If you close your eyes and picture social impact examples, chances are what pops into your head are organizations like Habitat for Humanity or Teach for America, traditional nonprofits that have managed to have a tremendous impact by creating social change on a large scale. 

If your nonprofit organization is smaller, then those kinds of organizations might not be the best models to study if you are looking to maximize the impact of your organization. The reality is, large nonprofits have resources, networks, even lobbying efforts that smaller organizations might have trouble replicating. 

A better model might be found in the area of social entrepreneurship.

Nonprofit Versus Profit: a False Binary?

At first glance, the terms entrepreneurship and nonprofit may look like opposites, as contradictory as self-interest and selflessness. On its face, entrepreneurship is all about innovation generating profit, whereas nonprofits subordinate financial gain to the achievement of some beneficent, philanthropic, or humanitarian goal. 

In the popular imagination, entrepreneurs make money first. Later, especially if they are wildly successful (think Bill Gates), there is an expectation, derived from the principle of noblesse oblige embedded in Andrew Carnegie’s Gospel of Wealth concept, that entrepreneurs will evolve into philanthropists. The other side of the stereotype is represented by the idea of the do-good organization with a socially conscious mission and a seemingly eternal paucity of financial resources.

The rise of social entrepreneurship over the past few decades has disrupted this binary. Essentially, social entrepreneurs are forging a middle way between the conventional dichotomy of profit and nonprofit enterprise, by which a socially impactful outcome can also generate a significant return on investment. And change leaders in traditional nonprofits are taking note.

Four Applicable Practices and Principles

Groups like the Social Impact Movement can be very instructive in terms of considering the benefits of social entrepreneurship to nonprofits. In that example, impact and identity in a sense become one and the same. Here are four other ways that social entrepreneurial principles and practices can be useful to nonprofits.

  1. Funding nonprofit organizations: social entrepreneurship can open up alternative funding streams for an organization, beyond the traditional philanthropic and governmental courses many nonprofits have traditionally relied upon. Whether an organization sells branded merchandise or looks to adopt a large-scale investment strategy adapted from social entrepreneurial business models, the goal is to unyoke mission from donor-based revenues
  2. Applying business models to social Impact: to an increasing degree, social justice and social impact are no longer exclusively the concern of nonprofit organizations. The rise of community development financial institutions (CDFIs) provides some evidence that generating capital and helping people are not mutually exclusive goals. From the perspective of a nonprofit change leader, the CDFI example may help alleviate misgivings about applying traditionally for-profit models to create social impact.
  3. Distinguishing nonprofit from impact: the basic concept of philanthropy is changing. People, especially millennials, are less willing to compartmentalize investment and philanthropy. Often, this means that people want a return on investment that also achieves measurable impact. Traditional nonprofits can take a page from this lesson by focusing on the ways their organization creates social change, rather than on the way their organization aligns with abstract philanthropic sectors or philosophies. It is one thing to argue that supporting the arts is important, but pointing out precisely how the arts benefit communities and demonstrating exactly who has benefited from such programming is another matter entirely. The overall effect of this trend is that in the minds of many, impact is more important than the abstract concept of nonprofit, which is not necessarily as synonymous with social good as it might have been even a generation ago.
  4. Learning from the impact of social entrepreneurs: the success of social enterprise over the past decade or so is undeniable. Social entrepreneurs have shifted focus from organization and its internal culture to scale, impact and amplification of the voices of people being positively impacted, which has implications for nonprofit leadership approaches. Emphasis on achieving sustainable funding sources through strategic partnerships is one important way that social entrepreneurship is changing how nonprofits do business.

Impact Versus Goals

If the goal of creating high impact nonprofits resonates with you as a social impact leader, then learning more about the practices and principles of social entrepreneurship can be a great way to start shifting your thinking from conventional non-for-profit orientations toward higher-impact approaches. 

Positive social impact requires networking and being oriented outside your own organization, which was not always the case when nonprofit organizations would more consistently target government and philanthropic funding streams. Global social entrepreneurship has shown the scalable capacity of approaches and ideas that even a few years ago might only have had a local or community impact. Traditionally, a nonprofit’s ideals and stated goals were enough to secure funding; now, measurable impact matters as much, if not more than, the identity and altruism of an individual organization. 

Consider Additional Development 

A great way to get oriented into this complex issue, as well as to harness some of the benefits of social entrepreneurship, is to consider a course in social enterprise.

There are lots of social impact courses out there, so selecting the right one can be tricky. That is why having some sense of the benefits that could be most advantageous to your organization and the impact(s) you are seeking to have can help you compare course learning outcomes, so that the investment of time you make yields the maximum return possible.

The bottom line is this: social entrepreneurship courses can be a great way for nonprofit leaders to benefit from the practices and principles of social enterprise. And there are lots of free options, including our own course on global social entrepreneurship.

December 18, 2019



Gina is our Marketing Manager at Philanthropy U. She has a background in international education, international development and scaling enterprises.