We're often asked what social entrepreneurship and social innovation specifically mean to us.
Since our founding in 1998 New Profit has focused on supporting innovative social entrepreneurs who have brought a pathbreaking, big idea to life in an innovative organization. Through these efforts we have come to define social innovation as the creation and application of new, innovative, and results-oriented practices, models, and approaches that have the potential to significantly increase the social impact generated per unit of input invested, compared to the status quo. We define social entrepreneurship as a type of social innovation. Social entrepreneurship, we believe, entails the development by entrepreneurial individuals of new models or approaches to social problems that hold significant potential for breakthrough social impact when implemented through the creation (or re-invention) of an organization.Ideal Role of Innovation and Entrepreneurship in the Social Sector
We believe that social innovation generally-and social entrepreneurship specifically-represent powerful forces for bringing new, improved solutions to address existing social problems. In an ideal world, innovation, and entrepreneurship in the social sector would behave as they typically do in the business sector. Examples include:
- Organizations, practices, and models that demonstrate the ability to generate high-impact outcomes would be rewarded by the market with additional resources, both financial and human
- Promising ideas and approaches to social problems would be manifested in organizational form
- Increased overall return on social investments would exist, directly and by stimulating existing actors to increase their own innovativeness
Yet, these aspirations appear out of reach. At a time when our challenges seem more imposing than ever, our ability to grow innovative solutions to a scale where they can maximize their impact on the lives of people with needs is limited. We've seen an unprecedented amount of philanthropic funds-more than $300 billion in 2007 alone-donated by Americans in recent years, but our biggest nonprofits are very old, and relatively few nonprofits ever grow to reasonable scale. Only one-tenth of one percent of the nonprofits founded since 1970 have grown to achieve more than $50 million in annual revenues. Unlike innovative businesses, very few nonprofits, including those with consistent, proven track records of high impact, are able to grow beyond a modest size and fundamentally transform the social issues they're addressing. And so our social problems persist.Barriers to Change Can Be Overcome
Significant barriers impede the flow of human and financial resources to social-purpose organizations that demonstrate superior results and performance, ultimately slowing efforts to create widespread, transformative change in our country. These barriers include ambiguity about what constitutes superior performance, lack of information about the best-performing and highest-impact organizations, relative importance of factors other than social impact in resource decisions by funders and supporters, and inadequate support systems.
While these barriers are formidable and entrenched, we believe they can be overcome. Our country's leadership, and our social sector, must establish a unifying vision and social innovation agenda that enables all motivated actors, including philanthropy, government, citizens, nonprofits, academia, and business, to identify a collective set of priorities for focused action, to leverage their own distinctive roles for maximum effect, and to build the scale of the overall effort to better match the magnitude of the problem.
Through our financial and strategic support of innovative nonprofits, we aspire to help social entrepreneurs and their organizations realize their fullest potential for social impact. These individuals relentlessly pursue opportunities to serve their mission, focus on data to drive improved impact, and emphasize solving problems at scale through organizational growth, replication, and strategies to drive broad-scale change. As a result, their organizations are demonstrating that solutions exist and that it is possible for us to solve the persistent social problems we face.
Through our Action Tank, we hope to inspire funding mechanisms that use the principles of innovation, performance, and investing in results to identify and grow high-impact solutions, and investment in human capital that delivers solutions and generates further innovation. Our aspiration is to help create an environment that will allow more social entrepreneurs across the country to grow their organizations and scale their social impact.