TheGlobalSocialEntrepreneurship
ForumintheDiplomaticCouncil
While technological innovations are widely promoted, social
innovations are still largely overlooked. The societal
development can not always keep up with the rapid
technological advancement and challenges of a modern
dynamic environment.
The Diplomatic Council (DC, www.diplomatic-council.org ) has
therefore launched the DC Global Social Entrepreneurship
Forum. It will focus on the possible impact of social innovation
on the economy and society.
The objective of the forum is to promote Social
Entrepreneurship as a tool for social change in politics,
business, civil society, and within the United Nations. The
Diplomatic Council will develop guidelines for international good
impact, efficiency analyses, publications, and work toward
networking with stakeholders on a global scale to support
Social Enterprises to become even more successful.
Social impact through innovation and entrepreneurship
Technological change has always been accompanied by a
change of society. While it is true that the challenges we are
facing today have become more exponential and global, so
have our means and the ability to solve these problems.
We can communicate globally, learn form the best practices
and scale social innovations internationally. In short, all the
possibilities of digitalisation, automation and technological
advancement can be used for the benefit of good impact.
Social Entrepreneurship is a global movement that, in general,
wants to solve social problems with entrepreneurial methods.
What initially may sound like a contradiction has in fact a long
tradition.
Henri Dunant can certainly be considered as an early Social
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Entrepreneur. In 1863 he founded what was later to be known
as the International Committee of the Red Cross.
A pioneer of modern Social Entrepreneurship is the economist
Muhammad Yunus. In 1983 he founded the Grameen Bank, a
development bank and microfinance organization, that provides
microcredits to small-scale entrepreneurs without collateral.
In 2006 he received the Nobel Peace Prize for his model.
This shows Social Entrepreneurship is not limited to what is
commonly understood as the social sector. Rather, it is a matter
of focusing on innovation and social impact.
CSR1 and other activities of purely profitable companies
distinguish from Social Entrepreneurship in the way that good
impact is not their primary goal, while Social Enterprises are
solely founded for this purpose. Traditional non-profit and
charity organizations do not necessarily differ in the objective,
but in the method. Social Enterprises have set themselves the
goal of meeting the increasingly complex challenges of our
society with creativity and entrepreneurship. Although Social
Entrepreneurship is still a niche phenomenon that is searching
for its place in politics and business, Social Enterprises have
developed a dynamic global network that creates successful
and innovative social business models.
1CorporateSocialResponsibility
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What is Social Entrepreneurship?
Image 1: Classification of Enterprises by objective and finance.
Own presentation.
Social Entrepreneurship can be described as the development
of solutions to societal challenges in an entrepreneurial manner.
The primary purpose is a positive social and/or ecological
impact as well as the economic sustainability.
Social Entrepreneurship can play an important role in order to
develop a sustainable market economy and guarantee
equitable distribution of wealth. Economic growth bringing
prosperity to mankind is one of the best guarantors for a
peaceful development. Thus, the classic economy, society,
state, and welfare associations can benefit from Social
Entrepreneurship.
The Diplomatic Council uses the term ‘Social
Entrepreneurship’ to describe the following types of
business:
•
Those where the social impact is targeted through the
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operational activity, often in the form of a high level of
social innovation.
•
Those where profits are mainly reinvested with a view
to achieving its social impact.
•
Those where the method of organisation or
ownership system reflects the enterprise's mission,
using democratic or participatory principles or
focusing on social justice.
While different definitions for Social Entrepreneurship exist,
they all share the idea of achieving social and/or ecological
impact for the common good. For the Diplomatic Council, Social
Entrepreneurship captures a unique approach to economic and
social problems, which applies practical, innovative, and
sustainable solutions to benefit society in general, whether the
organisations are non-profit or for-profit entities.
Legal forms of Social Enterprises
The legal structure of Social Enterprises varies very much of
the regulations of each country. There is no single legal form
addressing the specific needs of Social Enterprises. Many
operate in the form of social cooperatives some are registered
as private companies limited by guarantee, some are mutual,
and a lot of them are non-profit organisations like associations,
charities or foundations. A Social Enterprise is not determined
by its legal entity but by its operational approach.
Social Enterprises: An innovative force for good
It is difficult to compare the development of Social Enterprises
on an international scale, due to the lack of credible global data
and different statistical methods in each country. Furthermore,
the absence of a common multilateral definition of Social
Entrepreneurship contributes to this problem. However, there
are some indicators for certain developments. According to
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available data, Social Enterprises are predominantly young to
very young organizations. There are also some older players,
sometimes dating back to the beginning of the 19th century,
which underlines that Social Entrepreneurship is not a new
phenomenon. Overall, there is currently a strong social start-up
dynamic, which also originates from established players (social
intrapreneurship, incubators). Despite their diversity, fields in
that Social Entrepreneurs primarily engage are, social services,
inclusion and education, followed by culture and health.
Current developments include apps and other technological
thriven solutions for social and/or healthcare issues, online
platforms and improving means for scaling social innovation.
The Diplomatic Council beliefs that there is a great potential for
Social Entrepreneurship in the field of local development of
disadvantaged areas and communities as sectors like
development cooperation have barely been targeted yet.
A study by the consultancy firm McKinsey & Company showed
that in India alone, Social Enterprises could attract up to $8
billion in investment by 2025, eight times more than in 2015.
