Social Entrepreneurs 5.0

As long time readers know, the term "Social Entrepreneur" has morphed repeatedly over the past 15 years. At first, it was about the then odd idea of a nonprofit manager acting in a businesslike manner. Then, some of these managers started outside businesses; thus a second definition. In fact, my 2000 book Social Entrepreneurship: The Art of Mission-Based Venture Development, was about both of these uses of the term. In the book, I defined a social entrepreneur as "someone who takes reasonable risk on behalf of the people their organization serves."

Since that time, social entrepreneurs have been defined as investors who only invest in "good" businesses (those that don't abuse workers, for example) or businesses whose product benefits society. I've even heard pharmecutical representatives say that, since they make medicine and give away some of their product, they are social entrepreneurs. That seems a stretch to me, but whatever.

When I was teaching nonprofit management at the Kellogg School of Management, most of the students were very, very interested in making sure their business had social impact in some form. Kellogg's students are still in that frame of mind, but not unique-it's true at nearly all business schools today-and these graduates are increasingly pushing their businesses to help in some tangible manner. That's good, but....there's an even more interesting and potential-filled model

The definition of social enterprise I'm most excited about is what I would call version 5.0, the melding of the business and social benefit. Three good examples of this model are:

Toms Shoes: Buy a pair of shoes and a child in need gets a pair.

Two Degrees Bars: For every healthy food bar you buy, an aid organization gets a food pack for a child who is starving.

Sleeve Candy: Started by four Kellogg students, who linked up with the Salvation Army, Sleeve Candy retrieves, catalogs and sells vintage T-shirts, and 30% of the revenue goes back to the Salvation Army.

The best news? Investors are REALLY interested and have capitalized firms with this model repeatedly. They see the appeal of linking profitable business with meeting social needs.

Is it the answer to all the world's ills? No. Will businesses like this replace government in aiding the world? No. Does this foretell the end of the need for nonprofits? Not at all.

But with so many needs in so many places staying unmet, I'm on board with any idea that helps more than it hurts, and this model seems to have huge potential.

Finally--if there's still someone on your gift list for the holidays....think about patronizing these organizations or others you may know of that are using this model.