The Step by Step Guide on How to Become a Social Entrepreneur
- Trina Spillman
- May 1, 2019
- 5 min read
Many of us feel the need to serve a greater good in life, but turning a passion into a successful non-profit takes business acumen.
Definition of Social Entrepreneur
According to Roger L. Martin and Sally Osberg in a 2007 Stanford University report titled "Social Entrepreneurship - The Case for Definition,” a social entrepreneur is:
"someone who targets an unfortunate but stable equilibrium that causes the neglect, marginalization, or suffering of a segment of humanity; who brings to bear on this situation his or her inspiration, direct action, creativity, courage, and fortitude; and who aims for and ultimately affects the establishment of a new stable equilibrium that secures permanent benefit for the targeted group and society at large."
Step1. When is the right time?
As Rupert Scofield, the president and CEO of FINCA International, writes in the recently released Social Entrepreneur's Handbook, "Whether your mission is as ambitious as pulling millions of people out of poverty or as modest as feeding people in your neighborhood, now is the perfect time to get started.
Social entrepreneurship has never been more needed, more valued and more achievable than it is today."
Step2. Identify Your Issue
Regardless of the issue, you need to be 100% committed. If you're not sure what to do, look into joining another existing non-profit until you find your passion. The case study we will be examining is an organization founded by Scott Harrison called Charity: Water. While in Liberia taking photos, Scott recognized the one item that was causing sickness and even death for most of his subjects was a lack of clean water. He saw it (people walking miles to get clean water), photographed it, and found his calling. When he returned to the U.S., he knew what issue to tackle, and he has never looked back.
Step3. Build the Brand
Nicholas Kristof wrote in the New York Times that any brand of toothpaste is peddled with far more sophistication than all the world's life-saving causes. For Charity: Water, it was about re-creating charity. Harrison built a 100% model (finding separate donors to fund staff and operations) and wanted to show donors all the work they helped to fund. The first employee Harrison hired was in operations, and the second, a designer who helped to build the brand from scratch, differentiating it from other charity websites.
Step4: Think of It as a Business
The modern non-profit must adopt many of the same strategies, policies, and best practices employed by successful enterprises in the for-profit world. While it is important to function as a non-profit in legal terms, the most successful charities are well-run organizations, managed no differently than for-profit companies but with a different business objective. Literally every element of your brand should be business-driven. For Charity: Water, their sleek New York office consists of donated goods but rivals any top creative agency, they employ sophisticated CRM software to learn more about their donors (like a salesperson would a client), and plenty more.
"I think of Charity: Water as a for-profit tech startup that has no profits," says Harrison. "We give away 100% of our profits. So the better year we have, the more people around the world have access to clean water. Our shareholders are people in 17 countries around the world waiting for a rig to drive into a village to provide clean water to a few hundred people living there. We use the word ‘business’ so much more than ‘non-profit’, even though that's what we are."
Step5: Earned Income
A 501(c)(3) non-profit can still generate earned income. And plenty do. The National Center for Charitable Statistics estimates that nearly 70 percent of the $1.4 trillion generated by non-profits in 2008 came from the sale of goods and services.
The classic example: The Girl Scouts of the USA is synonymous with cookies—thanks to a troop in Oklahoma that began selling cookies in 1917 to raise funds. The Girl Scouts was founded in 1912, with the goal of teaching girls practical life skills. The cookie business did just that, while giving the organization a financial boost as well. Now the Girl Scouts, which has 3.3 million members, generates more than $700 million in annual revenue from the cookie program.
The Advantages:
Generating income frees an organization from total dependence on philanthropic dollars. At the very least, the income is a safety net; it also means more money to invest in the mission.
Unlike many grants, earned income is unrestricted and can be used however the organization chooses.
Finally, non-profits with earned income retain all the advantages of pure non-profits—including tax exemptions, ability to receive tax-deductible donations, and eligibility for non-profit-exclusive grants from major foundations.
Step6: Hire Employees Smarter Than You
A problem that isn't unique to non-profits, any well-run organization needs to employ this simple hiring tactic. For social entrepreneurs, it's often just as difficult to hire other employees who may have skills or experience beyond yours, but that's no different than a for-profit entrepreneur building a team. Once you get over that original fear, you will be able to find and keep talented employees who recognize that your ego doesn't get in the way of success.
Step7:Employ Transparency & Authenticity
Another important principle is being truthful with donors. In our case study, Harrison wanted his donors to know everything about his cause (hence the thorough website), but more importantly, he wanted transparency when it came to the financial information. He didn't want any questions on where the money was going, so he made it personal.
Annual reports should be made available for download, and there should be an updated counter on how many people a charity has helped.
Case study: "It was really important to me to be completely honest with people where their money went," Harrison says. "So, if you sponsored a well, we would send you back photos and the GPS coordinates of the projects, so you would know it existed and where it was, the community, and the people you helped. We're trying to make that personal connection to make that tangible for people."
Step8: Develop Smart Partnerships
For many social entrepreneurs, success is dependent upon (or relies heavily on) developing effective partnerships. From a corporate perspective, you want to align your brand with organizations that have a good track record but also align closely with your ideals. Large organizations get so many proposals for charitable causes in a given week that you need to smartly target which ones make the most sense, and get it right the first time. Beyond corporate partnerships, you can't do it yourself. Similar to hiring smart employees, you need to be watching for companies who can help you to achieve your end goal.
Step9: Make an Emotional Connection
Without a doubt, public perception can drive social entrepreneurs to success or failure, and rather quickly. Every organization (for-profit and non-profit for that matter) wants more media mentions and press coverage. But sometimes, it's as simple as going back to that original passion you had for the cause and developing your own ways to connect with individuals. Control the message and the medium, and never lose sight of your ultimate goal.
Step10: Utilize All Available Social Media Platforms
The basic mindset is that you need to be everywhere your donors are, and provide them value at every touch point. For our case study, visual storytelling has been extremely important. Harrison notes, "We've made over 200 videos using new media and are on ten different social media platforms, because they're as easy as signing up. We're aiming to connect donors in as close to real-time as possible with the people they are serving around the world."
The Business Model Works Best When:
The non-profit has a valuable product or expertise. As long as the product or service is directly related to the mission, the income remains tax exempt.
The user has some ability to pay.
The non-profit's mission is job training or skill building. According to IRS regulations, organizations that help certain classes of individuals—refugees or homeless people, for example—find jobs are permitted to become employers themselves.
Conclusion
Identify Your Issue
Build Your Brand
Hire Employees Smarter Than You
Employ Transparency & Authenticity
Develop Smart Partnerships
Make an Emotional Connection
Utilize All Available Platforms
Develop a Business Model (that generates revenue to help support your mission)
Very informative!