Impact: The new measure of success
Social impact describes how organizations’ actions affect the
social fabric of a community and the well-being of its
individuals. It is the standard point of reference in measuring or
judging the success of a Social Enterprise in order to determine
its achievements.
The success of Social Enterprises is not only measured by its
positive social impact on society but also by its economic
sustainability. This makes it unique in comparison to traditional
charity organisations that mostly rely on donations, but
nevertheless work for a good impact. From for-profit only
enterprises it differs in the way that social impact is as important
for Social Entrepreneurs as sales or profitability. It is the whole
reasons for the companies’ existence.
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Social impact measurement
That bears the question of how something so complex as social
impact can be quantified and numerically expressed. The
process can be quite elaborate; it requires the collection,
analysis, and comparison of data to provide evidence of
efficiency and the societal changes.
However, it begins with transparency, a clear mission statement
and a vision for society. Even though this may sound selfevident, a recent study for the German newspaper SPIEGEL
ONLINE found, that in fact only a few of the Top-50 charity
organisations report or explain the social impact of their
activities.
According to PHINEO, a leading consulting firm for effective
social commitment, many organizations still prefer to describe
what they do, instead why they do it and which social impact
they ultimately want to achieve.
This is often the result of a common mistake, confusing input,
and output with impact. Input in this context generally describes
the resources invested like funding, manpower etc. Output
describes the implemented activities, the reaching of target
groups and the acceptance among them. Despite popular
believe, these activities do not necessarily have a positive
impact on society, as they maybe don’t meet the special needs
of the target groups, are badly executed or just don’t achieve
sustainable change. It is the classic dilemma between “well
meant” and “well done”. The highest form of impact is a
sustainable change of society in the field of engagement. The
'Ladder of Impact' describes the process in a 7-step model.
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Image 2: 7 Steps towards impact. Own presentation.
To measure ones impact is a form of quality management in
order to compare, control and improve social activities. In a
world of limited resources all means dedicated to solve social
challenges should be invested most effectively. This is
especially important for impact investors and institutional
donors alike, for whom a certain form of comparability is
essential. For Social Entrepreneurs the promise of social impact
is an inherent part of their business model, so it is of the
uttermost importance to have a form of impact management to
be able to measure, adjust or improve social activities.
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A United Nations perspective on Social Entrepreneurship
Image 3: UN Sustainable Development Goals (SDGs). Credit:
United Nations.2
Sustainable development: A common goal for humanity
“The seventeen Sustainable Development Goals are our
shared vision of humanity and a social contract between the
world’s leaders and the people. They are a to-do list for
people and planet, and a blueprint for success.”,
said Ban Ki-moon, the former UN Secretary-General.
The United Nations have defined 17-key world problems.
Solving these challenges is a common goal for the whole of
humanity. Social Entrepreneurship can play a large role in
working towards this aim, as it combines the flexibility and
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https://sustainabledevelopment.un.org/?menu=1300
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pragmatism of the entrepreneurial world with the social
objective from the world of charity. Start-ups are used to
function under highly demanding and dynamic market
conditions. Social Start-ups are perfectly prepared to find
solutions for the tough challenges of social work in difficult
surroundings.
The Sustainable Development Goals (SDGs) aim to inspire
business leaders to think deeper into the many issues that
plague the world; and for the Diplomatic Council it is an
incentive to support Social Enterprises addressing these issues
to reach their full potential.
Strengthening the rule of law through Social
Entrepreneurship
“Business is the major source of investment and job creation,
and markets can be highly efficient means for allocating scarce
resources. They constitute powerful forces capable of
generating economic growth, reducing poverty, and increasing
demand for the rule of law.”,
said Professor John Ruggie, UN Special Representative.
Reflecting the worldwide expansion of the private sector
Professor Ruggie proposed the „protect, respect and remedy“
framework on business & human rights, which the UN Human
Rights Council endorsed in 2011.
The Guiding Principles on Business and Human Rights
define the respect of human rights as one of the core
expectations of society towards businesses. Enterprises should
not only use due diligence to avoid infringing the rights of others
but also address adverse effects with which they are involved.
Because Social Enterprises can affect virtually all internationally
recognized rights, they should consider the responsibility to
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respect all such rights, although some may require greater
attention than others in particular contexts. 3
According to the Diplomatic Council all international guidelines
for social impact must be based on the principles and objectives
of the United Nations to be legitimised and address the needs
of a global group of stakeholders.
Good impact for a better world
The aim of the Diplomatic Council is to strengthen Social
Entrepreneurship, support entrepreneurs, the civil society and
philanthropic organisations alike with the help of efficiency
analyses and guidelines for “good impact”, in accordance with
the objectives of the United Nations. The effective, smart and
target-oriented use of resources is essential to solve the
societal challenges of today’s world. The advantages of Social
Entrepreneurship shall contribute to a sustainable economic
development and fair distribution of wealth for all people all over
the world.
Contact
Professionals and Social Entrepreneurs who are interested in
an exchange on this topic are welcome to contact the DC
Chairman directly:
Manuel Kreitmeir, [email protected]
3https://business-humanrights.org/sites/default/files/reports-and-materials/Ruggie-report-7Apr-2008.pdf
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