Some entrepreneurs explicitly make social impact the centerpiece of their business models. Thus, these social enterprise businesses (SEBs) directly address social needs through their products or services, or through the numbers of disadvantaged people they employ. SEBs can be legally structured either as nonprofits or as for-profit businesses. The SEB must demonstrate the ability to be a going concern through the use of earned revenue, either by achieving profitability already or by creating a clear path toward profitability.

Note that SAGE believes that, in order for an SEB to be sustainable, it is imperative that they have an earned revenue strategy, rather than rely primarily (or totally) on “patron saints” who believe in the SEB’s mission. Examples of such patron saints include corporate donations, foundation donations, philanthropist contributions or government grants. These patron saints pledge their financial resources to keep the SEB running as a going concern. However, once the funding runs out, the SEB goes out of business.

One of SAGE’s greatest supporters is its Chairman of the Board, Mr. Jerr Boschee. Boschee described this well in his book called, Migrating from Innovation to Entrepreneurship (2006). On page 12, he says, “Without self-generated revenue, NGOs remain forever dependent on the generosity of others, and that is a risk that social entrepreneurs are unwilling to take. They are passionately committed to their mission—but they are just as passionately committed to becoming financially sustainable or self-sufficient in order to do more mission!”

[Click here for the full SEB judging criteria]
The first two judging criteria for a SAGE team entering the SEB competition are as follows:

Criterion #1 (26 points)

What is the marketplace viability of the business (e.g., has it achieved profitability through earned income, or has it gained support from private foundations, donors or the public sector)? Or has it defined a believable path toward profitability or financial sustainability)?

Note: This criterion is worth 26 points total: 12 for written annual report and 14 for oral presentation.

Interpretation

Social enterprises directly address social needs through their products or services or through the numbers of disadvantaged people they employ; they can be legally structured either as nonprofits or as for-profit businesses, but in either case they (1) must be profitable and/or (2) demonstrate long-term viability as a going concern through commitments from private foundations, donors or the public sector.

SAGE teams may enter a specific SEB up to three years. This means that:

• The best SEB can prove their sustainability and viability over the long-term
• No one SEB can be entered more than three years, which will prevent dominance by any one SAGE team based on the same idea

The primary purpose of a social venture is to solve a social problem; a secondary purpose may be to make a profit.

With the Berlin Wall coming down in 1989, the fall of the Iron Curtain and the end of apartheid in 1991, the spread of democracy, and the advances of technology in the past forty years, a growing number of ventures have been started in the “citizen sector,” contrasted with the “private sector” of CEs and corporations, or the public sector of government. Enterprises created by individuals in the citizen sector, however, identify some form of community service as the entrepreneur’s main mission.  These people are called social entrepreneurs (SEs), and while a part of their business model may seek profits from some type of ancillary operating activity, these profits are reinvested in their main, nonprofit operating activity. Examples include providing clean drinking water; alleviating poverty; improving healthcare, legalizing rights for the disabled; providing electricity to remote villages; implementing new education methods and technologies into schools.  Social entrepreneurship is a relatively new term, and while many people have differences about the definition of social entrepreneurship, most do agree that social entrepreneurs are those people who start enterprises that may or may not be profit-driven, but whose mission is driven by creating solutions to societal problems.

An outstanding book on the subject of social entrepreneurship is by David Bornstein, entitled How to Change the World: Social Entrepreneurship and the Power of New Ideas. (Oxford University Press: 2004). In the conclusion, Bernstein said: “If I learned one thing from writing this book, it is that people who solve problems must somehow first arrive at the belief that they can solve problems. This belief does not emerge suddenly. The capacity to cause change grows is an individual over time as small-scale efforts lead gradually to larger ones. But the process needs a beginning—a story, an example, an early taste of success—something along the way helps a person form the belief that it is possible to make the world a better place. Those who act on that belief spread it to others. They are highly contagious. Their stories must be told.” (p. 282)

By creating a unique competition for SEBs, SAGE provides high school youth with their first opportunity to “arrive at the belief” that they can solve problems. Judges will favor social ventures that include service activities that relate to some aspect of teaching entrepreneurship, financial literacy, personal financial management or technology (many teachers will tell you that they first gained a mastery of their subject when they had to explain concepts to others). Once a SAGE team has mastered entrepreneurial and other business skills, it can demonstrate its knowledge and skills by sharing them with others, such as grade school or middle school students.

Sample Activities

Sample activities related to business include: (1) organizing a Youth Entrepreneurship Camp for children ages 9-14, bringing children to your high school campus for a series of Saturday workshops; the last day of the workshop should give the students a chance to sell their goods or services; (2) creating a “Junior SAGE” Tournament, whereby a SAGE team organizes a SAGE tournament for younger students in junior high school or elementary school.

Criterion #2 (36 points)

Has the business demonstrated significant social impact, either through their products and services or through the numbers of disadvantaged people they employ (as a social enterprise)? Evidence of impact can include media coverage (e.g., newspaper, TV, radio) and potential market reach (e.g., regional, national, global scale).

Note: This criterion is worth 36 points total: 16 for written annual report and 20 for oral presentation.

Interpretation:

In their annual report and verbal presentation, how effective were the students in demonstrating significant social impact. The Ashoka Foundation, which strives to shape a global, entrepreneurial, competitive citizen sector: one that allows social entrepreneurs to thrive and enables the world’s citizens to think and act as changemakers.

Some entrepreneurs explicitly make social impact the centerpiece of their business models. Thus, these social enterprise businesses (SEBs) directly address social needs through their products or services, or through the numbers of disadvantaged people they employ. SEBs can be legally structured either as nonprofits or as for-profit businesses. The SEB must demonstrate the ability to be a going concern through the use of earned revenue, either by achieving profitability already or by creating a clear path toward profitability.

Note that SAGE believes that, in order for an SEB to be sustainable, it is imperative that they have an earned revenue strategy, rather than rely primarily (or totally) on “patron saints” who believe in the SEB’s mission. Examples of such patron saints include corporate donations, foundation donations, philanthropist contributions or government grants. These patron saints pledge their financial resources to keep the SEB running as a going concern. However, once the funding runs out, the SEB goes out of business.

Like Ashoka, SAGE believes that for a successful social venture to pass its “knockout test,” the business must be new and potentially pattern-changing, relative to prior attempts.

Is the SEB practical? Scalable? Cost effective? Examples of successful SEBs can be found at http://ashoka.org/impact. They include a company called Childline, which has provided direct assistance to more than 26,000 street children in Mumbai, India. Another company has helped cut rural electricity costs for over 1 million people in Brazil. This innovation has spread to 23 countries worldwide. A third example Martin Fisher started a company called KickStart. He and his colleagues have invented low-cost, human-powered irrigation pumps and other simple moneymaking tools, coupled with a sustainable and replicable supply-chain model that enables subsistence farmers to use the equipment to become self-reliant entrepreneurs. This process is transforming the lives of hundreds of thousands of poor Africans by enabling them to double or triple their annual net family incomes.