Social entrepreneurs are gaining global recognition, with many corporations partnering with them to align their business goals with social impact. Social entrepreneurship uses entrepreneurial activities to tackle societal issues, especially where traditional models fall short.
Recent studies show that social enterprises represent a fundamental shift in how businesses address social problems. An estimated total of 10 million social enterprises worldwide account for approximately 3% of all businesses and contribute around 2% to the global Gross Domestic Product (GDP). They employ over 200 million people and generate about $2 trillion in revenue, nearly double that of the global advertising industry. Notably, India, China and the United States host the largest numbers of social enterprises.
India, with over two million social entrepreneurs, leads globally. These ventures improve marginalised communities’ lives through employment, education, health care, poverty alleviation, and sustainability. Recent reports indicate that India’s social sector grew 13% annually over last five years, making up 8.3% of GDP in FY2023 amounting to around $280 billion. While public spending remains the primary source of social expenditure, there has been a notable increase in corporate giving and moderate growth in corporate social responsibility (CSR) and high-net-worth individual (HNI) donations.
As we approach the 15th Annual Social Entrepreneurs of the Year (SEOY) Award in India — a collaborative effort between the Schwab Foundation for Social Entrepreneurship, a sister organization of the World Economic Forum (WEF), and the Jubilant Bhartia Foundation — it’s clear that this partnership has been instrumental in building a supportive community. This initiative not only showcases the impactful work of social entrepreneurs in India but also connects them with global corporates and potential donors through the WEF and Schwab Foundation network.
A recent Schwab Foundation report highlighted key areas that need attention to enable social enterprises thrive within their resource constraints. Some of the challenges which need to be tackled are:
Ease of doing social business:The “ease of doing business” mantra must be extended to social sector. A streamlined approach to regulations is essential. Implementing a single-window clearance system at both central and state levels would enhance the ease of operating in the social sector. Establishing a dedicated ministry or department or a point of reference in the government to oversee this initiative could significantly improve the business environment for social enterprises.
Robust framework at the state level: Social innovators working with state governments face various challenges, including procurement, finance, and regulatory requirements. A supportive state-level framework is crucial to facilitate effective implementation of social schemes. It is necessary to recognise social enterprises as distinct from non-profit organisations for meaningful engagement.
Access to capital: Social enterprises often struggle to attract traditional investors due to their focus on social and environmental impact rather than profit. Supportive regulatory frameworks, impact-focused incubators, accelerators, venture capitalists, innovative funding schemes, CSR funding, hassle free clean overseas contribution and competitive bank loans are essential. The Social Stock Exchange is a start, but more progress is needed.
Corporate partnerships: Corporations should integrate social procurement, market linkages, and CSR outreach programmes into their core strategies to drive social innovation and contribute to a more equitable, sustainable, and inclusive society.
Increased social procurement: For a supportive ecosystem, encourage public and private sector procurement from social enterprises to help reach larger audiences and ensure impactful spending.
Showcasing change agents: Integrating community-led solutions, social innovations, and prioritising diversity and inclusion can amplify social enterprises’ effectiveness as change agents. They should establish a forum to present their initiatives to the government and society.
Social return on investment: Social enterprises should ensure impact assessment as requisites to demonstrate accountability, depict resource utilisation and help to beneficiaries and investors. This would organically reinforce building trust and reliability towards social efforts.
Leveraging Artificial Intelligence (AI): To bridge structural gaps and scale their impact, social enterprises should adopt emerging technologies, particularly AI. Large corporations can play a crucial role by supporting the development of new solutions and enhancing efficiencies.
Retaining skilled workforce: Social enterprises’ encompass a multifaceted spectrum influencing grassroots to boardrooms, operating in rural and underserved areas. Offering competitive salaries compared to private sector is difficult and becomes a challenge in terms of retaining skilled talent. Meaningful secondment and employee internship from large corporates can help bridge this need.
Building a narrative: There is a need for greater recognition and understanding of social enterprises’ operational models and impact. Developing comprehensive communication and outreach strategies can help bridge the gap between social entrepreneurs and stakeholders such as consumers, investors, policymakers, and potential employees. Effective forum or a coalition of the social entrepreneurs is a must.
Social entrepreneurship is a global phenomenon with India offering a fertile ground for these ventures due to its significant social challenges and supportive ecosystem. Government initiatives are fostering innovative solutions. We need to strategically position social entrepreneurs to help India become a developed economy by 2047 and a net zero-carbon country by 2070. To advance this sector, we must build trust, provide support, and actively participate in its growth.
Ajay Khanna is strategic advisor, Jubilant Bhartia Group, and co-founder, Public Affairs Forum of India (PAFI). The views expressed are personal
