Module 3: Social Entrepreneurship vs. Charity

Social Entrepreneurship: Not Just Charity

Social entrepreneurship cannot be confused with charity. While charity reflects the benefactor’s compassion for humankind and is measured in terms of the generosity of donations to the less fortunate, social entrepreneurship reflects more than the good intentions of its practitioners, who are not merely driven by compassion but are also compelled by a desire for social change. Oftentimes, charitable organizations survive at the mercy of their donors whose contributions vary with the economic climate. A nonprofit that practices social entrepreneurship, on the other hand, relies less heavily on donor funds because it creates social programs that are meant to be self-sustaining. Social entrepreneurs manage donor contributions in an effective manner, investing in social ventures which can then generate their own revenues to sustain themselves.

In other words, while charity uses donor funds to buy food to ease the poor’s hunger, albeit only temporarily, social entrepreneurship uses its funds to make a lasting social impact, creating instructional programs that teach the poor how to grow their own food so that they can take care of themselves in the long run. In a world of scarce resources, it is no longer enough to simply donate out of good intentions. Rather, Greg Dees emphasizes the need for people to value the social impact that their donations are actually having:

“In society, I’d like to see more value placed on social impact and success than on good intentions or effective marketing or the severity of the need you’re claiming to serve. I’d like to see a fundamental change in ethics or culture around that. We still have the lingering effect of a culture of charity, which honors people for their sacrifice—how much they give and the purity of their motives. The word charity comes from the word “caritas,” which is Latin for love or compassion. We’re rewarding people for demonstrating their love of humankind, but we’re not often looking to see whether it has the intended impact. So I’d love to see an ethics change, so that we honor people for the impact they’ve had directly, or indirectly in choosing to support programs and organizations and individuals that have had impact, not just for how much they give or how generous they are.”(1)

Moreover, social entrepreneurs have to identify opportunities that have the potential to change the world. In the words of Martin J Fisher & Kevin Starr, the authors of Real Good, Not Feel Good:

We can no longer afford to spend scarce funds on things that simply feel good. Instead we need to support initiatives that do real good, and that have the potential to generate large-scale and lasting solutions to the world’s biggest problems.”(2)

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(1) Dees, J. Gregory. Personal interview. 8 June 2009.

(2) Fisher, M., Starr, K. "Real Good, Not Feel Good."