Learning Laboratory

• Author: J. Gregory Dees
• Position: Clinical Professor of Social Entrepreneurship and cofounder of the Center for the Advancement of Social Entrepreneurship at Duke University's Fuqua School of Business. He is currently a Visiting Professor at the Graduate School of Business at Stanford University.

A pregnant South African mother diagnosed with HIV is scared and has no idea what to do. She is reassured when introduced to a “mentor mother” from the nonprofit mothers2mothers who also has HIV; her mentor’s counseling helps raise her chance of survival and lower her baby’s likelihood of infection.

A young Cambodian woman faces a bleak future of poverty and a terrible job market until she spots an opportunity to learn about digital data conversion and get a job in the field with the social enterprise Digital Divide Data (DDD) while earning a scholarship for higher education.

In India, a father spots a stall in the marketplace selling solar-powered lanterns, manufactured by the for-profit d.light. His home has no electricity. He replaces his kerosene lamp with the d.light lantern, saving on kerosene and providing better light for his children to study in the evenings.

These are just three examples, out of thousands, of how social entrepreneurs are working to address development problems such as HIV/AIDS, youth unemployment, and lack of reliable electricity. Their scope of activities is nearly boundless, covering microfinance, sustainable forestry, water purification, sanitation, agricultural productivity, women’s employment, education, health care (from drug and technology development to delivering supplies, selling products, and providing care), and much more. Sometimes their work is effective; sometimes it is not. Often, success depends on credibility and relationships with major players—government agencies, prominent foundations, multilateral development organizations, large established nongovernmental organizations (NGOs), and corporations. If those players can reach beyond the hype and the moving stories to draw out and apply hard lessons about effective and scalable solutions, the payoff can be significant.

Social entrepreneurs bring private resources, ingenuity, determination, business skills, and, in some cases, deep local knowledge to the problems that hold societies back. They innovate, test, and refine new approaches. Their successes and failures, once identified, are a source of valuable information about what works and what doesn’t. These social endeavors form a living—and vastly underutilized—learning laboratory for development innovation. We have a long way to go before governments and development institutions take full advantage of this creative problem-solving activity. But as rigorous assessment becomes more common, we can begin to identify which solutions are effective and have the potential to scale up and learn what we can from those ideas that looked promising but failed to deliver cost-effective results. (See “Every Which Way We Can” in this issue of F&D.)

Misunderstood concept

Many people confuse social entrepreneurship with a narrower idea of “social business,” moneymaking enterprises that also create social good. Combining powerful social innovation with a fully profitable business model may be the Holy Grail for many social entrepreneurs, but it is not an essential characteristic. This is apparent in leading proponents’ definitions of the concept (see box). What is essential is pursuit of new ways to tackle a social problem. Business models range from grant-dependent nonprofits to commercially viable for-profits.

Whatever the model, social entrepreneurs use business tools in creative ways as they attempt to craft more cost-effective, sustainable, scalable solutions. They often draw on creative business models to generate a better social return on investment. Although it is not necessary to show a profit, these entrepreneurs must be savvy when it comes to cost structures, revenue streams, and capital requirements. If they want to change the world, they need to find an economically viable path for getting there.

Our three examples illustrate a range of business models.

mothers2mothers (m2m) is a South Africa–based NGO that...