This week is all about the world of social enterprises and social businesses in What We’ve Been Reading! First and foremost, the Massachusetts Institute of Technology hosted the second Scaling Development Ventures Conference last month, which brings together impressive social entrepreneurs and organizations committed to combining international development and entrepreneurship. In the conference, these groups discussed various models and ideas that could be implemented to scale up social enterprises and business in order to create significant socioeconomic impact in the developing world. For them, scaling up social businesses is vital for them to remain viable and successful in the long run; because social businesses often focus on a specific issue in a specific situation, the goal for them is to initially make a substantial, measurable impact, and then to turn that initial impact into a durable and sustainable project. To make a more durable impact, the conference leaders agreed that the scope of the social enterprise’s initial mission will have to broaden, which can be successfully achieved by partnering up with similar organizations that provide different skillsets and approaches. Through interactions with organizations with similar goals but different approaches, social businesses have the chance to gain knowledge and experience as well as an increase in resources and audience recognition.
These observations and conclusions will become more relevant as businesses around the world grow more socially oriented. For example, 15% of Britain’s small firms consist of social enterprises, and businesses now have more opportunities and possibilities to foster positive social change. One of these social enterprises is a chocolate company in Britain that advertises fair-trade chocolate owned in part by Ghanaian producers; while most people praised her ambition but warned her of the viability of a socially responsible company, Sophie Tranchell argued that there is a way to make sure the social benefits are valued just as much as the profits are in a business. Some of her tips on starting a global social enterprise include finalizing and reinforcing your mission statement in everything you do in your business, ensuring financial support through companies, organizations, and governmental departments that support and encourage corporate social responsibility and community empowerment, having an awareness of the different regional and cultural influences on your business, and employing those who have the passion and the skills to make your social enterprise a successful one. By following these guidelines, Tranchell’s business now sells chocolates all over Europe and South Korea, and the partnership they have with the Ghanaian farmers for the cocoa have given the farmers economic stability as well as a voice in the cooca industry.
Social businesses and enterprises are often small to medium sized enterprises, and consequently often use crowdfunding as one of their methods to raise capital for their business. However, in the US and Canada, crowdfunding is limited to models that do not offer securities, such as donations or rewards for services done, meaning that peer-to-peer lending through an online intermediary is prohibited. SMEs, social enterprises, and crowdfunding platforms that focus on social enterprises have been the most affected by these prohibitions, as they are the ones most in need of raising capital, but now, the Securities and Exchange Commission in the US and the Ontario Securities Commission in Canada are proposing an exception to the securities prohibition for crowdfunding, allowing for up to 1 million in the US and 1.5 million in Canada of crowdfunding revenues through securities. This is exciting for social enterprises particularly because there is now greater access to capital markets through their inclusion in offering securities in exchange for crowdfunding, as well as increased investment opportunities for investors who would otherwise not recognize social enterprises as a possible avenue of investment. With social businesses as a healthy combination of community betterment and profit, it is no wonder that these enterprises and their methods and growing in size, popularity, and recognition.