From corporate responsibility and traditional philanthropy to impact investing and social enterprise and everything in between, the social impact landscape is broad and varied. Civic-minded entrepreneurs and mission-focused founders stretch and contort simple definitions of social enterprise. Entrepreneurs tend to favor action over classification, and can tend to have their hands in different types of ventures. Take Miami’s Felecia Hatcher, who may be known for her business consulting work, co-organizing that city’s Black Tech Week, or her work with Code Fever Miami, a tech training school.
They can also exist in multiple categories. In Philadelphia, a company such as ROAR for Good is creating a wearable product meant to prevent sexual assault, and a portion of the proceeds is invested in programs meant to reduce violence.
Today’s developing social venture community is fast growing in cities like Philadelphia, Baltimore and Detroit, where the problems entrepreneurs are facing down include generational challenges stemming from inequality and economic disinvestment. But it’s still new, a spinoff of surging local entrepreneurship scenes that meet their natural conclusion: how is our success helping our neighbors? Before that community can become smarter and more efficient, though, there needs to be clarity surrounding the people and organizations that comprise it and a shared understanding of the language they use to communicate.
One way to sniff out a proper social venture is that its social goals are embedded in the organization from the beginning. That is, a hot dog cart launched with the intention of employing citizens returning from prison is more of a social enterprise than a financial services firm that adds an employee volunteer campaign years after record profits — even if the latter puts more raw dollars into a cause.
That’s because intentions can be clear — if only to a founder. You can’t always say the same about outcomes and impact, which can be fuzzier.
“The word ‘impact’ means something different to everybody,” said Garrett Melby, cofounder of Philadelphia-based social enterprise and nonprofit accelerator GoodCompany Ventures. That ambiguity in terminology, he said, has created challenges for the social impact space. The Wharton Social Impact Initiative (WSII), a program of the Ivy League University of Pennsylvania, for example, refrains from attempting to define what “social impact” means at all.
Melby said he sees the community living at the convergence of “philanthropy and entrepreneurial strategy” — a confluence he said creates an opportunity to create new hybrid solutions for old problems.
“Spending time together as a group and having a schema for what fits into which bucket is going to be valuable,” he said.
Yet when there’s little consensus on the definition of a term you choose to label yourself as, there might be a problem with that label.
“It’s such a squishy word. It’s quick to alienate some people,” said Dermot Murphy, an associate at impact investing fund Halloran Philanthropies. “You can really divide a room on the intentionality of [how you define] it.”
In truth, there’s a spectrum along which must balance your social venture’s social impact and venture-mindedness.
“We have debates within our group and with entrepreneurs and other people we work with about how profit is good,” said John Moore of Investors’ Circle, the national network of impact investors. “How you balance the company, its impact and its revenue generation is tricky for the companies we deal with because they’re trying to do both [balance fiscal and social impact] at the same time.”
There’s an opportunity for nonprofits to learn from businesses that can successfully strike that balance, and there are those in the philanthropic sector who can challenge a business community into adding a greater goal than profit alone.
“It’s about taking the best of different worlds and [learning from] what they do well,” he said. “[We’re trying] to put various stakes in the ground so that people can understand what this is, how they fit into it and why it’s important.”
Right now, there are people who aren’t sure whether or not they even belong in the tent, let alone know their role within it.
“We’re all in this tent, but our heads are down,” said Dawn McDougall, executive director of a local civic hacking brigade of national nonprofit Code for America. “At the same time, do I self-identify as social impact?”
The point here is that any growing company that offices its employees a strong lifestyle is offering community value but we’re in an era that is asking for even greater community good. Are you prioritizing it?
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