Field Study: United States

In late July 2015, after seven months of research and discovery of the European social enterprise landscape, and its supporters, I was headed for the US. Located in Virginia, I built up a solid home base to work as a freelancer (I recently launched my professional website!) and take research trips to social enterprise hubs along the East Coast.

Before we dive into the field visits that – so far – have taken me to Washington, D.C. , New York City and New Orleans, I was curious to find out what academia and practitioners had to say about social entrepreneurship in the States.

What the academics say

I love reading up on academic findings in this field. The peer-review process and emphasis on scientifically sound methods shields findings from subjectivity; there is some neutrality and quality to the findings. With that said, I was surprised to find very little published work on social entrepreneurship in the US. The main papers I am referring to stem from 2010 and 2006.

Doeringer (2010) argues that social enterprise in the US “reflects a focus on generating income for organizations that provide services typically thought of as being provided by the nonprofit sector” (p. 292), while the European concept focuses more on tackling the issue of chronic structural unemployment. Doeringer’s work very much discusses social entrepreneurship through the lens of law; he highlights the role and distinction of the nonprofit sector so if you are interested in learning more about that, I recommend his work!

Similarly, Kerlin (2006) focuses on the distinction between social enterprise in the US versus Europe and claims that “much of the practice of social enterprise in the United States, termed as social enterprise, remains focused on revenue generation by nonprofit organizations” resulting in nonprofit social enterprise, nonprofit enterprise, nonprofit ventures, and enterprising nonprofits (p. 248).  According to Kerlin, the European understanding is rooted in the for-profit sector through “firms who seek to enhance the social impact of their productive activities.” (p. 249). The author sheds light on the role of cooperatives and the work of EMES – a research network of universities with a focus on social enterprise, social entrepreneurship, social economy, solidarity economy and social innovation. They are a good resource if you are interested in learning more about social entrepreneurship in Europe – which – however – is not the purpose of this introduction to social enterprise in the United States. But hey, knock yourselves out!

All in all, academic research of social enterprise in the U.S. very much relies on a comparison to Europe. The sources I consulted had me sort through pages and more pages of historic developments. If that’s what you’re into, that’s great but a word of warning: having interviewed more than 25 support organizations in Europe, I just don’t see any of these findings reflected in the current world of social enterprise in Europe, which makes me doubt the validity of U.S. findings. I don’t  mean to discredit anyone’s research, but let’s say I have my reservations.

Practitioner Insights

Similarly to the academic universe, I had a hard time digging up any up-to-date research on social enterprise in the U.S. in practitioners circles. The most extensive resource I could find is Social Enterprise: A Portrait of the Field by Community Wealth Ventures, Social Enterprise Alliance and Case at Duke from 2010. Here are the delicious bits from their report that surveyed 400 social entrepreneurs in 2009:

  • Main sectors social entrepreneurs are active in:
    1. workforce development
    2. housing
    3. community & economic development
    4. education, and
    5. health
  • Workforce:
    1. 41.7% of social enterprise have one to five employees
    2. 12% have more than 100.
  • Most common social enterprise types:
    1. education & training institutions
    2. retail & thrift shops
    3. consulting
    4. food service & catering
    5. arts-oriented ventures
Social Enterprise: A Portrait of the Field, p. 10

Social Enterprise: A Portrait of the Field, p. 10

  • Income:
    1. 34% of social enterprises in the US reported an earned income of more than one million dollars
    2. 25% quoted less than $100,000
  • Biggest challenges social entrepreneurs in the US face:
    1. sales & marketing (27%)
    2. financial issues (23%)
    3. human resources (13.8%)
    4. operations (11.9%)
  • Greatest support needs were rooted in a lack of technical assistance and training in
    1. business plan development (51%)
    2. introductory training to social entrepreneurship (48%)
    3. market research and analysis (45%)
    4. accessing capital (42%)

The authors argue that the biggest challenges in growing the sectors lie in the areas of funding and finances, lack of seminars and training, as well as changes in legislation. All in all, it seems to require a cross-sector effort from the investment community, support organizations and advocacy groups/legislators. It is not the most current report, but I really recommend it if you want to dig a little deeper into U.S.-American social enterprises!

Social Enterprise: A Portrait of the Field, p. 7

Social Enterprise: A Portrait of the Field, p. 7

If you are looking for more recent data, check out Ben Thomley’s The Facts on Social Enterprise in the US in Huffington Post Impact from 2012. Be aware that the links don’t direct to the data source he mentions but the general website of Social Enterprise Alliance.

In 2014, Michael Belinsky argued in Stanford Social Innovation Review that three developments had influenced the sector in the previous year. Foundations were able to make a new type of investment well suited to social entrepreneurs: Program-related investments are similar to grants with the difference of having to be repaid. Corporate forms such as Benefit Corporation (adopted by 31 States as of February 2016) and L3Cs – low-profit limited liability companies. Thirdly, in 2013 Social Impact Bonds made an entry to the US. Often referred to as a Pay For Success model, which offers a more output-oriented financing models to social entrepreneurs. I asked Michael for an update but haven’t heard back yet.

Even though not a detailed insight, I hope this got your mouth watering! As I am based in the united States for now, this section will not be as consistent as the European field visits. I will throw learnings and insights from trips to other countries in, so make sure to use the tags in the right sidebar to navigate!
Let’s dive in and see what social enterprise support looks like in the United States!    

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