Menachem's Writings

Social Entrepreneurship

I had never heard of social entrepreneurs until Nat mentioned the concept to me the other day. I don't think he had heard of it either. But I liked the concept, as I understood it, when I first heard the name.

Last week Nat met a guy who had what I would have called in the past a "goodie-goodie" site. He offers all kinds of social services, mainly allowing people to network -- work, advice, services, selling, etc. I looked at the site and saw, almost immediately, that there was no money in it (of course there is alway sponsored advertising -- and this kind of site doesn't "care" if you come and go -- if the site is good, you will come back). Nat had written in his email to me that "this guy must be rich -- he doesn't need money if this is what he does". I guess being independently wealthy does help.

But I thought about it a bit more. Of course, the first thing I did was to go to Wikipedia to see how this concept was defined there. It says, "A social entrepreneur is someone who recognizes a social problem and uses entrepreneurial principles to organize, create, and manage a venture to make social change". While a regular entrepreneur, someone who is in the market purely to make money, measures performance, or more precisely success, in terms of profit, money in his pocket, bottom line, a social entrepreneur (also) measures success by the positive impact he or she has on society. Many social entrepreneurs work through non-profit organizations. But this is not necessarily the only way to do it.

In Israel such a non profit entity is called an Amutah. The amuta concept is a leftover from the Turkish rule of Palestine. The Turkish government (sultan) wanting to keep an eye on possibly subversive groups in this far corner of their empire, forced them to be registered and report periodically on their activities and finances. This was perfect for the control freak, communist-style Israeli government. However the clever Jews, and among them many politicians, worked out ways of using the Amuta system for maximizing profits and leaving nothing behind in society. (P.S. there are also thousands of honest ones).

But I don't want to write about that problem today. I am more interested in the "real thing", not the Israeli bastardization.

So back to the Wiki. "The terms social entrepreneur and social entrepreneurship were first used in the literature on social change in the 1960s and 1970s". So the terminology isn't new.

Rabbi Riskin, while talking about the different types of Biblical leprosy, red, green, houses, clothes, skin, mentioned a particular gentleman he once went to visit early in his rabbinic career. The man's office was green, his upholstery was green, his pen and the color of the ink was green. Indeed, he noticed the man wore a green tie, a green suit, the carpet was green. The rabbi was overwhelmingly curious. What was the purpose of all this green? The man answered with a question (yes, he was Jewish too), "Rabbi, haven't you ever seen a dollar bill? It's green, and I'm here for one purpose only, and that is to make more dollars". The good rabbi understood the pitfalls of green to which the Torah refers.

But being a Social Entrepreneur does not mean you have to be independently wealthy in order to be altruistic or benevolent. For a start, halacha teaches us that a person must give charity and that while one should give (at least) ten percent of his (gross? net?) income, he may not give more than 20% lest he himself becomes requiring of charity in the future as a result of his generosity.

We also learn that the higest form of charity is to give someone the opportunity to earn a living. This ruling is not just a Jewish source. A Chinese(?) proverb says, "Give a man a fish and he will eat for a day. Teach him how to fish and he will eat for a lifetime." [Others have added, "Teach a man to sell fish and he eats steak". This is funny, but does strengthen the moral.] Similar sentiment to the Jewish one.

The other side of the coin may be: "Give a man a fish; you have fed him for today. Teach a man to fish; and you can sell him fishing equipment." The Germans realised this concept early on. They were "happy" to give Israel Mercedes Benz buses rather than cash for post war reparations after murdering so many Jews. But, now Israel has to buy Mercedes Benz service and spare parts forever, and we all know it costs more to buy spare parts to build a car than to buy the car. So they've done OK. Definitely better than had they given us greenbacks.

Anyway, back to the social concept. I think you shouldn't (have to) feel "bad" about making money on a social project. Yes I know, some people are funny about it. They are unable to differentiate between someone making money and also providing a social service; if it's of social benefit, then it should only be charity.

The more money the social entrepreneur makes, the more society benefits. The entrepreneur's rules should be up front, so that asking questions like what percentage of the "donated" money goes to administration are irrelevant. For example, assume my social business supplies underwear or lingerie. Let this social business, website or store, sell underpants for the homeless at $10 a pair. In other words, for every $10 you spend, we will buy a pair of undies and deliver them, with your love, to a homeless person somewhere in the streets of the Five Towns. Each pair that you and your friends "buy", provides another new, clean pair of knickers to a poor person in our catchment area. The benefit to our target audience is direct. (Please don't send us $15.)

If I, as any entrepreneur, social or financial, can buy the pair of underware that I sell for $10, for $2, I make $8 markup (not profit); however if I buy them $8 each I'm probably losing money because my overheads will kill it as a business -- and I will stop doing it, thus depriving the poor of fresh clean undergarments. If we sell many units in a week and our supplier gives us an additional discount, well I am an entrepreneur . . . and you are getting exactly what you paid for . . . a warm feeling that you have given a warm and clean feeling to a homeless person.

Is such a social contribution charitable? I think so. I've profited, society has profited, and you're all the better for it.

Please feel free to and don't forget to stop by my site to look at my latest (and classic) photographs.


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