Business is constantly evolving. Today, sectors like education and healthcare are being transformed in a bid to tackle critical global challenges. Social entrepreneurship—the practice of building mission-driven businesses that address societal and environmental issues while remaining profitable—leverages innovation and strategic thinking to deliver both impact and income.
There are currently 10 million social enterprises worldwide, producing approximately $2 trillion in revenue, and the numbers keep growing. For those who are passionate about blending business know-how and strategy with social impact, understanding social entrepreneurship is more than a trend—it’s a way to build a meaningful and impactful career.
What is social entrepreneurship?
Though the concept of social entrepreneurship has existed for centuries—think Florence Nightingale and Maria Montessori—we credit Bill Drayton, founder of Ashoka, with coining the term “social entrepreneur” in the 1980s. Drayton is still widely considered to be among the greatest social entrepreneurs of all time.
At the core of social entrepreneurship is the aim to build businesses that exist to solve crucial social or environmental challenges. Business ventures cover a wide range of sectors and issues, from education and climate action to clean energy and poverty.
Social enterprises combine business skills with innovation and creativity to drive meaningful change. Many align their work with the UN’s Sustainable Development Goals (SDGs). This not only provides a clear and measurable framework to work with, but is also an important consideration for investors. By working in this way, social entrepreneurs rethink traditional models to develop lasting, mission-driven solutions.
Mission-driven business models
Social enterprises vary in structure, typically following one of three business models.
- For-profit: These enterprises operate like traditional businesses in that they aim to make a profit. However, they also prioritize creating a positive impact by building their business around an environmental or social challenge.
- Nonprofit: Nonprofit social enterprises are solely focused on achieving their mission. Revenue that the business generates through its products and services is reinvested, meaning they are not solely reliant on donations or grants.
- Hybrid models: This model combines elements of for-profit and nonprofit models. For example, a nonprofit enterprise may own a for-profit subsidiary to generate revenue, while also receiving donations to help support its mission.
While each of these models offers its own potential benefits and challenges, for-profit social enterprises tend to lead. These businesses can attract impact investors and pursue revenue generation that allows them to scale their business without being dependent on grants or donations.
Additionally, for-profit businesses—unlike nonprofit organizations—are eligible for B Corp certification. This certification recognizes companies that meet high standards of social and environmental performance, accountability and transparency. The B Corp movement has grown significantly in recent years: there are currently 9,500 B Corps worldwide, compared to 3,500 in 2020.
Big players in social enterprise
To see how mission-driven businesses can balance impact with profit, let’s take a look at just a few of the most well-known success stories.
Patagonia
The outdoor clothing brand focuses on environmental activism. It donates a portion of its profits to environmental causes and builds sustainable and ethical practices into its processes and products. In 2022, the company’s founder, Yvon Chouinard, transferred ownership to two entities. One ensures the company continues to operate in line with its mission. The other focuses on ensuring Patagonia’s profits go toward fighting the climate crisis.
TOMS
This social impact business, founded in 2006 by Blake Mycoskie, started out as a shoe brand operating a “one for one” model. For every pair of shoes they sold, they would donate a pair. Since its inception, the company has donated over 100 million pairs of shoes. Over time, the business has expanded to include eyewear, clothing and coffee, each of which is tied to a cause.
Lush
The globally recognized cosmetics brand has a strong commitment to animal welfare, ethical sourcing and environmental activism. It has a number of policies aimed at supporting this mission, including policies focused on digital elements of the business. For example, they have an open-source tech policy where they share the technology they develop to encourage a more sustainable business system.
Ben & Jerry’s
The American ice cream brand is well-known for its strong social mission. It focuses on issues such as climate activism, human rights and fair trade. Since it was founded in 1978, it has grown into one of the world’s most recognizable ice cream brands while remaining focused on its mission to make a difference in society.
The startup landscape is shifting. More entrepreneurs are emerging with both a passion for change and the business skill set to turn their vision into impact. Will you be part of the shift?
The future is mission-driven
If you’re ready to make a difference in business, take a look at how our Master of Science in Business for Social Impact & Sustainability can help you on your journey to social entrepreneurship. The program provides a comprehensive understanding of sustainability and the skills to integrate it into profitable, purpose-driven business models. Gain practical, real-world experience to drive change in a new era of business.