The false gospel of “social entrepreneurship”

Among the most popular recruiting pitches in the startup world today is the claim to be “mission-driven” and to be oriented towards “social impact.” This follows the lead of so many established tech companies, whose pretensions to “make the world a better place” ring so close to home that when skewered on HBO’s Silicon Valley, it’s hard to know who’s in on the joke. Throughout the tech world, “social impact investing” and “philanthropy” are some of the hottest new status brags for the upwardly ambitious.

When I first stepped into business school back in 2009, I was surprised to learn during orientation that more than a third of my classmates had cited a strong interest in “social entrepreneurship” as a part of their applications. At the time, I was puzzled why anyone would pursue an MBA to go into social entrepreneurship, which was a concept I only vaguely understood at the time. What I later learned was that almost none of them actually did. Nevertheless, social entrepreneurship programs are so popular that not only are they ubiquitous at prestigious business schools (and at those that aspire to be), but they are very prominent features in school marketing. This trend has only grown since I graduated. The landing page for Harvard Business School’s MBA program features a big splashy carousel advertising how its graduates are “Making a difference” in Southeast Asia and Africa. (70% of HBS grads last year went into management consulting, finance or tech, btw.)

It’s time to splash some cold water on this phenomenon. Some corrective is needed to counter both the gospel of “social entrepreneurship” as the most effective route of social change, as well as the usefulness of corporate partnership in the same.

The best of intentions

Most people, and certainly those who get involved in social entrepreneurship activities, have some issue(s) that they personally care a lot about: homelessness, drug addiction, at-risk youth, climate change, etc. What most of them quickly discover is that it can be extremely difficult to pair one’s career with working on that issue full-time. There just aren’t that many jobs available tackling the issue of homelessness, for example, and those that exist tend to be extremely low-paid. Trying to pursue a career in that field while living in a giant metro area with a high cost of living makes achieving a middle-class lifestyle almost impossible, as any number of idealistic young people in D.C. or NYC can attest.

(I lived this reality myself. When I arrived home from the Peace Corps and decided to continue my career in international development, I quickly discovered that not only was the competition for scut-work-level jobs in the NGO or development contractor sector intense, but they were mostly concentrated in Washington D.C. and paid around $35k/year with bad hours. In that field, what one is “supposed” to do is work in penury for a few years and then take on debt to get a graduate degree, which in theory qualifies you for one rung up the ladder. There are lots and lots of masters-degree holders working in “international development” jobs around the beltway carrying tens of thousands of dollars in student debt and earning $50k/year, and they’re the lucky ones. Not surprisingly, I decided not to do that. But I digress.)

Of course, “social entrepreneurship” often means trying something new – a different approach or strategy to a seemingly intractable social program. Sometimes, through a combination of smart strategy, incredibly hard work and a lot of luck, this new approach works. Legends like the Grameen Bank and the Acumen Fund both started this way.

But far more often, just like in the startup field, new approaches don’t work. Just like with a startup, founders who don’t have a lot of practical experience in their field of interest often don’t understand the fundamental issues that created the problem in the first place. This happens to particularly be true in charitable causes, which tend to attract many people on an emotional level who don’t always evaluate it on a rational basis, too. When you throw ego (and Africa) into the mix, naturally, things get even worse: think Kony 2012 or the “1 Million T-shirts for Africa” debacles.

“Social entrepreneurs” tend to be founders, not joiners. Even when, as is usually the case, there are existing organizations using standard approaches known to be effective at addressing one’s issue of choice, joining an incumbent organization goes against the gospel of “entrepreneurship.” This is why there are literally dozens of non-profits in every major city who claim to be “tackling homelessness,” and thousands of NGOs “feeding the hungry in Africa.” All of them craft broadly similar missions, compete with each other for beneficiaries to “serve,” and chase the same deep-pocketed donors for donations, all of which contribute to the infamous inefficiency and amateurism of the sector as a whole.

In fact, a tremendous amount of “social entrepreneurship” simply boils down to begging wealthy people for money. Begging for money is the sine qua non of the field that never makes it into glossy brochures on the topic. My guess is that if it did, fewer people would be interested.

Business as a driver of change

There is no doubt that business, capitalism, free enterprise, or whatever you want to call it, can be a tremendous driver of social change. One needs only to look at the economic history of societies where entrepreneurism has been allowed to flourish to see this in action. Since gradually embracing a market-based economy in the late ‘70s, China alone has lifted 800 million people out of grinding poverty, which in my book trumps almost every other criticism of the Chinese state.

But the notion that “business” can be neatly separated from public policy, and indeed politics itself, is downright silly. Flourishing enterprise, and indeed markets themselves, are the products of conditions that deliberate policy makes possible. The same is true of most broader social questions. Poverty, public health, education, housing and economic opportunity are really political issues that have political antecedents to their real-world effects.

Lots of businesses today touch upon these issues, but very few companies can truly say to have singlehandedly made a big difference in them. This is because big, difficult problems of social and economic justice like these are simply too big for a company, or even an industry, to address even if they wanted to. Google, YouTube and smartphones may have radically democratized access to knowledge (an enormous social benefit), but public schooling still operates pretty much as it did half a century ago. Moreover, that democratization has had the perverse effect of actually strengthening the credentializing grip of established educational institutions, instead of creating new ones.

Imagine one of our trillion-dollar companies, Apple or Amazon, attempting to take on the affordable housing crisis in most of America. Even with their innovative energy and deep resources, they would be highly unlikely to “succeed” (whatever that would even mean in this scenario). This is because the reasons for the housing crisis are systemic: a complex mess of legal restrictions, zoning regulations, voter attitudes and developer appetites, just to name a few. In other words, it’s fundamentally a political question, not a matter of finding the right product or “solution.” And only governments can squarely address political questions.

Governments are the ultimate provider of “scale.” Governments aren’t expected to generate profit or returns for investors, and are the only purpose-built mechanism for resolving the competing demands of different communities. Yet over the last few decades, socially-minded idealistic doers have gradually seemed to eschew politics and the public sector in lieu of pursuing “impact” through direct service (like social entrepreneurship). Meanwhile, conservatives have relentlessly pursued an agenda of dismantling the welfare and administrative state itself, making the case not that public interventions were ineffective, but just ideologically wrong.

This isn’t to say that non-profits, social entrepreneurship and even large companies can’t have “impact” – simply that it’s dwarfed by that which government itself wields. The fact is that working for the government (or running for office) holds nowhere near the brand value nor cultural cachet as “social entrepreneurship,” which needs to change. Unfortunately, this seems unlikely to improve anytime soon. Federal and state governments are quickly approaching a perfect storm: waves of retiring Boomers, draconian changes to government employee compensation, and of course, the toxic leadership brand of the White House’s current occupant.

The ability to pair your career with working on a social issue that’s important to you is a true gift, and is work worth doing. Yet it’s important to keep in mind that real and meaningful change is extremely difficult to realize without political action. Any “social impact” or “social entrepreneurship” program that neglects this aspect of creating change isn’t worth its salt, and is just trying to duck the hard work. The same goes for “mission-driven” corporate marketing. Repeat after me: it’s okay if your work doesn’t “make the world a better place.” There are lots of ways to serve your community outside of your job.


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