[MUSIC] In our last session we talked a little bit about social entrepreneurs and social innovation. Today I want to introduce a little bit different concept, the concept of social enterprise and show how it fits in between the two concepts we've already been working on. So we know what social entrepreneurs are. They're these dreamers, these practical dreamers who have big ideas for changing the world. And they'll do anything necessary to get there. Social innovation, as we said, is a novel fresh solution to a problem that involves some kind of improvement in terms of efficiency, effectiveness, or costs. But in between this concept of social enterprise. And social enterprise is the vehicle, the institutional form that social entrepreneurs are going to employ to get to their goal. And these social enterprises meld and bring together both concerns about mission and margin. Together they're going to unite them in a new form in some cases. And what I want to explore today is how the forms used by social entrepreneurs can change, and very substantially. So let's think a little bit about these three concepts in very practical, simple terms. Think about micro-finance as we talked before. Think about Muhammad Yunus. Muhammad Yunus is the social entrepreneur. He's the man who drove this fundamental global movement and innovation that turned banking upside down, and said that banking must be available to the poor because they are the ones who need it most. And he radically changed the terms and the scale of banking to make it accessible to millions and millions of people around the world. So he's a social entrepreneur. His social innovation is micro-finance. But in between, he needed an institution. He needed a form. He created a social enterprise called Grameen Bank that would lend money to the poor and with using repayment of the loans, be able to continuously make more and more loans over time. So you need a social entrepreneur and you need a social innovation, but you also need in the middle a form, a vehicle, a social enterprise. Now, one of the interesting things about social entrepreneurs is that the vehicles that they use range greatly. For social entrepreneurs, a big question will come up about what type of organization to create. Should it be for-profit, non-profit or something in between? Today we're going to explore this question of sector selection and organizational types in the social enterprise system, just to give you a little better sense of all the options that are out there, the many different possibilities that are present for social entrepreneurs. Think about an idea of a spectrum, not black or white, one type of organization or another, for-profit or non-profit. I want you instead to imagine a spectrum of organizations, ranging from purely non-profit and charitable to entirely for-profit. But in between those two poles I want you to think about the possibility that there are organizational forms and types that are spread across those two poles. And they give you more choice than the pure kind of binary choice of for profit, nonprofit. This idea of social enterprise spectrum was first promulgated by Greg Dees. It's been an important idea in the sector because it helped us break free from the idea that there was just two options available. In fact, there are many other possibilities for social entrepreneurs. So let's look at this spectrum. And we'll see that on the polar ends, we do recognize traditional charitable organizations and for profit organizations. But in between, we see some other forms. We've seen the rise in the last 20 years of a lot of nonprofits that are entirely, or mostly, dependent on earned income, fees that they charge to clients, dues, service fees that they collect to make the enterprise work. Those nonprofits are much more commercialized, market sensitive than traditional charities that simply depend on donations. So already, as we go from left to right, we start to see that among nonprofits, there are the purely charitable nonprofits that are designed only to be driven by donations and the goodwill of others, to organizations that are more market positioned around delivering a service for which there is an actual demand and for which people will actually pay a fee. When we think of particularly health nonprofits and education nonprofits, where fees and tuition and charges are an important part of the engine that makes these enterprises work long term. Then we start at the other end, the right hand side, and we think of traditional businesses that just simply go after profits, and nothing else. But we can also move a little bit over and start to see that there's a large number of business firms that also have a social dimension to them, that they have a conscience. They have a sense of corporate social responsibility and the desire to do something for the community beyond just generate revenue. So there's a difference between traditional pure for profits, and then the growing class of businesses that see their mission as being broader than that, as having some kind of social relevance and impact. And then in between, in the center of the spectrum, are a complicated group of new organizations that are hybrid in form, that combine both nonprofit entities and for profits working in collaboration with each other under a single umbrella in a hybrid form that tries to marry both the features of a nonprofit and of a for profit enterprise. If you think about the spectrum as continuous, not as categorical, that these are not boundaries but instead a progression, you can think about the range in which organizations pursue social impact versus profit-making, the way in which they interact with a group of diverse stakeholders in the nonprofit context to a well-defined group of owners and shareholders in the for profit context. And you can also think about the way in which funds are handled. Are they reinvested and put back into the enterprise in the nonprofit form, or do they distribute it outward toward shareholders in the for profit form? A lot of different possible dimensions, but across all these dimensions there's actually variation from pure to mixed approaches. [MUSIC]
