SY BBA SEM 3

301 – Entrepreneurship Development

Unit – 3 Social Entrepreneurship

1. Introduction to Social Entrepreneurship

2. Characteristics and role of Social Entrepreneurs
3. Innovation and Entrepreneurship in a Social Context
4. Start-Up and early stage venture
5. Issues in creating and sustaining a Non Profit Organization
6. Financing and risks
7. Business Strategies and scaling up

What is Social Entrepreneurship?

“Helping, fixing and serving represent three different ways of seeing life. When you help, you
see life as weak. When you fix, you see life as broken. When you serve, you see life as whole.
Fixing and helping may be the work of the ego, and service the work of the soul.”
― Rachel Naomi Remen, Professor, University of California, San Francisco

Social entrepreneurship is all about recognizing the social problems and achieving a social
change by employing entrepreneurial principles, processes and operations. It is all about
making a research to completely define a particular social problem and then organizing,
creating and managing a social venture to attain the desired change. The change may or may
not include a thorough elimination of a social problem. It may be a lifetime process focusing on
the improvement of the existing circumstances.

We can say Social entrepreneurship is an approach by individuals, groups, start-up

companies or entrepreneurs, in which they develop, fund and implement solutions to social,
cultural, or environmental issues. This concept may be applied to a wide range of organizations,
which vary in size, aims, and beliefs. For-profit entrepreneurs typically measure performance
using business metrics like profit, revenues and increases in stock prices. Social entrepreneurs,
however, are either non-profits, or they blend for-profit goals with generating a positive "return
to society"

Social Entrepreneurship does not focus on social issues only but also it focuses on
environmental issues. We do have different examples of women empowerment, child
development treatment of waste products through social entrepreneurship. Generally it is
associated with Non Profit or Non Government Organizations.

“What business entrepreneurs are to the economy, social entrepreneurs are to social
change? They are the driven, creative individuals who question the status quo, exploit
new opportunities, refuse to give up, and remake the world for the better.” – David
Bornstein, Author, How to Change the World: Social Entrepreneurs and the Power of New
Ideas

In the 2010s social entrepreneurship was facilitated by the use of the Internet,
particularly social networking and social media websites. These websites enable social
entrepreneurs to reach numerous people who are not geographically close yet who share the
same goals and encourage them to collaborate online, learn about the issues, disseminate
information about the group's events and activities, and raise funds through crowd funding.
“Think big. Having a big vision is very important in entrepreneurship. It’s better to have a
vision that is giant-sized than one that is too small. The bigness of the vision often
attracts other like-minded individuals who can see into the possibilities, and therfore this
type of thinking attracts opportunities for growth.” – Linda Rottenberg, CEO and Co-
Founder, Endeavor

Three types of social entrepreneurship

In their book on social businesses, The Power of Unreasonable People: How Social
Entrepreneurs Create Markets That Change the World (2008), John Elkington and Pamela
Hartigan distinguish three types of social entrepreneurship:

• Leveraged non-profit ventures

This is a non-profit type of venture. The entrepreneur engages a cross section of

society, including private and public organisations, to realise a particular social
innovation. Leveraged non-profit ventures depend on outside philanthropic funding, but
since their partners have a vested interest in their continuation, longer -term
sustainability is often enhanced.

• Hybrid non-profit ventures

A non-profit type organisation as well, but this model includes some cost-recovery
by means of selling goods and services. To be able to sustain their activities,
entrepreneurs must mobilise other sources of funding besides public or philanthropic
sectors. Grants or loans offer a solution to money shortages. These loans, however, need
to be paid back at a certain point.

• Social business ventures

Social business ventures are for-profit entities that provide a social or ecological
product or service. Although financial profits are an underlying goal here, accumulating
wealth is not the main objective. The focus of the enterprise is to grow as a social
venture in order to reach more people in need and positively impact one or multiple
sectors of society. Hence, a great deal of the profits is reinvested in the enterprise to
fund expansion. The entrepreneur of this type of venture seeks investors who are
interested in combining financial and social returns on their investments.

BUSINESS ENTREPRENEURSHIP vs SOCIAL ENTREPRENEURSHIP

Innovation and Entrepreneurship in a social context

Social entrepreneurs are the engines of innovation. Social innovations are new strategies,
concepts ideas and organisations that meet the social needs of different elements which can be
from working conditions and education to community development and health.
Social innovation and enterprise is a tool for social change. Social entrepreneurship helps to
acquire the knowledge, skills and mindset necessary to introduce a new social entrepreneurship
venture. It focuses on the unique entrepreneurial processes associated with the creations or
discovery of positive social change.

Non Profit Organisations

A non- profit organisation is also known as a non- business entity. It is an organisation whose
purposes are other than making a profit. It includes- churches, public c schools, public charities
public hospitals etc.

History of Social Entrepreneurship

Social entrepreneurship is relatively a new term. It came in to notice just a few decades ago.
But its usage can be found throughout the history. The concept of "social entrepreneurship" is
not a novel idea, but in the 2000s, it has become more popular among society and academic
research, notably after the publication of "The Rise of the Social Entrepreneur" by Charles
Leadbeater. In fact, there were several entrepreneurs who established social enterprises to
eliminate social problems or bring positive change in the society. Vinoba Bhave, the founder of
India’s Land Gift Movement, Robert Owen, the founder of cooperative movement and Florence
Nightingale, founder of first nursing school and developer of modern nursing practices might be
included in this category. They had established such foundations and organizations in 19th
century that is much before the concept of Social Entrepreneurship used in management.

There were entrepreneurs during nineteenth and twentieth century’s who made efforts to
eradicate social evils. Apart from this, there are many societies and organizations that work for
child rights, women empowerment, save environment, save trees, treatment of waste
products, etc. Apart from addressing the social issues, social entrepreneurship also includes
recognition and addressing the environmental problems and financial issues for rural and urban
poor.

Andrew Mawson worked extensively upon the concept of social entrepreneurship and
extended the same to bring about reform in the community structure. He also laid the
foundation of the Bow center in east London. For this he was conferred upon the peerage of
Lord Mawson and he works for developing partnerships for regeneration work initiated by him.

These days, the concept of social entrepreneurship has been widely used and that too in
different forms. The establishment of Grameen Bank by Muhammad Yunus, Ashoka: The
Innovators for the Public by Bill Drayton, Youth United by Jyotindra Nath, Rand De by
Ramakrishna and Smita Ram, SKS Microfinance by Vikram Akula and Roozi.com by Nick Reder,
Brent Freeman and Norma La Rosa has popularized the term.

In fact, all big brands and companies are adopting the concept of social entrepreneurship and
trying to address the issues in our society by opening schools in far flung areas, educating
women for family planning, making it possible for farmers and poor individuals to access low
interest credits, establishing plants for waste treatment, planting trees and going green.

