This year in social enterprise

Dec 19th, 2014

As the year draws to a close, we like to reflect on the state of the space in which we operate. Social enterprise was, and continues to be, a nascent industry, but has come a long way in the last five years. This week, we’re looking at the updates and progress the industry has made and the methods we’re putting in place to grow.

2014 in Impact Investing: The Big Bang and its Aftermath by Ben Thornley on Huffington Post
According to Thornley, co-author of The Impact Investor: Lessons in Leadership and Strategy for Collaborative Capitalism, impact investing experienced a “Big Bang” in 2014, reaching and surpassing its tipping point and ceasing to be an insider’s game. Today, ideas and practices surrounding impact investments are scattered around the globe. Thornley argues that this “Big Bang” will have ramifications for years to come, the most important of which being the idea of segmentation.

While the core of impact investing remains the same, the practice is becoming more segmented. Thornley cites four subgroups of social enterprises: first responders, solution specialists, early-stage innovators, and scale agents. Each of the four attracts different audiences and has different approaches to raising capital. Why is this important? Thornley suggests that as the market matures and segments become more specialized, it is crucial to think about roles and responsibilities in impact investing. In other words: “The Big Bang of impact investing makes listening and learning hot in 2015.”

The Face of Poverty by Christian Seelos on Stanford Social Innovation Review
Christian Seelos, scholar at the Stanford Center on Philanthropy and Civil Society, created a diagnostic framework called “the face of poverty” to act as a starting point for productive decision-making within social enterprises. Seelos noted that many social entrepreneurs and funders are relying on technical innovations and one-size-fits all “best practices” to solve the problems their ventures face in developing markets. This method means we collectively run the risk of limiting our understanding of the environment, and may not make the right decisions with regard to innovation and scale.

The framework consists of four dimensions that shape the face of poverty: economic, cognitive, normative, and power & politics. It aims to identify and explain the barriers that sustain an undesirable, change-resistant status quo. By understanding these barriers, Seelos hopes that entrepreneurs will have the tools to make informed, productive decisions about intervention design involving innovation and scale.

Working from the Inside Out: IDB’s inaugural conference on scaling corporate social enterprise explores building bridges by Carolina Tocalli on Next Billion
Last month, the Inter-American Development Bank and its partners organized the first-ever “Scaling Corporate Social Enterprise Conference” in Santiago, Chile. The purpose of the conference was “to initiate a social innovation ecosystem capable of generation hope for the most vulnerable sectors in the region” according to Hans Schulz, Vice President for the Private Sector at the IDB. At the conference, entrepreneurs reflected on the obstacles they experienced when attempting to scale their social change models and offered advice for ways to begin and scale social ventures.

This comes at an opportune time as Latin America undoubtedly needs specific and sustainable social inclusion. There are several inclusive business models in Latin America with talented stakeholders and institutions like IDB have redoubled their commitment to promote, strengthen, and finance an open innovation ecosystem to develop these key ventures to benefit society as a whole.

New Here?