No, You Don’t Need to Start a Business

Michael Zakaras
Oct 16 · 7 min read

Reflections from Bill Drayton, architect of social entrepreneurship

I’ve spent a good deal of time over the last 15 years speaking with two groups of people: those who want to solve social problems and those who fund them to do so. From where I work within Ashoka (the world’s largest network of social entrepreneurs), these conversations are like glimpses into the future we want to live in. They are illuminating and uplifting.

But a recent trend — among both groups — has caught my attention: the unbridled enthusiasm for social enterprise and the power of markets in particular to solve humanity’s deepest challenges. I’ve witnessed the conversation about social innovation and social progress become dominated by a business-centric outlook that often conflates financial sustainability with impact and that devalues civil society and the public sector as permanent second fiddles to the private sector.

It’s a trend that I find troubling because it threatens to transform an important idea — that business has an obligation to both reduce social harm and create shared value — into a dogma that our collective salvation must come via markets. And perhaps even worse: that it is via the pursuit of financial return that human beings most reliably lift each other up.

So I decided to sit down with Bill Drayton, the founder of Ashoka who launched the field of social entrepreneurship almost 40 years ago now. I wanted to know: What does Bill think of all this? After all, he is the person who coined the term “social entrepreneur” in 1980 and who demonstrated just what is possible when you marry innovation and creativity with a relentless commitment to the good of all. So what was his take on our current moment, and was he as concerned as I was?

We spoke together this fall in his office in Arlington, VA.

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Bill, how do you explain what seems like our current obsession with social enterprise and “doing well while doing good”?

Every 7–10 years people become particularly enamored with this idea: “Wouldn’t it be cool to make money and do good at the same time? Brilliant!” This idea turns quickly contagious — in part because most of philanthropy comes from the world of business, which makes the idea not only familiar but a fit with that world’s sense of its own superiority.

Of course, business did start the “everyone a changemaker” revolution around 1700. It said: We will make anyone with a better idea — anyone –rich, happy and respected. That ended many centuries of stagnation in terms of per capita income. Civil society had to catch up, which we only started to do in the 80s. But pulling lessons from business and being a business aren’t the same thing.

Social enterprise is important. However, these periodic enthusiasms do damage. Suddenly, the amount of money available for social enterprise multiplies and multiplies. But the deal flow does not suddenly go up by 10- or 20-fold in a year. So organizations are encouraged to change into or at least seem to change into profitable businesses. Their supporters having become profit-seeking investors, what choice do they have? This typically ends badly. Returns plummet and no one wants to talk about the craze anymore. Remember “venture philanthropy”?

These waves distort the work of the citizen sector both by pulling organizations away from their purpose and what they are good at and by pulling people towards direct service and away from systems change. That’s because systems change takes a long time and is much less likely to be financially profitable than direct service.

Bill Drayton, Ashoka founder

Tell me more about direct service versus systems change because that seems like a critical distinction.

It’s the difference between giving a fish or teaching a person how to fish versus changing how the fishing industry works in the first place. It is relevant to this conversation because we simply don’t have enough resources flowing into our sector toward systems and mindset change, and today’s enthusiasm for social enterprise is very direct service-focused. This is a huge investment inefficiency. Why this bias? It’s a lot easier to understand and make investments in new wells or clinics than in changing a society’s framework when it comes to gender equity, for example. Few business investors would have any idea where to start.

What is somewhat mystifying, though, is that the business sector has developed a subset of investors who look for pattern changes and who know what it requires — including patience and of course creative entrepreneurship. We need more such sophisticated investors in the social sector who see and understand this deeply.

One of things we hear so often is that nonprofits are at an inherent disadvantage because their dependence on grantmaking makes them less effective and ultimately unsustainable. Is that also a reason for the strong preference today for social enterprise?

First, as you know, I’ve never liked the language of “nonprofit” — labeling this work by what it’s not. Doing so seems like we’re apologizing right out of the gate. We use “citizen sector” and “citizen organizations” because caring and organizing makes one a citizen and also because the work recruits and empowers many other citizens to become changemakers.

Second, grants aren’t inherently unsustainable. There are so many institutions — from your local church to the League of Conservation Voters — that have a devoted group of people who give, and who give reliably. Every gift comes with a quid pro quo. I give to the League because our inaction on climate change drives me crazy and because they are a very competent group that will do what I don’t have time to do. I’m telling them with my gift: Please go and do this. That’s just as sustainable as the transaction when I buy a pair of socks. (And don’t forget: socks don’t just sell themselves. Think of how much money goes into advertising, packaging, retail.) Moreover, roughly half the income of U.S. citizen organizations come from fee-for-service charges, although that’s not enough to make such groups profits they can give to investors.

You coined the term “social entrepreneur” decades ago now. Do you think “entrepreneur” still throws people off because when they hear it they immediately think: business?

Perhaps. But one of Ashoka’s early contributions was challenging the notion that business had a monopoly on entrepreneurship. The truth is that entrepreneurial qualities exist in people, regardless of the type of institution they lead. Entrepreneurship is legal model agnostic. And it’s still quite rare: most business people aren’t entrepreneurs just as most social workers aren’t either. True entrepreneurs have a big systems-change idea that they will pursue for however long is necessary until it becomes the new reality. This is what drives them, much more so than money.

Social entrepreneurs in particular are driven from deep within to serve the good of all — and therefore so is their work. It is therefore critical that the sources of support not contradict that central compass setting.

Whether it’s business or social entrepreneurs, all of us need to learn quickly how to work together in a profoundly new reality. The rate of change and the degree and extent of interconnection have been increasing exponentially for three centuries now. Carbon burned anywhere changes the climate everywhere. We need to break past all the old structures and institutions. We need to be asking ourselves how do we live and work together as our species becomes, in effect, a single brain-like organism. How do we ensure that every person has the abilities to thrive in this new reality, where value is defined by contributing to and adapting to change? That is, how do we help everyone become a changemaker and gain the foundational skill of cognitive empathy, which we all must master and practice from early childhood on, as the foundational ability?

I’m glad you say this because I’ve often thought that the obsession with social enterprise and business models put too much emphasis on the how and not enough on the why. But when you emphasize empathy and “the good of all” aren’t you talking about values first?

The prophets and the scientists alike tell us that our happiness, health, and longevity come from giving to others. Everyone wants to express love and respect in action, and it’s our job to make that easier, starting with young people. We’re in a massive transition moment where perhaps half the world sees the necessity of an “everyone a changemaker” reality and are happily engaged in it.

However, the other half are not — and they are falling further behind every year as the “game” accelerates and as those in the game help one another get better and better at it. This has created what we call “the new inequality.” It drives income inequality (there is a bidding war for those with these abilities and disappearing demand for those who lack them). It fuels the poisonous “us-versus-them” politics spreading rapidly across the globe. The new inequality is cruel and destructive. Ending it is a values question, yes. Even more, so is ensuring that everyone has the life-giving ability to express love and respect in action. Imagine what it’s like not to have that gift.

A New Game

Ideas for a world in which everyone contributes

Michael Zakaras

Written by

Michael Zakaras works at Ashoka and loves to write about social entrepreneurship, politics, empathy, and more.

A New Game

Ideas for a world in which everyone contributes

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