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Self-sustainability: the dilemma at the heart of social entrepreneurship

A suggestion to allow social entrepreneurs to survive while pursuing their social mission - by Erwan Lamy

Social entrepreneurship is defined by the Organisation for Economic Cooperation and Development (OECD) as “the entrepreneurship that has as its main goal to address pressing social challenges and meet social needs in an innovative way while serving the general interest and common good for the benefit of the community. “In a nutshell, social entrepreneurship targets social impact primarily, rather than profit maximisation in their effort to reach the most vulnerable groups and to contribute to inclusive and sustainable growth”. But what about its own sustainability?

According to Deloitte’s 2018 Global Human Capital Trends report, “a profound shift is facing business leaders worldwide: The rapid rise of the social enterprise, reflecting the growing importance of social capital in shaping an organisation’s purpose, guiding its relationships with stakeholders, and influencing its ultimate success or failure.” Some claim that “the future belongs to social entrepreneurs” or that “the for-profit social enterprise is the impact model of the future,” others call it “a new paradigm for business” or even “the new business model.”

The model’s appeal is evident, The Guardian stating that in the UK “one in four people who want to start a business want to create a social enterprise”, “the sector now accounts for 9% of the small business population, employing 1.44 million people” and “Social Enterprise UK estimates the startup rate is three times that of mainstream SMEs”.

“There are big benefits to this model. For-profit enterprises are often more sustainable in the long run, and able to scale more quickly,” a social entrepreneur explains in Forbes. “But there are also big challenges.”

According to The Guardian, the sector has to tackle an image problem affecting its sustainability: 71% of social entrepreneurs “still struggle to make a living from a social venture. The same proportion struggle to find sustainable revenue streams and 60% find it difficult to access the right kind of finance.” The newspaper mentions a social entrepreneur who “despite a number of big wins and 400% growth year-on-year, isn’t sure it’s a sustainable business model.”

Despite institutional efforts like the European Commission’s social business initiative, social enterprise is in a precarious position, on the razor’s edge between market economics and the voluntary sector: social entrepreneurs have to deal with either the precariousness of the different kinds of support (external or internal) or the risk of mission drift. They must always strike a delicate balance between commercial principles and social concerns. There is no shortage of discussion concerning the possible solutions that could help to maintain this balance, and social entrepreneurs are striving to reconcile conflicting aims on a daily basis, but the economic roots of this precariousness remain.

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