Tuesday, September 1, 2009

Social Entrepreneurship

As I evaluate our current budget and program of work and look to the future, especially in these tough economic times, the idea of social entrepreneurship keeps entering into the equation. According to the Nonprofit Board Answer Book II social entrepreneurship refers to a philosophy of self-sufficiency (BoardSource, 2002, p. 70). It is the idea that nonprofit agencies should find alternative sources of revenue to further it's mission. In other words, nonprofits should work towards becoming self-sufficient.

Our agency is no exception. The Oil Region Alliance, the lead economic development and tourist promotion agency for all of Venango County; part of northern Crawford County and located in northwest PA, for example, is an organization that relies heavily on membership dues and municipal contributions to further it's mission. And, these funds are highly correlated to the economy. In good economic times membership dues and municipal contributions go up and in bad economic times membership dues and municipal contributions go down. So, the idea of social entrepreneurship, or the evolution to self-sufficiency by creating an alternate revenue source makes sense for the longevity of our agency and the long-term success of it's mission.

There are obviously pros and cons. According to the Nonprofit Board Answer Book II (BoardSource, 2002, pp. 76 & 77) social entrepreneurship can help your nonprofit:
  • Generate new sources of revenue to help pay for administrative and overhead costs that traditional funds can't.
  • Diversify income sources and reduce reliance on signature fund drives.
  • Raise visibility in the community and create new ways for people to become connected to the agency.
  • Build upon the mission and create new jobs in the community.

On the other hand, there are these drawbacks:

  • Failure. Every entrepreneur understands there are risks to new ventures.
  • The organizational structure may be too bureaucratic to accommodate a profit-oriented venture.
  • Unfavorable publicity may come your way when you compete with for-profit competitors.
  • Stakeholders may become confused about the mission.

So, as you can see, there are many variables to consider when building social entrepreneurship into your nonprofit business model. It is the proverbial "catch 22" where the agency wants to further it's mission but resources are dwindling. The community needs and often expects the nonprofit to function, but is not willing to fund the effort. Therefore, the agency has to get creative in order to survive. Please let me know your thoughts on social entrepreneurship?


  1. Isn't this the challenge for all of us? You've done an excellent job of explaining the position many organizations and non-profits are in as we evaluate how we should be spending our time and resources. Our success is likely to depend on striking the fine balance between staying mission focused yet responsibly raising the funds needed to support the organization.

    Additionally we find ourselves continually trying to meet the expectations of the larger community, who often have little knowledge of the organization's mission. Even within a large membership organization, members are motivated to continue their support based on various perceptions of what they want the organization to do. Some want advocacy, others community events. Should we be in our office and always available or beating the streets to reach our goals?

    I suspect we will not easily answer your question in a way that will please everyone but a good Board of Directors will understand and support the mission, by assisting in fund raising when necessary.

  2. Well said! And, I agree, either way we go, it must be board driven. Thank you so much for your insight.