Satyarthi began his career in activism primarily through advocacy and organizing raids on companies, in the hope that he could raise awareness of child exploitation. These actors fall into two categories: customers, whose role is to shift the power balance and government, whose role is to alter the economics. In situations like this, we have observed, social entrepreneurs aim to transform the equilibrium by adding new actors to an existing system. Three groups of players-owners, labor brokers, and retailers-dominated the country’s handmade-rug industry, their interlocking interests perpetuating a particularly ugly equilibrium that benefited them by exploiting children. Social entrepreneurs add new actors to an existing system: customers and government.Ĭaptured by these middlemen, the children were sold to business owners who forced them to work 12 or more hours a day under brutal conditions, their small hands producing the handsome but inexpensive rugs retailers demanded. In the early 1980s the children’s rights activist Kailash Satyarthi, joint winner with Malala Yousafzai of the 2014 Nobel Peace Prize, saw that poor children were easy prey for labor brokers who recruited workers for a number of Indian industries, including carpet weaving. India’s handwoven-carpet industry offers a prime example of this dynamic. Social and economic problems often reflect an imbalance of power among the economic actors involved. In the following pages we’ll describe how representative entrepreneurs have successfully made these changes. In studying these leaders and their ventures, we have found that they all focus on changing two features of an existing system-the economic actors involved and the enabling technology applied-to create sustainable financial models that can permanently shift the social and economic equilibrium for their targeted beneficiaries. More than 100 social entrepreneurs representing 91 organizations have received Skoll awards to date. Each year the foundation confers the Skoll Award for Social Entrepreneurship (SASE) on a small number of people. Over the past 15 years we have studied successful social entrepreneurs up close through our work for the Skoll Foundation, which was established in 1999 by the internet entrepreneur Jeffrey Skoll. What can social entrepreneurs do to increase their chances of achieving sustainability-and perhaps even profitability? We think we have an answer. As others around the world saw that it was actually possible to make a tidy profit lending to poor people, they adopted the Grameen model, vastly magnifying the impact of Yunus’s initial innovation. The experiment grew into the famed Grameen Bank, a financially sustainable social business serving disadvantaged Bangladeshis. In the late 1970s, for example, Muhammad Yunus secured funding to conduct an experiment in which very poor borrowers were given tiny loans. In some cases a social enterprise may even spawn a profitable business. To achieve sustainability, an enterprise’s costs should fall as the number of its beneficiaries rises, allowing the venture to reduce its dependence on philanthropic or governmental support as it grows. Otherwise the new socioeconomic equilibrium will require a constant flow of subsidies from taxpayers or charitable givers, which are difficult to guarantee indefinitely. The endeavor must also be financially sustainable. In Afghanistan, GoodWeave’s supply chain inspectors are all female, so they may enter the women’s quarters in homes, where most carpets are made. Today GoodWeave operates globally, and Kiva is on track to facilitate more than $1 billion in microloans within the next couple of years. And through the Kiva platform, Matt Flannery and Jessica Jackley enabled small-scale lenders in wealthy countries to lend to small-scale borrowers in poor countries. For example, the children’s rights activist Kailash Satyarthi realized that reaching ethically concerned consumers through Rugmark (now GoodWeave International) could help foil exploitative labor brokers in India’s carpet-weaving industry. In studying the winners of the Skoll Award for Social Entrepreneurship, the authors found that they all focus on changing two features of an existing system: the economic actors involved and the enabling technology applied. Grameen Bank is a famous example of a social venture that met both goals. But the endeavors should be financially sustainable, because there’s no guarantee that subsidies from taxpayers or charitable givers will continue indefinitely. Ventures in this realm are usually intended to benefit economically marginalized segments of society that can’t transform their prospects without help. Social entrepreneurship has emerged over the past several decades as a way to identify and bring about potentially transformative societal improvements.

Enterprise journal