Have you ever wished you’d come up with a pithy phrase that really sums up what you believe in and are trying to do? Clearly, I have. For me, it’s “social entrepreneurism.” More and more young companies are working to both make money and address a social problem at the same time. Deanna Cioppa’s article in Crain’s New York Business highlights some NYC-based companies that are doing just that.
Rampant unemployment. Prisoner recidivism. Endemic poverty. Solving these problems was once the exclusive province of nonprofits, charitable foundations and government. No longer.
In the past 25 years, a new class of business has sprung up, one that applies private-sector practices to the creation of products and services that address problems of hunger, poverty, illiteracy and climate change—to name a few of society’s pain points. Marked by an agility and growth potential rare among grant-dependent nonprofits, these social enterprises operate on a double bottom line: They try to make a profit while making the world a better place.
“Most of your effort in a nonprofit is begging for money and not really being held accountable for it,” says Christopher Grewe, founder of American Prison Data Systems, which sells modified tablet computers to correctional institutions. “I can raise as much money from the private sector as I need, and will actually knock the problem down.”
That sensibility, combined with a commitment to doing good, helps explain why social entrepreneurism is on the rise. One measure of their popularity is the proliferation of so-called benefit corporations. These are companies that incorporate with a commitment to make a positive impact on society and the environment—and hold themselves accountable to meeting those lofty goals.
New York state authorized the incorporation of B corps in 2011, but the nonprofit B Lab has been assessing and certifying B corporations for nearly a decade.
In that time, 1,350 companies across the world and more than 100 in New York state have been certified, including big names like Etsy and Warby Parker. Of course, not all self-identified social entrepreneurs create B corps; companies that simply embrace the double mandate of profitability and social good are numerous, as are the reasons many become B corps in the first place.
“For-profit businesses can scale, bring in outside capital and attract the best talent because they can afford to treat employees well,” said Katie Holcomb, a spokeswoman for B Lab.
Social entrepreneurism is also gaining ground at business schools. Between 1995 and 2011, the number of students enrolled in social-enterprise courses at Harvard Business School leapt from 71 to 600. A 2012 survey of U.S. college students found that 45% would take a pay cut to make an impact.
Investors are pouring money into the sector, creating a powerful incentive to do good. In 2014, $1 out of every professionally managed $6 in the U.S. qualified as a sustainable investment; in 2012, it was closer to $1 out of $9, according to Morgan Stanley.
“We have had an unprecedented past decade,” said Damon Phillips, co-director for the Tamer Center for Social Enterprise at Columbia University. “We’ve been at war. We’ve had a huge financial crisis, and I believe that makes us introspective. It’s more likely that we’re going to ask ourselves, ‘What is important to us?’ “
To get a sense of the social-enterprise landscape in New York, we gathered 10 entrepreneurs who are helping to erase that space between “good for business” and “good for all.”
Read the full article here.