respectively. Significantly, all the potential government contributions were very much in the realm of creating the right ‘enabling’ environment for social entrepreneurship to flourish in – levelling the playing field and formalizing the rule of law were the next most popular.
Businesses, by contrast, were seen much more as potential collaborators, with mutual benefits resulting for both partners. In a world where the consumer is king and where companies are eager to tap the world’s 4 billion ‘bottom of the pyramid’ potential consumers, social entrepreneurs offer companies a way to reach these markets and to offer consumers the ‘unique value proposition’ that may give their products an edge over those of their competitors. True, the two top priorities centred simply on what companies can offer social entrepreneurs: redefining their corporate giving role beyond just giving money, to include contacts as well as technical, financial and strategic business skills (65 per cent), closely followed by coming up with financial innovations (61 per cent) such as community development financial institutions, funds of funds, social venture capital funds, creative use of secondary markets, and tax-exempt bonds. However, the next priority (51 per cent) involved recognizing that social entrepreneurs can give business the edge when it comes to reaching previously untapped markets since such markets are social entrepreneurs’ primary constituency.
Multilateral and bilateral financial and development institutions
Here again, the potential of collaboration was recognized, with 68 per cent voting for ‘expanding private public partnerships’ to systematically include social entrepreneurs that have found practical, innovative approaches to solving the problems that the public and business sectors are trying to address. However, it was recognized that this collaboration is very dependent on the degree of freedom given to these institutions by governments, who are their main shareholders, and the degree to which governments are committed to decentralizing power structures and supporting enterprise development and poverty eradication in their own countries.
Philanthropic individuals and foundations
The emphasis here was very much on the way foundations use their money. Top priority was to ‘think long-term and be patient’ (60 per cent). Many foundations look for results in the short term, say two or three years, which is too short a time for social entrepreneurs to achieve results. The next priority was providing working capital (57 per cent), with the focus less on funding specific pet projects and direct service provision and more on providing financial support that can be used to improve capacity and performance. Contributing more than money was the third priority (53 per cent). This might comprise providing support for long-term planning or for board and executive recruitment, coaching, help in raising capital, and leveraging relationships to identify additional resources.
Can entrepreneurship be taught? This is a question that has been debated over the years and around the world. The 69 per cent who voted for cultivating entrepreneurial thinking, beginning at primary level, clearly think it’s at least worth a try. Next most popular was promoting interdisciplinary programmes (55 per cent), with the aim of demonstrating how business models, tools and techniques can be applied to social value creation – the need to break down the silos was a recurring theme throughout the three days of the Summit.
For this section only, there were two votes. Participants were asked to identify themselves as social entrepreneurs or ‘others’ and vote separately. What was striking about this was the similarity in the way the two groups voted: the actual numbers differed slightly but the order of priorities was identical. ‘Changing mindsets about development practice’ and ‘Solidifying their governance structure’ were top priorities for both groups (60 per cent for each from social entrepreneurs and 56 per cent from ‘others’). The votes for ‘Increasing solidarity and mentoring’ (25 and 28 per cent) and for ‘Accelerating alliances’ (45 and 52 per cent) were interesting. While the first seems to be associated with the more ‘airy-fairy’ ‘building the fellowship worldwide’, the second has the much more practical aim of ‘increasing the replicability and scalability of their initiatives’.
The need for finance
Not surprisingly, the need for more and better finance came up time and again throughout the Summit. At the end of a session on existing financial mechanisms, all speakers were asked for a final soundbite summing up their ‘dream’ for the field. These included:
- a wider group of grantmakers willing to build infrastucture for social entrepreneurs;
- learning to address owners of capital so they can understand what we’re trying to do and want to support it;
- more capital flowing from different sources;
- a chain of communication and trust transmitted through marketplaces and heard by a huge pool of donors;
- more institutions in the field working together, a conspiracy against poverty;
- some of the sector’s capital needs coming from the grassroots, and from capital markets in poor countries.
But are social entrepreneurs doing what they need to do in order to obtain money? Commenting after the voting session, Alex Nicholls (Skoll Centre for Social Entrepreneurship, UK) remarked that social entrepreneurs want to be enabled to get on with the job but they don’t want to be interfered with. Topics like accountability or measurement of impact had hardly come up at the Summit (except during the discussion of ACCESS in the financial mechanisms session ), though these will be needed if social entrepreneurs are to attract finance. The case needs to be made for supporting social entrepreneurs. He suggested a need to ‘balance operational freedom (ie freedom to get on with the job in the way they want to) with external accountability’.
1 Visit Alliance Extra, December 2004, at http://www.allavida.org/allianceonline for a report on the Summit.
2 ACCESS will present NGOs’ past results so people can see their capabilities and predict their future performance.
For the full results of the voting, see http://www.schwabfound.org/results.htm
For further information, contact Pamela Hartigan at Pamela.Hartigan@schwabfound.org