Introduction to Social Enterprise

Designed by : Ahmed Fouad

Modern History of Civil
Society in Egypt
• 1945 Relief and Rehabilitation

• 1960 Service Provision (Subsidized)

• 1980 Community Comprehensive Development

• 1990 Human Rights Based Approach (HRBA)

• 2000 Millennium Development Goals (MDGs)

• 2005 Corporate Social Responsibility

• 2010 Social Enterprise

• 2013 Sustainable Development Goals

 A World of
Social Entrepreneurship
• Over the past two decades, the Citizen sector has
discovered what the business sector learned long ago:
There is nothing as powerful as a new idea in the hands
of a first-class entrepreneur.
• Social entrepreneurs drive social innovation and
transformation in various fields including education,
health, environment and enterprise development.
• They pursue poverty alleviation goals with
entrepreneurial zeal, business methods and the courage
to innovate and overcome traditional practices.
• A social entrepreneur, similar to a business
entrepreneur, builds strong and sustainable
organizations, which are either set up as not-for-profits
or companies.
 What is Social Entrepreneurship ?
• Applying practical, innovative and sustainable approaches to benefit
society in general, with an emphasis on those who are marginalized
and poor.

• A term that captures a unique approach to economic and social

problems, an approach that cuts across sectors and disciplines
grounded in certain values and processes that are common to each
social entrepreneur, independent of whether his/ her area of focus has
been education or whether the organizations they set up are non-profit
or for-profit entities.

• It is this approach that sets the social entrepreneur apart from the rest
of the crowd of well-meaning people and organizations who dedicate
their lives to social improvement.
 Who is a Social
Entrepreneur?
• A social entrepreneur is someone who recognizes a
social problem and uses entrepreneurial principles to
organize, create, and manage a venture to make social
change (a social venture).

• Where as a business entrepreneur typically measures

performance in profit and return.

• Social entrepreneurs are individuals with innovative

solutions to society’s most pressing social problems.
They are ambitious and persistent, tackling major social
issues and offering new ideas for wide-scale change.

• Rather than leaving societal needs to the government

or business sectors, social entrepreneurs find what is
not working and solve the problem by changing the
system, spreading the solution, and persuading entire
societies to take new leaps.
 What is a Social
Enterprise?
• Social enterprises are social mission driven
organizations which apply market-based
strategies to achieve a social purpose.
• The movement includes both non-profits that use
business models to pursue their mission and for-
profits whose primary purposes are social.

• Their aim is to accomplish targets that are social

and/or environmental as well as financial: is often
referred to as the triple bottom line.
• Many commercial businesses would consider
themselves to have social objectives, but social
enterprises are distinctive because their social or
environmental purpose remains central to their
operation.
CSR Vs SEs
 Types of Social
Enterprises ?

• Leveraged non-profit ventures

• Hybrid non-profit ventures
• Social business ventures
Leveraged non-profit ventures
• The entrepreneur sets up a non-profit organization to drive the adoption of
an innovation that addresses a market or government failure.

• In doing so, the entrepreneur engages a cross section of society, including

private and public organizations, to drive forward the innovation through a
multiplier effect.

• Leveraged non-profit ventures continuously depend on outside

philanthropic funding, but their longer term sustainability is often under
question given that the partners might change / lose interest / be unable to
keeping funding the venture.

Fundraising Oriented
Hybrid non-profit ventures
• The entrepreneur sets up a non-profit organization but the
model includes some degree of cost-recovery through the
sale of goods and services to a cross section of institutions,
public and private, as well as to target population groups.

• To be able to sustain the transformation activities in full and

address the needs of clients, who are often poor or
marginalized from society, the entrepreneur must mobilize
other sources of funding from the public and/or
philanthropic sectors. Such funds can be in the form of
grants or loans.
Quality oriented
Social business ventures
• The entrepreneur sets up a for-profit entity or business to provide
a social or ecological product or service.

• While profits are ideally generated, the main aim is not to

maximize financial returns for shareholders but to grow the social
venture and reach more people in need.

• Wealth accumulation is not a priority and profits are reinvested in

the enterprise to fund expansion. The entrepreneur of a social
business venture seeks investors who are interested in combining
financial and social returns on their investments.

Marketing Oriented
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Social Capital
Markets
 Institutions in Social Capital
Markets

• Value banks have the same role as commercial

banks in traditional capital markets. They take
deposits from savers and give loans to individuals
and companies. Since Value Banks focus on the
social sector, they have a better understanding of
the business models and the specific needs and
requirements of social enterprises. In addition,
the savers sometimes accept a lower interest rate,
which can be passed on to the social enterprise.

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 Institutions in Social Capital
Markets

• The traditional role of investment banks

is the financial advisory of corporate
clients and the matching of supply and
demand. Social investment advisers take
over the same role in the social sector.
They support the social enterprise in
setting up an appropriate financing
structure and finding the right investors.
 Institutions in Social Capital
Markets
A stock exchange is an efficient public
platform to match supply and demand. On
stock exchanges, companies can issue shares
or bonds which are then traded
continuously. Companies have access to a
large capital pool and investors can sell their
shares or bonds without delay at any time. A
Social stock exchange can be an attractive
financing option for social enterprises with a
proven business model and significant
financing needs. At the moment, four social
stock exchanges with trading activities are
being incorporated.
https://economictimes.indiatimes.com/markets/
stocks/news/social-stock-exchange-will-it-
improve-access-to-capital-for-social-
enterprises/articleshow/70108595.cms
Institutions in Social Capital
Markets

Investment funds act as intermediaries

between demand and supply by
bundling funds from investors that they
subsequently invest in certain asset
classes. This approach reduces the
transaction costs and the risk through
diversification effects. Social investment
funds apply the same principle in the
social sector. They collect funds from
individuals or foundations that they
invest in a given sector such as
microfinance or the solar industry.
 Institutions in Social
Capital Markets
• Rating and research agencies publish
ratings and research reports on publicly
listed companies to support investors in
their capital allocation decisions. In the
social sector, funding consultancies play
this role. They publish research reports on
different sectors and advise funders on
which organizations to support.
• Funding platforms are similar to social
stock exchanges as they provide a
platform to match demand and supply, but
without active trading.