Want to join the world of social entrepreneurship? Explore outstanding examples of social entrepreneurship and business models in social entrepreneurship now!
Introduction
Social entrepreneurship makes a difference by combining business ideas with the goal of solving social problems. This article will look at the 9 most innovative business models in social entrepreneurship and show you some typical examples of this business type. Exploring these cases will give you valuable insights about businesses that focus on both making money and doing good.
Table of Contents
What is social entrepreneurship?
Social entrepreneurship is a special type of entrepreneurship that creates, funds, and implements solutions to social, cultural, or environmental issues. While traditional businesses focus primarily on profit, social enterprises aim to achieve broad social, cultural, and environmental goals. These goals can involve poverty alleviation, healthcare improvement, and community development.
Due to the special approach, success in social entrepreneurship is measured differently from traditional ones. It’s not just about financial gain but also the positive impact on society. Social entrepreneurs are mission-oriented, driven by the desire to solve social problems and create lasting change. They usually collaborate with external stakeholders and prioritize sustainable development.
Typical social entrepreneurship examples
Grameen Bank
Grameen Bank was founded by Muhammad Yunus in Bangladesh. It pioneered the microfinance model by providing small loans, or microcredit, to impoverished individuals without collateral requirements. Grameen Bank has assisted over 10 million borrowers, most of whom are women, lifting many out of poverty through entrepreneurship. The business earned the Nobel Peace Prize in 2006 for its transformative role in poverty alleviation and women’s empowerment.
Fairphone
Fairphone, based in the Netherlands, is a social enterprise producing ethical and sustainable smartphones. It focuses on fair labor practices, uses conflict-free minerals, and designs products to be repairable and recyclable. Fairphone operates on a market linkage model, connecting small-scale producers to external markets and funding social programs through smartphone sales. The company promotes fair wages, sustainable practices, and environmental responsibility.
The Big Issue
The Big Issue is a famous social enterprise magazine in the United Kingdom sold by homeless individuals. It aims to empower vendors by providing them an opportunity to earn income and reintegrate into society. Vendors purchase the magazine for a lower price and sell it for a higher price, keeping the profit.Â
The Big Issue has helped thousands of individuals earn an income and improve their lives. It fosters dignity, community, and purpose, helping to break the cycle of homelessness.
9 Cutting-Edge Business Models in Social Entrepreneurship
Entrepreneur Support
The Entrepreneur Support model is a widely recognized model of social entrepreneurship. It operates by providing business and financial services to its clients. It supports self-employed people and small businesses with consulting, training, microfinancing, and technical help. This support helps entrepreneurs grow their businesses and also generates income for the social enterprise.Â
Organizations like Ashoka successfully use this model to find and support social entrepreneurs who solve social and environmental problems. Its support and resources empower such social entrepreneurs, allowing them to implement impactful solutions.
This model is flexible and used in many sectors by different economic development organizations, microfinance, and business development service providers. It focuses on giving resources, mentorship, and sometimes funding to entrepreneurs, helping them develop their skills and make a positive impact.
Market Intermediary
This model focuses on helping clients market and sell their products or services. It is particularly beneficial for people like small farmers, artisans, and disadvantaged groups. Instead of selling products directly, it connects these producers with broader markets, enhancing their reach and impact. For example, an organization that helps small farmers market and sell their crops operates under this Market Intermediary model.
The model focuses on providing marketing and sales assistance, strengthening market connections, and improving financial security for clients. By linking clients with potential markets, it helps them develop and sell their products effectively. Notable examples include Ten Thousand Villages and Krochet Kids intl., which support various marginalized groups. This model also emphasizes fair trade practices, ensuring fair prices and sustainable practices for producers. It balances social impact with profit, promoting economic empowerment and sustainable development.
Employment
The next business model in social entrepreneurship is the Employment model. It provides job opportunities and job training to individuals facing significant barriers to employment. They can be the disabled, homeless, at-risk youth, ex-offenders, and more. This business’s goal is to create jobs and job training programs for its target populations. It also integrates social support services like job coaching, skill training, therapy, and housing assistance to enable a supportive work environment.Â
Social enterprises under this model operate in the open market, generating income from selling products or services to cover expenses and social costs. The benefits of this model include meaningful job creation, skill development, improved quality of life, and community development. An outstanding example of this model is Digital Divide Data, which focuses on helping landmine victims, abused women, rural immigrants, and orphans in Cambodia. It offers computer literacy and technology training, leading to data entry jobs within the organization. The enterprise generates revenue by securing data entry contracts from universities and businesses, which funds operating costs and fair wages for its clients.
