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Oct 29, 2013

The social enterprises ecosystem

Social enterprise is an area with a rich set of thoughtful professionals.  Suzanne Smith’s Social Trendspotter is an excellent newsletter on current thinking in this field.  The latest issue contained a link to an excellent article she co-wrote on the ecosystem we need to support social enterprise.  In my area, I call this needed ecosystem CINCO – the Community Investment Network of Central Ohio.

Here is an excerpt from her article:

Much like their for-profit counterparts operating incubators and accelerators, social enterprise ecosystem builders provide many advantages. By their very nature, ecosystem builders work on an overall system rather than one individual part. Some critical questions addressed are:

  • How do we attract capital?
  • How do we build strong social enterprises?
  • How do we turn consumers into customers of social enterprises?; and
  • How do we attract policymakers to our cause?
Ecosystem builders often rely on some outside support from philanthropists who believe in the value of social entrepreneurship.  This is amplified by the difficulty social entrepreneurs typically have receiving access to capital to support the start-up and growth capital needed for their enterprises. For now, investors are cautious and sometimes unaware of the value of social investment. While the tides are turning with the increasing attention being given to impact investing, social entrepreneurs still find themselves constrained by lack of capital support, and ecosystem builders are constrained by their ability to pay for support services.

There are roles that different groups can play to support them and ensure that social enterprise as a whole thrives:

  • Policymakers can introduce legislation that supports access to capital and markets through purchasing preference. They can also conduct research that quantifies how social enterprises can drive economic development.
  • Funders can use philanthropic dollars to fill funding gaps. It is impossible to independently generate revenue for some necessary support services, such as introductory workshops and online marketplaces. Funders can address those needs.
  • Investors can dedicate part of their portfolio to social investments and leverage ecosystem builders to find solid investments.
  • Universities can teach courses on social entrepreneurship and provide social enterprises access to their talent pools.
  • Traditional business support organizations can diversify their service models to meet social enterprise development needs and encourage social impact within all business models.
  • For-profit businesses can enhance their employee engagement models to provide pro bono expertise in business skills and practices, legal support, and other core competencies.