A Promising Critique of Social Enterprise

Anyone who has been around philanthropy for a while knows that foundations are subject to trends that reach a crescendo--birthing new prophets and new organizations--only to fade into near silence.

At this week's COF Conference, I was reminded of one such trend: social enterprise. I am not referring to social enterprenuerialism that is a current “flavor of the moment.” Social enterprise, which peaked somewhere around the turn of this century, is the practice whereby (mostly domestic) nonprofits establish for-profit businesses intended to both garner earned income and fulfill their mission.

I spoke with Community Wealth Venture’s Alfred Miller Wise who agreed with my assessment that social enterprise was once trendy:

People promoting social enterprise played a role in that by promoting social enterprise as the answer. They were overly evangelical. Now we are much more measured. We don’t say social enterprise will make even the best-run nonprofits into cash cows.

He added that social enterprise requires “patient capital,” something foundations, who want results quickly, often lack.

I’ve written about a similar rise and fall and now, again, rising trend with Venture Philanthropy in which leaders like Alfred kept quietly refining their approaches until the train came back around.

I wouldn’t be surprised to see the same could happen for social enterprise. Business media doesn’t often cover strategies being implemented by traditional foundations, but they are covering the work of social entrepreneurs and the foundations that support them. That’s because it is an idea that resonates for readers and donors and average citizens.

I worry about the fact that so much media coverage is now going to international approaches, leaving domestic social service agencies looking like bald-headed stepchildren. There is no question that nonprofits need strategies to enhance their sustainability, and that social enterprise is an important option under the right circumstance.

Community Wealth Ventures works with nonprofits who offer equally compelling stories being told by at least one leader who is leaving the hype behind.

2007COF

Susan Herr