Fee-for-Service
The Fee-for-Service model is a common business strategy in social entrepreneurship where organizations charge clients directly for the socially beneficial services they provide. Its fee structures can include mandatory fees, voluntary fees, requested fees, membership fees, and hybrid fees. This model is widely used by hospitals, schools, museums, and membership organizations. It helps cover operational costs while effectively serving the target demographic.
Social enterprises, such as Bookshare and Jacaranda Health, use this model to achieve financial self-sufficiency and sustainability. By generating revenue directly from clients, these organizations can fund their operations, expand their social impact, and avoid reliance on donations. This model connects the social mission to revenue-generating activities but requires careful pricing to balance affordability and cost recovery.
Low-Income Client
This is a variation of the Fee-for-Service model that provides affordable goods and services to low-income individuals or communities. The model addresses essential needs and improves the quality of life for disadvantaged populations. It targets low-income individuals who face barriers to essential products and services, offering goods like healthcare and basic utilities.
Social enterprises operating under this model generate income from the sale of these products and services to cover operational costs. Scojo Foundation is an example of the Low-Income Client model. It provides low-cost reading glasses in rural India. It operates in both urban and rural markets, where the urban market generates commercial revenue, and the rural market focuses on social programs. This integrated approach allows Scojo to achieve deeper social impact while maintaining financial sustainability.
Cooperative
Another widely recognized type of social enterprise is the Cooperative model. It’s a fee-based membership organization that provides services to a group with shared needs or goals. Its characteristics include democratic control, where every member has an equal vote, and shared ownership of assets and resources. Profits are shared among members according to their participation.
Benefits of this model include empowering members, fairly sharing profits, and focusing on the community. The Cooperative model combines a social mission with a democratic, member-driven structure, promoting long-term sustainability and community well-being.
Cooperative Cleaning in New York is a typical example of cooperative social enterprise. It’s a worker-owned business that offers eco-friendly cleaning services. It pays living wages and gives ownership opportunities to its members, promoting economic empowerment. In Ethiopia, the Oromia Coffee Farmers Cooperative Union consists of smallholder coffee growers who sell their coffee worldwide. This cooperative ensures fair prices for farmers, empowering them economically and supporting sustainable agriculture practices.
Market Linkage
The Market Linkage model in social entrepreneurship focuses on facilitating trade relationships between small producers, local firms, and cooperatives with external markets. Unlike market intermediaries, these social enterprises do not sell or market their clients’ products directly. Instead, they act as intermediaries, connecting buyers and sellers and providing essential market information and support services. This model helps empower small-scale producers by enhancing their access to larger and more profitable markets, improving price discovery, and fostering local business development.Â
You can refer to Chetna Organic as a case of the market linkage model. It facilitates trade relationships between small-scale organic farmers and external markets. Chetna Organic provides market information, research, and business development support to empower farmers to access higher-value markets independently.
Service SubsidizationÂ
The next model is Service Subsidization, which is very common in social entrepreneurship. Utilizing this model means the social enterprise sells products or services in the marketplace to fund its social programs. This approach integrates business activities with social missions, ensuring financial sustainability by reducing dependence on grants.
For instance, a consulting firm may offer services to businesses, using the earnings to support job training for disadvantaged youth. This model leverages both tangible and intangible assets to generate income while addressing social issues.Â
Jaipur Rugs, a business that makes and sells handmade rugs, is an example of this Service Subsidization model. They work with over 40,000 artisans, mainly women from rural India. The company uses the money it makes from selling rugs to support the Jaipur Rugs Foundation. This foundation helps the artisans and their communities by offering healthcare, education, and training in new skills.
Organizational Support
The Organizational Support model involves a social enterprise selling products or services to the public, with the profits used to support a separate non-profit organization. Unlike the service subsidization model, where social programs are directly integrated, the social enterprise and non-profit in this model are distinct entities.Â
For example, Goodwill Industries operates thrift stores whose sales fund job training for people with disabilities. Benetech, another example, licenses software to fund social impact projects. This model leverages non-profit assets like expertise and facilities for revenue, offering scalability and flexibility in generating funds to support social missions.
Conclusion
The growth of social entrepreneurship has helped solve various issues among communities. The examples of social entrepreneurship mentioned can be typical cases that are inspiring and effective.
When joining this world, you can choose the suitable business models in social entrepreneurship to start. Whichever you pick, remember to balance between the economic and social aspects to reach sustainable development.