The concept of Social Entrepreneurship has also been included as a separate branch of
management courses. Even youth is also looking forward to volunteering their services and
brilliant ideas to bring a social change through social entrepreneurship.

Who is Social Entrepreneur?

A social entrepreneur is somebody who takes up a pressing social problem and meets it with
an innovative or path breaking solution. Since profit making is a secondary objective, therefore
they are people who are passionate and determined about what they do. They possess a very
high level of motivation and are visionaries who aim at bringing about a change in the way
things are.

By definition social entrepreneurs are great people recruiters who present their ideas or
solutions in a way that many people, who are either part of the problem or surrounding it,
recognize a need for change and get onboard the change bandwagon. Thus mobilizing the
masses for bringing about change is a hallmark of a social entrepreneur.

Examples of social entrepreneurship include microfinance institutions, educational programs,

providing banking services in underserved areas and helping children orphaned by epidemic
disease. Their efforts are connected to a notion of addressing unmet needs within communities
that have been overlooked or not granted access to services, products, or base essentials
available in more developed communities.

A social entrepreneur might also seek to address imbalances in such availability, the root causes
behind such social problems, or social stigma associated with being a resident of such
communities. The main goal of a social entrepreneur is not to earn a profit, but rather to
implement widespread improvements in society. However, a social entrepreneur must still be
financially savvy to succeed in his or her cause.
“Whenever society is stuck or has an opportunity to seize a new opportunity, it needs an
entrepreneur to see the opportunity and then to turn that vision into a realistic idea and then a
reality and then, indeed, the new pattern all across society. We need such entrepreneurial
leadership at least as much in education and human rights as we do in communications and
hotels. This is the work of social entrepreneurs.” - Bill Drayton Founder of Ashoka: Innovators
for the Public “

Some of the very famous people who inspire others to take up social entrepreneurship are:

 Susan B Anthony: was the Co-Founder of the first women’s temperance movement and
a prominent American civil rights leader for women’s rights in the 19th century.
 Vinobha Bhave: is a prominent figure in Indian modern history and was the founder and
leader of the Land gift movement that helped reallocate land to untouchables.
 Maria Montessori: a pioneer in education. Developed the Montessori approach to early
education in children.
 Florence nightingale: she laid the foundation for the first school of nurses and worked
to improve the hospital conditions.
 Margaret Sanger: She was the founder and Leader of the Planned Parenthood
federation of America, championed the family planning system around the world.
 Rachel Brathen: "Yoga Girl" is the name of Rachel Brathen’s New York Times best-
selling book and the handle for her Instagram account, which reaches 2.1 million
followers. In addition to showing her audience fresh yoga poses and tips, Rachel hopes
to connect teachers with people in the online community who need healing. “What
if social media could become a social mission?” asks Brathen. Her online
channel oneoeight.tv was an “online studio” that offered health, yoga, and meditation
services.

Characteristics of Social Entrepreneur

Creativity

The ability to think differently, to find innovative solutions where others do not see any change
possible is a gigantic quality to lead a social enterprise. To be a social entrepreneur is to
innovate outside-the-box!

Self-confidence

Being confident allows people to follow their intuition, and create solutions so many others
didn’t dare to try. It is a key success factor for social entrepreneurs. To be a social entrepreneur
is to impulse change. Being self confident is a must in difficult situations, or when other
stakeholders have doubts about the feasibility of a project.

Perseverance

Perseverance is a huge quality of social entrepreneur. Never give up is a key success factor for
any entrepreneur, and even more when (s) he want (thus can!) to change the world. To be a
social entrepreneur is to try harder than others.

Leadership

The ability to convince other to join the movement is key to be inspiring and thus have a broad
impact. To be a social entrepreneur is to lead the implementation of innovative solution, and
engage with a large community to change society in a sustainable way.
Team spirit/solidarity

Collaborate with every stakeholders is a must-have quality to lead successfully a social project,
and having a team spirit is thus essential! To be a social entrepreneur is to collaborate and
integrate different ideas in order to create solutions suiting the needs of a maximum of
stakeholders.

Adaptability

The ability to adapt to the world that changes rapidly, and find solutions where others only sees
problems is one of the keystone of any social enterprise. To be a social entrepreneur is to lead
innovative solutions adapted to the world’s most pressing issues.

Openness to Collaboration

While embarking on a quest to change the world may feel lonely, it is important to remember
that social entrepreneurship is a team sport, and other people are willing to help. Social
entrepreneurs need to stay open and attentive to potential partnership and collaboration
opportunities. In many cases, collaborative initiatives and joint-ventures can achieve
social/business goals much more effectively than solo endeavors.
Example: Refugee Investment Network partnered with Village Capital to offer an investment-
readiness tool designed for refugee entrepreneurs.

Commitment to Improve Social Welfare

Social entrepreneurs are socially committed first and foremost – that is a no-brainer. But what
differentiates them from, say, a company engaging in CSR, is their ability to fully devote their
time, energy and meager resources to make sure things actually change for the better. A
business can use corporate social responsibility (CSR) – which entails everything from charitable
donations to community work – to improve social welfare, but critics also point out that some
for-profit entities use CSR as a public-relations tool.

Risk Taking

Risk taking is essential in social entrepreneurship – and in any kind of entrepreneurship, for that
matter. It takes a special mindset to wake up one day and say you want to change things in this
world. The risk becomes even greater if you have no money, don’t have a posh social
background, leave your day job, or embark on a project that could cost you your livelihood…or
even your life.

Faith in Team Work

Teamwork is essential for social entrepreneurs. In a sector in which there often is not enough
money, resources or expertise, the only resources available are people – and time, if you can
call it a resource. Therefore, social entrepreneurship revolves around the concept of crowd
sourcing, tapping into a team of faithful workers along with volunteers scattered around the
world to identify worthy projects, fund them and undertake them.

Role of a Social Entrepreneur

A social entrepreneur is somebody who takes up a pressing social problem and meets it with an
innovation or path breaking solution. Since profit making is a secondary objective, therefore
there are people who are passionate and determined about what they do. They possess a very
high level of motivation and are visionaries who aim at bringing about a change in the way
things are.

1. Determine Objectives

Primary objective of social entrepreneurs is to put people first. They have a heart for people
and their needs. They have a social mission - they are interested in uplifting communities
and bringing about social transformation and change. The social entrepreneur wants to
empower people and make a positive impact on their lives. The social entrepreneur wants
social impact to be competitive and visible, with a strong focus on sustainability. The social
entrepreneur wants to respond to socio-economic circumstances and provide solutions.

2. Development of the organization

Social entrepreneurs are the change agents to help a social-purpose organization address
and create opportunities for organizations to achieve their social purpose.

