A couple of weeks ago, former New York Times columnist Anand Giridharadas published Winners Take All: The Elite Charade of Changing the World. Giridharadas deconstructs the role of the rich and powerful in modern society, and scrutinizes the activities of high-profile philanthropists. The book has the potential to radically change how we as a society think about social enterprise and the role of companies.
“Generosity is no substitute for justice.” Giridharadas’ point is clear: if wealth is amassed in ways that harm employees or customers, or that degrade the environment, there is no absolution in using that wealth for philanthropic purposes. In other words, it is not enough to allow for unfettered capitalism and then redistribute later. What matters are the rules of the game. He rejects the way of thinking about the world enabled by The Gospel of Wealth, an article written in 1889 by Andrew Carnegie that justified extreme ‘taking’ in the name of progress and held the upper class of self-made rich responsible for also ‘giving back.’
This worldview might lead one to conclude that the role of social enterprise is nothing more than a mechanism for the wealthy to redeem themselves. Anyone who has gone through the process of fundraising and understands the psychology of large donors will know the importance of speaking to this motivation.
But social entrepreneurs are more than just instruments to perpetuate the system that creates inequalities. While traditional charities might see themselves as addressing market failures, the world has changed since 1889 and entrepreneurs are freeing themselves from this ‘take and give back’ mentality. There are all sorts of social entrepreneurs, and more and more of them are transforming business practices to avoid generating negative impacts and to proactively create positive social value.
In my role as the director of the Stanford Graduate School of Business’s Center for Social Innovation, I frequently meet graduate students and established professionals with clear and fixed ideas of what their entrepreneurial venture is going to be. Some have an established cause or mission, a deeply personal motivation that drives them to ‘do good’ and address a social or environmental problem; others simply want to be entrepreneurs and do well, and don’t see their business idea as having a ‘social’ element at all. These two groups most closely represent the supposed dichotomy between social and traditional enterprise. But it is the other groups floating ‘between the lines’ that demonstrate how—just like many apparently binary comparisons—the division between social and traditional is not as clear cut as it might seem.
One of these groups in the fluid center of the social-traditional enterprise continuum contains the students whose venture ideas undoubtedly reveal some integral concern for social impact, but who would not go so far as to identify themselves as social entrepreneurs. Some are concerned about marginalizing themselves by applying the ‘social’ label and closing a door, especially to investment. Others religiously try to avoid a dependence on philanthropic capital. Others develop a traditional business, and have values they intend to uphold and will take steps to protect them along the way. Some of them will end up growing the ranks of benefit corporations and B-Lab certified organizations. On the flip side, some social leaders arrive with preconceived notions that a market approach is the only way for them to take their idea forward, when the market actually doesn’t exist to support their idea. Others discover that revenue generation can free them up from the unpredictability of philanthropic funding sources.