NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, May 29, 2012

We’re talking about success and social value. Today many people lump this in a special category: social entrepreneurship. We’re not sure exactly what that is, so we’re interested in learning more. As it turns out, so were two Tuck class of 2013 students, Christopher Halstedt and Brad Callow. This past spring they did an independent study Senior Associate Dean Bob Hansen and Gregg on exactly this topic. They set out to see if they could understand what exactly is social entrepreneurship and how it creates social value. Here are some excerpts from what they found:

We began this independent study with the mindset that we would target social entrepreneurs with for-profit practices (so-called Social Entrepreneurs). In exercise, this was much more difficult to achieve, as a lot of what nonprofits aim to accomplish comes solely from philanthropic influences. Of course we believe that successful nonprofits should think like for-profits and strategically position themselves for growth and scale; however, this mindset comes few and far between.

From our readings and anecdotal discussions, there were three key criteria we believe were essential. Though they were relatively simple, their respective impact on each nonprofit was and will continue to be significant:
• Is the idea worthwhile?
• Is it a good idea for the goal?
• Is there good execution and is it sustainable?

One learning experience from this independent study really revolved around the difficulty of measuring success in a nonprofit setting. We saw it time and time again, and the answer isn’t as simple as profitability, as each nonprofit has its own metrics for measurement of what makes for worthwhile outcomes. It was interesting to see that some nonprofits take a proactive approach in defining these measurements, while others had a tough time answering the basic question, what is your impact?