In both organization development and social entrepreneurship, one of the goals has to be
sustainability so that the organization or business can continue to focus on creating healthy,
effective workplaces and vibrant communities. As Mair and Marti (2006) say, “in social
entrepreneurship, social wealth creation is the primary objective, while economic value
creation, in the form of earned income, is necessary to ensure the sustainability of the
initiative and financial self-sufficiency.”

3. Securing resources

Economic security as well as other securities of different resources of each country is

determined by array of different factors. Some factors seem obvious and are measurable,
while other factors, such as entrepreneurship and, especially social entrepreneurship, are
tacit and hard to measure. Anyway, social entrepreneurship is accepted globally as a bridge
between business and benevolence. It attempts to find solution to local sustainability issues
that are normally not addressed by traditional organizations.

4. Arranging technology and Equipment

Technology can empower social entrepreneurship initiatives by democratizing access to

information, creating business value, and enabling new capabilities—although not every
technology initiative succeeds.

So how can social entrepreneurs increase the success of their endeavors? A recent Social
Innovation Mapping Report by the Intel Foundation and Ashoka examines the best practices
of entrepreneurs who successfully use Information and Communications Technology (ICT)
to create social impact.

5. Development of new market

Social entrepreneurship aims to solve social problems using methods of market and models
of business, with an intention to generate social value to the society or targeted groups
over rewarding entrepreneurs with profits.

The emergence of SE in the world is set in the context of the growth of neoliberalism from
the 1980s and the rise of large welfare states.[2] Together, the welfare state and the
neoliberal economic order were meant to provide a fair and equal opportunity to citizens.
To achieve this, the state relied on the market to fuel economic progress with the hope that
it would trickle down in bringing about social progress. But, what emerged was a realization
that a “perfect” market is an ideal, which does not exist in reality due to many distortions in
the society. It is in this context as the state failed to address the shortcomings of the
market, SE has begun to emerge as an alternative and/or supplementary force to
correct the markets.

6. Human Rights

When it comes to human rights, social enterprises strive to safeguard matters such as
liberty, pursuit of happiness, living free from discrimination, freely exercising religion,
freedom of speech, fair trial and more. Educating people, negotiating with governments,
providing safe havens, raising public awareness; these are all strategies employed by social
enterprises and in doing so, they often help out those who live under the most worrisome
circumstances.

7. Financial Management

Financial management goes beyond book-keeping. It goes beyond compliance with

statutory requirements – although this can be a major challenge in itself. Financial
management is about whether the company leadership (a) fully understands both the
financial and the management accounts (b) knows which services or products are running at
a profit (or loss) and the implications of this (c) manages the organization like a business
rather than a series of projects, (d) thinks beyond the next year and puts some pound signs
against future business scenarios and perhaps above all else (e) has a good handle on cash-
flow. Social entrepreneur has to think about all such stuffs with having a priority to serve
the society.
 8. Environment

Social entrepreneurs have plenty of possibilities to focus their attention on with regards to
the environment: developing businesses that supply sustainable products or services,
distributing resources responsibly, waste disposal management, emissions reduction,
preserving land and wildlife or even negotiating with municipalities, companies and
governments to decrease their ecological footprint.

Difference between Entrepreneur and Social Entrepreneur

One way to explain social enterprise is that it is like any other business but with a social mission
at its core. In a regular enterprise, the commercial models focus on delivering profits to
shareholders. Some part of the profit may be contributed for social good. But, social enterprises
focus on developing operating models to achieve their social goals. If there are any profits, they
are usually committed to sustain positive social impact

.
Social entrepreneurship is “a multidimensional construct involving the expression of
entrepreneurially virtuous behaviour to achieve the social mission, a coherent unity of purpose
and action in the face of moral complexity, the ability to recognise social value-creating
opportunities and key decision-making characteristics of innovativeness, proactiveness and risk-
taking”.

“Social entrepreneurship” is the dynamic process through which specific types of individuals
deserving the name of “social entrepreneurs” create and develop organizations that may be
defined as “social enterprises”. “Social enterprises” are a subset of such activities in which
commercial models are used as the vehicle by which social objects are achieved.
 Social entrepreneurship has become a fashionable construct in recent years. Often evidenced
by success stories across the world in diverse fields (health, education, finance, culture, etc.),
the concept has become increasingly evident in commercial markets, academic discourses and
policy making.

Innovation & Entrepreneurship in social context

Societies all over the world are facing major societal challenges, such as climate change, socio-
economic inequalities or ageing populations. Social entrepreneurs take it on themselves to
develop innovative solutions for such societal challenges, in particular those that governments,
for-profit and non-profit organizations fail to address. This problem-solving role in society is
recognized by governments, who therefore stimulate social entrepreneurship and innovation,
especially in times of general retrenchment. Supporting organizations such as Ashoka and the
Skoll foundation have also created platforms for social entrepreneurship to stimulate their
problem-solving role in society. Moreover, the academic community has studied this
phenomenon with increasing interest, with the result that the current state of social
entrepreneurship research has progressed beyond infancy into a mature stage.

Social innovation is about creating new social structures that allow issues of justice, education,
environmental protection, sustainability and/or community development to be reframed so
that new solutions can come forward. Social innovators question the premises on which
existing social structures are built and then reimagine systems and institutional relationships to
bring about change. The distinction between social entrepreneurship and social innovation is
fluid, and there is often overlap between the two change making approaches.

“Social Innovation focuses attention on the ideas and solutions that create social value—as well
as the processes through which they are generated”.

Social innovation and social entrepreneurship may work through a variety of organizational
architectures to enable change. We can think about organizations as being on a spectrum: At
one end of the spectrum are not-for-profit entities that fill vital social and environmental needs
through traditional charitable approaches, relying on donations as their primary source of
funding. At the other end of the spectrum are for-profit businesses that fill customer needs
through market-based mechanisms: selling the product or service for what the market will
bear. Many for-profit companies incorporate sustainability and socially responsible practices
into their operations and culture, but they are still primarily focused on the financial bottom
line. In between these two ends of the spectrum are a range of organizational architectures
that innovatively address social and environmental needs by developing new products and
services and/or through creative structures for the delivery of these products and services. This
space between traditional not-for-profit and traditional for-profit organizations encompasses
social innovators and social entrepreneurs

Social entrepreneurship is exercised where some person or group: (1) aims at creating social
value, either exclusively or at least in some prominent way; (2) shows a capacity to recognize
and take advantage of opportunities to create that value; (3) employ(s) innovation, ranging
from outright invention to adapting someone else's novelty, in creating and/or distributing
social value; (4) is willing to accept an above-average degree of risk in creating and
disseminating social value; and (5) are unusually resourceful in being relatively undaunted by
scarce assets in pursuing their social venture.

