Entrepreneurship & Not for Profit

Entrepreneurship and Not-For-Profit Organisations

by Thomas M. Cooney


For centuries, many individuals have committed themselves to improving the environment of their communities and to offering a better life for those whom society considered less fortunate. Frequently this has led to the establishment of charitable or not-for-profit organisations whose primary purpose was the enhancement of society. The activity of these individuals has led to the development in Ireland of a significant number of social enterprises and activities from which communities suffering a wide variety of human needs have benefited. However, their work has not been formally recognised as an act of entrepreneurship because the people who initiated these ventures were not motivated by profit but by broader social objectives. This is a perspective that must be altered if we wish to engender greater entrepreneurial activity in this country.

It has been heartening to note in recent times that there is now a greater recognition by society generally of the contribution made by social entrepreneurs to the economy and to the social needs of the country. Some social entrepreneurs have initiated well-established organisations such as Children At Risk in Ireland (CARI), while others have initiated events that have raised money for those in need. For example, Bob Geldolf certainly behaved entrepreneurially when organising the Live Aid concerts that helped raise millions of pounds for famine victims in Africa. The biggest success story in Ireland of 2003 was undoubtedly the hosting of the Special Olympics and the creation of the venture, gathering of resources, building a team, and profitably achieving their goals was surely a wonderful example of entrepreneurship. 

What is Social Entrepreneurship?

Many commentators simply view social entrepreneurship as the creation of any not-for-profit organisation, and thereby include the public sector. But social enterprises are significantly different to the public sector whose organisations are larger, funding comes from government, and the taxpayer is the boss. Social enterprises need to be established in the same way as profit-orientated ventures since they need to generate income from a variety of sources, and the risk of bankruptcy and closure is constant. Defining a social enterprise is additionally complicated by the legal status that it may take since the options include a Charity, Trust, Co-Operative, Private Company, or Public Company. The variety of legal and operating structures utilised by social enterprises contributes to the challenge of identifying how many exist and to the deeper understanding of their characteristics.

The process of social entreprenurship is broadly similar to the traditional concept of starting a new business as the entrepreneur gauges the commitment, develops the infrastructure, generates and screens ideas, conducts feasibility studies, and plans the venture. The social entrepreneur will also establish a new venture team, develop a business plan, and determine sources of finance for the venture. Alternatively, one can consider the process of social entrepreneurship in the following way:

  •       Identify the vision and the idea;
  •       Identify and enthuse the key stakeholders;
  •       Identify and marshall appropriate partnerships, alliances and support;
  •       Develop the idea to a workable plan;
  •       Identify and marshall appropriate resources;
  •       Turn the plan into reality;
  •       Sustainability and survival.

As can be seen, social entrepreneurship follows a similar path to that found with other forms of entrepreneurship.

How Does It Differ? 

As with entrepreneurship in other contexts, unique characteristics apply and these peculiar differences must be considered when initiating a social enterprise. For example, social enterprises frequently start from a point of having no assets and are unable to offer collateral for loans, and thus must access a range of non-traditional funds. Social enterprises will operate in complex partnerships with the private and public sector that may have a strong impact upon the developmental path of the organisation and issues related to funding. Indeed, income will frequently come from a combination of commercial and non-commercial sources. The principal difference between social entrepreneurship and traditional entrepreneurship is that social enterprises reinvest the surplus income or utilise it for additional social purposes. The motives behind the venture are socially or community driven.

The Characteristics of a Social Entrepreneur 

A social entrepreneur is an individual who is driven by a social vision, someone who has the leadership skills to operationalise that vision, and who will build something that will grow and endure. Social entrepreneurs build social, aesthetic and environmental capital, as well as the financial capital required to achieve the primary objectives of the social enterprise. Many of the characteristics of successful social entrepreneurs reflect those of entrepreneurs in the profit-seeking sectors. Some commentators believe that their leadership and personal qualities are similar, that they are equally driven and ambitious, that they have a vision that they can communicate and sell to others, and that they have the capacity to bootleg resources. The vision is generally based on an opportunity where the current services to the community are weak. The social entrepreneur also needs to build networks and relationships that bring credibility and co-operation to the organisation. 

While social entrepreneurship is normally financially fragile and the risk is high, it is critically important to the development of our communities. Indeed, how many sports clubs and social groups throughout the country have people behaving entrepreneurially on a regular basis? The new stand that was built at the local sports field to accommodate spectators – where did the idea come from, how were the funds gathered? Was that not entrepreneurial behaviour? The Alzheimer’s Foundation that was recently established in your locality is surely an act entrepreneurship also. It is time that we stopped equating entrepreneurship with the creation of a new venture only and instead saw it as a behaviour that occurs in many different contexts. Throughout our communities, there are people demonstrating entrepreneurial characteristics everyday except that we fail to recognise them because they have not established a profit-making venture. It is time to open our minds and maybe we will discover the entrepreneurial capabilities within ourselves and how they can be used to help others.

Thomas M. Cooney