Sonal Shah and Lily Cole consider potential impact of social enterprise
Can social enterprise ever be big enough to save the world? That was the intriguing question pondered by a panel at the Natural History Museum in London last night.
The debate was staged to promote The Venture, a competition from Chivas Regal that will see funding prize money of $1m dispersed between 27 ‘start-ups with a mission to create positive change’. Many of the social entrepreneurs in the running for the prize money were present in the audience.
Amongst the guests wrestling with the critical question was Sonal Shah, from the Beeck Centre for Social Impact and Innovation, based at Georgetown University in Washington. Shah is also the ex-director of the office of social innovation at the White House, established under the Obama administration.
Alongside Shah was former model turned social entrepreneur Lily Cole of Impossible.com, described on the site as ‘A global community who help each other out. People share their time, skills and objects.’ The site also has a shop selling ethical products.
With the question the debate centred around in front of them, it was inevitable that the challenge of scale soon came up in the conversation. Thomas Davies, the chief investment officer for Seedrs, a crowdfunding platform for of start-ups, pointed out that: “90% of the UK’s GDP comes from small SMEs with fewer than 20 employees. So that’s the vast majority of the economy. From a social enterprise angle, maybe what’s more impactful is lots and lots of small enterprises doing very, very well.”
Moderator Daniela Papi-Thornton (from the Saïd Business School) cited the oft-quoted obstacles to growing a social enterprise; lack of access to funding, lack of government support and red tape. Sonal Shah’s reponse was that these problems were not just confined to social ventures: “Those are problems for every business in the world. If you’re not getting funding you need to look at whether your business proposal is the right kind of business proposal and is that why you’re not getting funding?”
Davies pointed out that raising money for any business was challenging and said he had the utmost respect for social enterprises trying to fundraise: “What you’re doing is narrowing the group of investors that will be interested in you because what you’re looking for is an investor that is looking for a return but also looking for the social value out of that.”
To naively try and have social impact and not have sustainability is a suicidal path
Cole was asked why she thought it was harder to raise money for a social venture. “It’s too new,” she replied. “We’ve found with a social business like Impossible that charity is a really well defined space... there is loads of understanding and a market around donations, then you have business and there is a whole market around that… social business sits somewhere in between. It hasn’t got the same understanding, it hasn’t got the same tax benefits and it hasn’t maybe got the same financial upside. I don’t think there is enough of an audience yet.”
The panel also tussled with the moral quandary of whether it is better to reach a point of financial security as a business before addressing the social issues you want to impact or to strive for the two goals side by side.
They agreed that securing the financial side of a social business was crucial. “To naively try and have social impact and not have sustainability is a suicidal path. It’s really important to think about how you’re making your money,” said Cole.
Returning to the question of if social enterprise will ever be big enough to save the world, Papi-Thornton pointed out that despite interventions, problems still existed. “People are still poor, people still suffer from infirmities… how do we solve these problems?”
“They’re doing it!” responded Shah, pointing to the social ventures represented in the audience. She pointed out the willingness of consumers to support ethical businesses and the next generation of employees entering the workforce who were asking more of their potential employers.
“The greatest success is when everyone wants to compete with each one of these (social) businesses. Corporates are already seeing that as a challenge… how does purpose become a part of the company rather than seeing it as just a thing that they do?”
The winners of The Venture will be announced at an event in New York in July.
Photo credit: The Venture