The reasons behind the popularity of social entrepreneurship are many. On the most basic
level, there’s something inherently interesting and appealing about entrepreneurs and the
stories of why and how they do what they do. People are attracted to social entrepreneurs like
last year’s Nobel Peace Prize laureate Muhammad Yunus for many of the same reasons that
they find business entrepreneurs like Steve Jobs so compelling – these extraordinary people
come up with brilliant ideas and against all the odds succeed at creating new products and
services that dramatically improve people’s lives.

But interest in social entrepreneurship transcends the phenomenon of popularity and

fascination with people. Social entrepreneurship signals the imperative to drive social change,
and it is that potential payoff, with its lasting, transformational benefit to society, that sets the
field and its practitioners apart.

Social entrepreneurship is an appealing construct precisely because it holds such high promise.
If that promise is not fulfilled because too many “nonentrepreneurial” efforts are included in
the definition, then social entrepreneurship will fall into disrepute, and the kernel of true social
entrepreneurship will be lost. Because of this danger, we believe that we need a much sharper
definition of social entrepreneurship, one that enables us to determine the extent to which an
activity is and is not “in the tent.” Our goal is not to make an invidious comparison between the
contributions made by traditional social service organizations and the results of social
entrepreneurship, but simply to highlight what differentiates them.

The critical distinction between entrepreneurship and social entrepreneurship lies in the value
proposition itself. For the entrepreneur, the value proposition anticipates and is organized to
serve markets that can comfortably afford the new product or service, and is thus designed to
create financial profit.
The social entrepreneur, however, neither anticipates nor organizes to create substantial
financial profit for his or her investors – philanthropic and government organizations for the
most part – or for himself or herself. Instead, the social entrepreneur aims for value in the form
of large-scale, transformational benefit that accrues either to a significant segment of society or
to society at large.

Unlike the entrepreneurial value proposition that assumes a market that can pay for the
innovation, and may even provide substantial upside for investors, the social entrepreneur’s
value proposition targets an underserved, neglected, or highly disadvantaged population that
lacks the financial means or political clout to achieve the transformative benefit on its own. This
does not mean that social entrepreneurs as a hard-and-fast rule shun profit making value
propositions. Ventures created by social entrepreneurs can certainly generate income, and they
can be organized as either not-for- profits or for-profits.

Case Study 1:

Muhammad Yunus, founder of the Grameen Bank and father of microcredit, provides a classic
example of social entrepreneurship. The stable but unfortunate equilibrium he identified
consisted of poor Bangladeshis’ limited options for securing even the tiniest amounts of credit.
Unable to qualify for loans through the formal banking system, they could borrow only by
accepting exorbitant interest rates from local moneylenders. More commonly, they simply
succumbed to begging on the streets. Here was a stable equilibrium of the most unfortunate
sort, one that perpetuated and even exacerbated Bangladesh’s endemic poverty and the misery
arising from it.

Yunus confronted the system, proving that the poor were extremely good credit risks by
lending the now famous sum of $27 from his own pocket to 42 women from the village of
Jobra. The women repaid the entire loan. Yunus found that with even tiny amounts of capital,
women invested in their own capacity for generating income. With a sewing machine, for
example, women could tailor garments, earning enough to pay back the loan, buy food,
educate their children, and lift themselves up from poverty. Grameen Bank sustained itself by
charging interest on its loans and then recycling the capital to help other women. Yunus
brought inspiration, creativity, direct action, courage, and fortitude to his venture, proved its
viability, and over two decades spawned a global network of other organizations that replicated
or adapted his model to other countries and cultures, firmly establishing microcredit as a
worldwide industry.

Case Study 2:

The well-known actor, director, and producer Robert Redford offers a less familiar but also
illustrative case of social entrepreneurship. In the early 1980s, Redford stepped back from his
successful career to reclaim space in the film industry for artists. Redford was struck by a set of
opposing forces in play. He identified an inherently oppressive but stable equilibrium in the way
Hollywood worked, with its business model increasingly driven by financial interests, its
productions gravitating to flashy, frequently violent blockbusters, and its studio-dominated
system becoming more and more centralized in controlling the way films were financed,
produced, and distributed. At the same time, he noted that new technology was emerging –
less cumbersome and less expensive video and digital editing equipment – that gave
filmmakers the tools they needed to exert more control over their work.

Seeing opportunity, Redford seized the chance to nurture this new breed of artist. First, he
created the Sundance Institute to take “money out of the picture” and provide young
filmmakers with space and support for developing their ideas. Next, he created the Sundance
Film Festival to showcase independent filmmakers’ work. From the beginning, Redford’s value
proposition focused on the emerging independent filmmaker whose talents were neither
recognized nor served by the market stranglehold of the Hollywood studio system.
Redford structured Sundance Institute as a nonprofit corporation, tapping his network of
directors, actors, writers, and others to contribute their experience as volunteer mentors to
fledgling filmmakers. He priced the Sundance Film Festival so that it appealed and was
accessible to a broad audience. Twenty-five years later, Sundance is credited with ushering in
the independent film movement, which today ensures that “indie” filmmakers can get their
work produced and distributed, and that filmgoers have access to a whole host of options –
from thought-provoking documentaries to edgy international work and playful animations. A
new equilibrium, which even a decade ago felt tenuous, is now firmly established.

Case Study 3:

Victoria Hale is an example of a social entrepreneur whose venture is still in its early stages and
for whom our criteria apply ex ante. Hale is a pharmaceutical scientist who became increasingly
frustrated by the market forces dominating her industry. Although big pharmaceutical
companies held patents for drugs capable of curing any number of infectious diseases, the
drugs went undeveloped for a simple reason: The populations most in need of the drugs were
unable to afford them. Driven by the exigency of generating financial profits for its
shareholders, the pharmaceutical industry was focusing on creating and marketing drugs for
diseases afflicting the well-off, living mostly in developed world markets, who could pay for
them.

Hale became determined to challenge this stable equilibrium, which she saw as unjust and
intolerable. She created the Institute for One World, the first nonprofit pharmaceutical
company whose mission is to ensure that drugs targeting infectious diseases in the developing
world get to the people who need them, regardless of their ability to pay for the drugs. Hale’s
venture has now moved beyond the proof-of-concept stage. It successfully developed, tested,
and secured Indian government regulatory approval for its first drug, paromomycin, which
provides a cost-effective cure for visceral leishmaniasis, a disease that kills more than 200,000
people each year.

Although it is too early to tell whether Hale will succeed in creating a new equilibrium that
assures more equitable treatment of diseases afflicting the poor, she clearly meets the criteria
of a social entrepreneur. First, Hale has identified a stable but unjust equilibrium in the
pharmaceutical industry; second, she has seen and seized the opportunity to intervene,
applying inspiration, creativity, direct action, and courage in launching a new venture to provide
options for a disadvantaged population; and third, she is demonstrating fortitude in proving the
potential of her model with an early success.

Time will tell whether Hale’s innovation inspires others to replicate her efforts, or whether the
Institute for OneWorld Health itself achieves the scale necessary to bring about that permanent
equilibrium shift. But the signs are promising. Looking ahead a decade or more, her investors –
the Skoll Foundation is one – can imagine the day when Hale’s Institute for OneWorld Health
will have created a new pharmaceutical paradigm, one with the same enduring social benefits
apparent in the now firmly established microcredit and independent film industries.

Start-Up and Early stage ventures issues in creating

With the Indian government launching various schemes to promote small scale industries in
India, local businesses have been mushrooming all over the country with many startups making
huge impacts in the past few years. But it’s not easy, there are abundant problems faced by
entrepreneurs.

While companies like Paytm and Flipkart are an example of what a startup can achieve in a few
short years, there are certain problems that almost all entrepreneurs face while starting out.

1) Financial & cash flow management

Getting business funded is one of the main issues that all business face and have to tackle in
order to survive. While one might have initial money saved up to start a business, they don’t
survive for long and one cannot just rely on the next sales check to arrive so one can pay the
bills and take care of the next step in business. A steady flow of cash is essential for small
business to survive and one always need to have extra funds to take care of rainy and in-
between days.

Many entrepreneurs struggle to make ends meet and at times don’t even pay themselves so
they can clear the invoices in time.

What one can do is plan finances better so there are no delayed invoicing and one have enough
gap in between getting the money, clearing the invoice and paying employees (including self)
salaries. For this, one need to make sure one have a well-prepared business plan in advance
and that includes funds set aside to weather the worst-case scenario. Remember you are new
so one will have limited availability of funds, and thus one have less room for error. One will
also not make a profit right away so have enough funds set aside before one can start and add
it in business plan and budget accordingly.

2) Hiring employees & team building

We all have faced interviews at one or other point of our lives and for many, it has been one of
the most stressful points in their lives.

While we all have been in the above situation one point or the other, there are very few of us
who have conducted interviews and it is equally hard if not more as the majority one have not
done it before and thus have no idea how to go about it. The situation is only more stressful by
the fact that one is doing it as a new entrepreneur and thus want to pick that perfect candidate
that not only fits one’s budget but is also proficient at the work they are being hired for.

Picking the right combination team for a startup is equally stressful as one has no idea how the
team will work together even if the candidates are right on paper and efficient working alone or
on their own. It is thus advisable that be exclusive and look beyond resumes and job
requirements. When posting jobs requirements be specific about what exactly are one looking
for and with what budget and benefits.

Make sure one mention what qualifications candidates must have and what the job duties
would be required and what hours and days they would be working.

This will save a ton of time as people who would apply would be aware of the budget and
duties while applying.

Once you have a pool of prospects, take them on a company tour and show what exactly would
be the environment they would be working in. This will give one and them an idea of what to
expect and how they react with one’s staff will give one an idea of how they gell with one’s
team.
One can also try reaching out to remote areas as workers in small cities and villages often want
to move out and once trained can be a great choice for the entrepreneurs.

Further for jobs where a person doesn’t need to be physically present in the office to work, look
for skilled workers in other cities and states as this can end up saving one a lot of money that
would otherwise be spent on developing a physical office for them. This will also provide them
with an opportunity to work with a company that is based in metros and move out when
required.

3) Dealing with the unknown and self-doubt

Every entrepreneur, especially the ones that are just starting out, doubt themselves and often
question if their business will work, be profitable and survive with time. They also often doubt if
their product with work and if the customers will accept them.

There is no getting away from these questions and none of them has a solid, reliable answer till
one are in that position. There are many unknown factors and many of the long-term plans
often will remain in flux depending on new developments that take place.

Dealing with this volatility is one of the hardest parts of being a new entrepreneur and all one
can do is remain calm and deal with them as they come. Follow and promote work
relaxation and instead of getting discouraged motivate self and look at one’s list of goals and
tasks to do today and try to achieve them than worry about the future unknown that might or
might not happen.

4) Decision-making

One of the hardest and most stressful problems faced by entrepreneurs is decision making.
New entrepreneurs have a harder time making decisions as they often equate even small
decisions with how it will impact the company and its budget. Self-doubt also makes them
question the decisions they have made already made and if it was the right one. It’s is only with
time that they learn to take hundreds of decisions a day, big and small, without questioning
themselves and often facing decision fatigue.

While it will take some time and experience to reach that point, they can start by following the
5 steps of the decision-making process to make crucial decisions. These are – Identifying their
goal, weighing their options, considering the consequences, make the decision and evaluate it
before giving it a nod.

For smaller decisions, they can also allocate it to the people they trust and are best suited to
that department and would know what works for one the best.

5) Facing Criticism

One of the constant problems faced by entrepreneurs is criticism. Be it about their business
ideas, small failures in business decision making or starting the business in the first place.

Even big entrepreneurs like Ratan Tata and NR Narayana Murthy have faced criticism and still
face them. As a new entrepreneur, one might face it more and would be constantly warned
about the various ways the business can fail. Sometimes these critics might even get personal
as they’ll feel jealous of and threatened by one.
As a good entrepreneur, one need to learn to face them head-on and separate the wheat from
the chaff. Basically, one need to look at genuine criticism, evaluate it and fix them so one don’t
face it again. Put aside unhelpful comments and ‘advice’ and use the genuine one to take the
business further up.

6) Finding customers

It’s really hard to attract customers for any company that is starting out especially if they are a
business with limiting marketing budget. This problem always plays on every entrepreneur’s
mind and the fact that people tend to stick with well-known brands they’re familiar with makes
it harder for them to sell their products.

But new companies hold a big advantage over brands and that is their pricing is much cheaper
than their rivals. If they provide a high-quality product at a much cheaper rate than their rival,
they will not only be able to attract new customers but also retain their customer who will
become loyal to them over time.

7) Time management

When starting out with a new business time management might be one of the biggest problems
faced by entrepreneurs.

As a newcomer, an entrepreneur has to take up many roles and don as many hats as he can. He
or she has to accomplish a lot in a limited amount of time and thus is always running from pillar
to post to take care of things.

While the limited time and funds are something that no one can control, what one can do
is have a strict schedule that allocates the time and money to each task. As a newcomer, one
cannot afford to waste time as it will only cost one more in the long run and one thus one need
to be smart about allocating each minute. For this, one needs to create a goal list which is
divided into weekly goals, monthly goals and annual goals. Plan work of week accordingly and
break them down into specific tasks for each day.

When one focuses on achieving the daily goals one will automatically reach weekly goal and in
turn annual goals. This will also help to keep track of things and let one know where one stand
on their business goals.

Other types of challenge include:

 Lack of Structure - Established companies typically have well-defined cultures, clear

goals, measurable performance expectations, and refined training processes that
maximize employee skills and optimize performance. Unless the company is lucky
enough to have experienced leadership, startups often begin their journey without a
definitive culture, which often leads to internal challenges, conflicts, disappointments,
and employee turnover.

A lack of historical marketing and sales data makes it difficult to determine and define
reasonable goals and expectations. And a shortage of manpower, combined with the
need for "all hands on deck," often means training happens on-the-job and on the fly. A
great product, service or business can easily fail without a strong culture, clear business
goals, and a proven method for teaching employees how to do the best job possible.
  Managing Disparate Visions of the Future - There are general challenges that affect all
startups centering on time management and proper allocation of resources. These daily
challenges can be addressed with better organization, effective communication, process
evaluation, and hiring experienced advisors.

Although, while these challenges are ubiquitous, what degree they affect a startup is
unique to that organization. In my experience, I think the biggest challenge of any
startup organization is to manage the individual visions and expectations of those who
contribute to the company as the venture grows. Entrepreneurial energy must be
directed and controlled, but entrepreneurs don't like being told what to do. The
stronger the alignment of the vision among the contributors, the further it goes before
outside help is required.

 Open Communication - Communication is frequently overlooked as a key component of

successful startups. Often in the Startup Culture, everyone is working at breakneck
speed, absorbing more work for fewer team members. However, this heads-down,
knocking out code and generating sales daily grind can lead to silos within your small
startup.

On the other end of the spectrum, in an established organization, there can be a sense
of forced or too much corporate communication, from top-down only. There's a balance
out there for the savvy startups: share critical info up and down and sideways -- good or
bad -- to ensure your team members are informed and on the right track. Land a big
account or solve a major coding roadblock? Make sure your team knows! Stumble and
fail in a big investor pitch? Share that, too. As you grow your organization, open
communication will help build your trust in each other, and speak volumes as your
startup scales.

 Don't Be Afraid to Do Something Different - Developing a new culture is even harder

when the startup is forging a new niche industry or has no direct competitors. It takes
confident guidance from leadership to convey the message that the strategies and
philosophies that might have worked in previous careers and companies, likely don't
apply in this particular niche. This approach will take employees out of their comfort
zone and require extra support. Providing guidance and feedback in terms of priority
organization, task load, and level of effort are all helpful ways to support team members
during times of transition.

 Product Validation - Many startups rush into development of an idea before truly
understanding the requirements for a successful product and before validating the
financial viability of the opportunity. Whenever someone approaches me for tips or
advice on how to start a new company, one should always ask three things:

 How well do they know the problem or industry?

 Why would anyone trust them to deliver a solution for the problem?
 How will they monetize, and if there's a valid monetization plan, will it be
enough to cover the expense of developing and operating the solution?

Sustaining Non Profit Organizations

A nonprofit organization (NPO), also known as a non-business entity, not-for-profit
organization, or nonprofit institution is an organization traditionally dedicated to furthering a
particular social cause or advocating for a shared point of view. In economic terms, it is an
organization using its surplus of the revenues to further achieve its ultimate objective, rather
than distributing its income to the organization's shareholders, leaders, or members. Being
public extensions of a nation's revenue department, nonprofits are tax-exempt or charitable,
meaning they do not pay income tax on the money that they receive for their organization.
They can operate in religious, scientific, research, or educational settings.
The key aspects of nonprofits are accountability, trustworthiness, honesty, and openness to
every person who has invested time, money, and faith into the organization. Nonprofit
organizations are accountable to the donors, founders, volunteers, program recipients, and the
public community. Nonprofit organizations are usually founded on a great platform, research,
education, health care, homelessness, hunger, and/or poverty alleviation, just to name a few,
and through the creation of resources and services, each are purposed to impact individuals
and/or communities.
Nonprofits are created to fill a societal void or need within a community, provide funds for
research, and/or assist individuals and groups with financial, educational, medical, and social
services, as such the vision, mission and objectives are formed around that void.

Six Keys to Creating Nonprofit Sustainability

 Leadership Values Equate to Culture

The first and most significant step in creating a nonprofit organization is to know the values that
the organization will hold and become your standards of importance. Organizational values
serve as criteria for making decisions and setting priorities and lie behind the explanations and
justifications [leaders] give for [their] actions these values become organizational culture.
Values are the first key in creating nonprofit sustainability because they are the foundation and
when in place they provide viability and authenticity.

Building an organizational culture that is based on terminal and instrumental values in vital in
nonprofit sustainability for it is the values that act as the fuel for the rocket!

 Community Mapping
Equally important, when creating a nonprofit organization, strategic planning is an essential
step with sustainable benefits. As such, the second of the six keys of nonprofit sustainability is
community resource mapping. Community resource mapping is a process by which data is
collected in order to create a map of community assets and resources, such as people, physical
structures, organizations and institutions, within a defined area, and it can be utilized to create
a meaningful service project. As a nonprofit leader, knowing what businesses and/or
organizations within a particular ‘service area’ offer similar or the same products, programs,
and services is detrimental to the sustainability of nonprofit organizations.

Additionally, knowing what resources are available, what resources are needed, and what
organizations are contributing to and/or providing those resources alleviates the pitfall of a
saturation of services, products, and/or programs in a given community which can easily
translate into a loss of potential volunteers, donors, funding and ultimately the demise of an
organization.
  VMOSA
The third of the six keys of nonprofit sustainability is the creation of the VMOSA (Vision,
Mission, Objectives, Strategies, and Action Plans). VMOSA is a practical planning process
utilized to help community groups define a vision and develop practical ways to enact change
within the community; in essence creating an organizational culture. VMOSA planning is vital
because it becomes instrumental in helping nonprofit organizations set and achieve short-term
goals while keeping sight of their long-term vision. Vision is a specific destination, a picture in
your head of a desired future. The mission statement is the ‘how’ of an organization, it defines
the company’s goals, ethics, culture, and norms for decision-making. The Objectives are the
measurable outcomes that the nonprofit want to achieve; these are put into place primarily for
management to gauge the effectiveness of the organization. Strategies and action plans, are
self-explanatory and will vary based upon the outcomes that are put in place through the
vision, mission and objectives.

 Organizational Alignment
The fourth of the six keys of nonprofit sustainability is organizational alignment, hiring
employees, selecting volunteers and board members who share the same mission, vision, and
goals of the nonprofit organization. In addition to the founder, an important key in
organizational alignment are individuals (employees, volunteers, and board members) who are
self-actualizing (self-transcendent, self-aware) because these individuals know who they are
and have accepted themselves as persons, resulting in freedom from the crippling need for
approval and from the fear of expressing their true selves.

 Donors and Donation Allocation

The fifth of the six keys to nonprofit sustainability is to know and retain donors. According to
Data and Analytics (2016), 95.4% of Americans give to charity. According to research donations
are mostly done in the fields of Religion, Education, Human Services, To Foundations, Health ,
Public-Society Benefit, Arts/Culture/Humanities, International Affairs, Environment/Animals.

Knowing the donor(s) and how donations are allocated assists greatly in creating and
implementing a fundraising plan, both are vital to the sustainability of nonprofit organizations.

 Web Presence
By the same token, creating a web presence (organizational website) can make all the
difference when it comes to donors, which is why this is the sixth of the six keys to nonprofit
organization sustainability. Many of the donors may never physically connect with the nonprofit
organization, many volunteers conduct internet searches to find volunteer opportunities, and
many businesses and organizations want to see the ‘fruits of labor’ before becoming involved
with a nonprofit organization. A professional organizational website can create the medium for
these interactions and promote retention. From this information, it can be ascertained that a
web presence can create additional avenues to reach the public.

Financing Social Enterprises:

Government grants, corporate funders, foundations, bootstrapping or funders and investors?

Social entrepreneurs are creating “blended” values, delivering social and/or environmental
benefits along with financial returns. But those organizations that provide financing are still
distinct:
  the “funders” who grant funds or (less often) lend to social (non-profit) enterprises
 the “investors” who invest in or lend to social-purpose (for-profit) businesses

Finance your non-profit social enterprise:-

As a social entrepreneur, you have a great “change” idea. To develop it, you need financing.
Financing is the money or assistance you will need to start your organization or your new
initiative to deliver a service or sell a product based on your idea.

Ask yourself or your non-profit organization the following as you pull together the plan for
financing:-

Starting a new social enterprise or an initiative emerging from within an existing non-
profit/charitable organization:-

If you’re a new enterprise:

 Are you starting a new social enterprise or an initiative emerging from within an existing
non-profit/charitable organization? If so, you should ask yourself: do you have
the characteristics to be successful?
 Will those attributes be recognized by prospective funders or lenders? If not, perhaps
you need to consider partnering with another more experienced entrepreneur or
organization to launch your social enterprise.
 Is there an existing charity or non-profit organization that might be interested in your
idea to further their social mission that may be a logical partner for you?

If you are starting a new revenue-generating initiative to support the core mission of an
established charity or non-profit organization:

 Will this initiative be spun out as a separate legal entity?

 If so, with what human, financial and other resources?
 If it will be an internal initiative, how will it be funded and tracked internally within the
existing organization structure?

If you’re seeking outside funding, determine what types of financing might work and how much
money you will need:

 How much funding you can access based on your track record and the network of
contacts you have with prospective funders?
 If you are a social enterprise, emerging from an existing charity/non-profit organization,
is the board and management willing and able to provide any funding or guarantees for
loans to the social enterprise. This consideration will depend on the culture of the
existing organization. Today many groups are risk averse and not willing to take on or
support a social enterprise unless it is a direct fit with the organization’s mission and a
project of reasonably small scale to mitigate some of the inherent risks in a new
venture.
Consider bootstrapping as a financing option
If you are unsure of your ability to attract outside funding or if you want to approach a new
social enterprise in a more cautious way that may be more appealing to your board and current
funders, then a bootstrapping strategy may be effective.

Bootstrapping is a common sense approach to a frugal launch of your business using your
existing assets or a small subset of an established organization’s assets to launch your business
idea and test the entrepreneurial waters.

For social enterprises, bootstrapping might involve generating:

 Donor funding (individuals or businesses), private foundations or early customers for

the service or product you’re going to launch in your social enterprise
 Corporate funding may be available from businesses or their related foundations where
their business objectives are a good match with your social mission or where their
employees/other stakeholders share a passion for your social cause.
 Customers may be willing to purchase an early prototype; provide an advance for future
services; or purchase consulting services from your team, based on your area of
expertise, particularly, if they see significant potential in your idea.

These early revenues can be an effective way to get your enterprise off the ground,
contributing social/environmental benefits and building value until you can secure additional
financing.
Bootstrapping can be augmented in social enterprises by the effective use of volunteers to
operate the enterprise.

Approaching outside funders or investors

You have made a decision to approach outside funders and/or lenders about your business plan
for the social enterprise. You need to determine if your enterprise will be in a position to
provide any financial return to the funder from the operation and if so, on what timeline. If
applicable, you should ask your parent organization:

 Are they willing to accept the risk associated with funding that may involve repayment
over time and provide some level of return for the funder or lender?
If there will be no anticipated return of funds to the lender or funder, then traditional funding
sources of donors (corporate and individual), foundations and government agencies will be
your targets.

If you or your organization is willing to explore alternative funding models and sources, then
the following links may help to identify targets:

 www.socialcapitalpartners.ca which provides links to organizations that will help finance

social ventures. Social Capital Partners uses the term“social enterprise financing” to
refer to for-profit funding sources and “social enterprise grants and venture
philanthropy” to refer to non-profit funding sources.

Four ways for entrepreneurs to raise funding efficiently.

1. Find an incubator or accelerator

It's easy to want to accept any potential startup investment money that’s thrown your way. But
with such seed capital often comes strings and an expectation of specific returns or ownership
that may not jibe with the founder's vision. Getting accepted into an incubator or accelerator
program gives entrepreneurs a stipend, while they spend a specified time period (anywhere
from five months to two years depending on the program) formulating a more detailed plan for
their business, meeting potential investors and receiving training from academics and industry
leaders. By the time they leave, they'll not only have specific access to funding thanks to the
program, but they'll know exactly the kind of investors they'll be best suited for.

2. Look for your angel

It’s rare that a wealthy benefactor who wants to invest in your great idea just falls into your lap.
A site like Gust plays matchmaker for startups and investors, allowing both sides to evaluate
each other in a neutral online platform. A resource for entrepreneurs is regional small business
development offices, which are located in most major cities and can give information on fellow
local businesses (and potentially the people who fund them).

3. Take your company public

Crowd funding has gained popularity as an effective method for a smaller business -especially
one that has a specific social purpose or doesn't need a huge influx of money to get started- to
get off the ground. Whether it's through Kickstarter, Indiegogo, GoFundMe or any other similar
platform, the key is sharing a good story about your mission and making investors feel like
they're part of something, no matter how small the contribution. With the right campaign, you
could end up with even more startup capital than imagined, as happened to the founders of the
pocket-sized medical scanner Scanadu Scout, whose initial fundraising goal of $100,000 turned
into almost $1.7 million.

4. Seek professional help

Before you take venture capital money, look for an accountant. Plenty of accounting firms,
including big international ones like PWC, have specific professionals dedicated to advising
entrepreneurs on the right ways to raise capital in order to prepare for their exit strategy,
whether it be an IPO or acquisition. Meet with them before you take any money, not
afterwards.

Benefits & Risks of Social Enterprise

Benefits Risks
Financial ▪ Generates sustainable ▪ Lose money
source of income ▪ Start-up costs higher
▪ Diversifies revenue than willing to commit
streams ▪ Traditional nonprofit
▪ Reduces donor funders may decrease
dependency support
▪ Leverages existing assets ▪ Opportunity cost
▪ Unrestricted funds (earned income vs.
▪ Cost savings in shared back fundraising)
office
▪ Increases credibility with
 Funders
Mission ▪ Sustainable programming ▪ Mission and reputation
vehicle could be compromised if
▪ Accountability for achieving the venture is seen as a
social objectives sell-out by stakeholders

▪ Leverages mission ▪ Organization has difficulty

activities and core balancing mission and
competence money, causing mission
drift from core social
activities to business
▪ Enterprisecould have
negative impact on
clients
Operations ▪ Incorporates organizational ▪ Venture may divert
development and business management and staff
tools throughout the attention
nonprofit organization ▪ Increased
▪ Provides double bottom line organizational
context for management that complexity
crosscuts all functions ▪ New systems required to
▪ Requires organizations to support enterprise add
manage social interest, assets, costs
and investment ▪ Business skills needed for
▪ Enhances strategic thinking to enterprise may necessitate
function in a dynamic market hiring new staff
▪ Increases efficiency
and cost
effectiveness
▪ Improves market responsiveness
Culture ▪ Innovation ▪ Cultural
▪ Entrepreneurship differences
social programs
of

▪ Market orientation and enterprise

▪ Results orientation may cause
tension
▪ Staff may leave due
to "business
culture"
▪ Board and staff may
feel sold out
▪ Resistance to change
The How-To: Scaling Social Enterprise Ventures

The world needs social entrepreneurs, and social entrepreneurs need funds!

At the moment, the buzzword on everyone’s entrepreneurial radar is growth, scaling, and
sustainability. Sure, as social entrepreneurs, we solve big problems at the macro-level - poverty,
health, loneliness, education. We are talking billions of potential beneficiaries, yet the truth is
social enterprise firms remain small- less than five people, in some cases.

Funding is a challenge even though there is lots of money available through donations, grants,
developmental aid, banks, impact investors- so, what is going on? Clearly, you are more likely to
get the big funds, if you have traction (prove your idea works, and the market/beneficiaries are
willing to accept it), you can scale (grow disproportionate to the investments), and even better,
you have a sustainable business model (covering your own costs), and make profits!

So, there are several stages you need to complete, and the more you accomplish (according to
investor perceptions), the more money you get to fund your venture. Of course, if your impact
is large and traceable with market value, you might be lucky to be supported
through CSR funds. But these are exceptions. The thing to remember is that donations (charity,
grants, CSR) are rarely long-term, and this creates challenges for future viability of social
enterprise ventures.

So, let me make it simple: social entrepreneurship ≠ social + entrepreneurship.

Yes, they overlap, but there are fundamental differences both funders and entrepreneurs need
to appreciate. Let me break it down for you. Scaling is about increasing impact (this does not
necessarily mean more resources), while growth is about organizational size and reach (i.e.
more resources). This is the big difference between conventional for-profit businesses
and social enterprises where often growth is the only way to scale.

To avoid diluting purpose and stretching your resources too thin, ask yourself: where do you
see yourself 10 years from now? Where do you see your beneficiaries, and what role will the
organization have in its communities in ten years? A strong social entrepreneurial venture plans
for its own obsolescence, with respect to the initial problem, as you have hopefully irradiated it.

There are two basic ways to scale social enterprises- either you go wide (horizontal scaling), or
you go deep (vertical scaling). Of course, you might like to work on a hybrid version of both.

What does horizontal or vertical scaling mean? You can look at scaling (growth) as a strategy
with various parameters like impact, replication, tools, product portfolio, reputation,
governance, manpower, and funding. Choosing a strategy is a function of the goals of the social
organization, its environmental constraints and its values. There is a real possibility that without
strong governance and cultural orientation to purpose, the impact will get diluted.

Horizontal scaling involves approaching multiple geographic markets, and often different types
of customers. You often try to standardize the product, and this makes impact measurement
easier. So, if your focus is giving vaccines for improving child mortality at a global level, for
example, at the very basic level the vaccines is standardized (with minor tweaks if necessary)
and you can measure impact by how many children were inoculated. This is the simplest level
of measurement.
Gavi, the Vaccine Alliance (Switzerland) uses its strategic partnerships around the world to
provide vaccines to children around the world, and since 2000, it has prevented over nine
million potential deaths by inoculating over half a billion children. Noor Dubai (UAE), which was
launched in 2008, works to free the world from preventable forms of blindness, and has
reached 25 million individuals from Africa and Asia by the beginning of 2017.

Horizontal scaling allows growth based on social franchising, market pull, organic growth, or
through strategic partnerships. For instance, We Love Reading (Jordan) uses a social franchising
model to create a network of neighborhood libraries around the world.

Vertical scaling, on the other hand involves focusing on one community, often localizing in one
area, and going deep with a larger portfolio of products. There is no exact replication, but what
happens is that through trust, co-creation, and community organizing, the social organization
acts as a catalyst, and has a wider portfolio of products in the community.

The long-term purpose of such organizations is to eventually withdraw from the

place/community, when it is able to solve its own problems. Very often, the products will
morph and keep evolving as community needs evolve with systematic intervention. An example
of such an organization is Ruwwad Al Tanmeya that works in Jordan, and though their focus has
been youth, they are deeply involved with the communities they work in. Similarly, Karam
Foundation (USA) is not confined to a geographic area, but works with one segment- Syrian
refugees. The important thing to realize is that unlike most for-profit entrepreneurs, social
entrepreneurs do not need to focus on volume to be impactful.

Reputation building for both types of strategies is critical, but again, differs in scope. For vertical
scaling, gaining legitimacy with entrenched actors is necessary for survival, whereas for
horizontal scaling, reputation builds market acceptance and helps gather funding. Horizontal
scaling requires more effort on disseminating of information on cause and product availability,
and works faster with partners to mobilize resources.

In the case of vertical scaling, it is really about trust. One method is education, of both
beneficiaries and persons of impact. Education is often a slower process. Social entrepreneurs
often look at their purpose as to “teach a person to fish,” rather than to “give a fish”. However,
the key with both scaling processes, as mentioned by Auma Obama, founder of the Sauti Kuu
Foundation (Kenya), is to begin the process by revisiting your assumption about fish: i.e. start
by asking the question: “Do they eat fish?”

Steps in Startup Process:

The following are the steps in startup process:

- Employed.

Organization.

erprise.
Financing and Risks:

Management and protection of financial resources must be a concern for all non- profit
organizations.

isks in financial management are any actions that contribute to the reduction in value or loss
of any of the organization’s financial assets.
- profit organisations
of tax exempt status of the organisations
or other legal actions.