All over the world, social entrepreneurs are making a difference. Their businesses tackle poverty, social injustice, health inequalities and climate change. But while their aspirations are admirable, money is often scarce. So they need to be creative in finding funds.
Social entrepreneurs need a broad understanding of capital. By this, I don’t just mean money. Those who draw on social, cultural, environmental, human, symbolic, and spiritual capital, as well as cash, stand a better chance of success. Let’s take a closer look at each type of capital in more detail.
1. Social capital. Social capital is trust between business people, the kind that otherwise exists within a family or community. Social entrepreneurs can create this trust by building formal and informal networks such as self-help groups and professional associations. Such groups have a stronger collective voice than individual businesses, and can use each other’s resources to meet mutual goals. This a winning strategy because it is reciprocal. If one person helps another, the other person may repay their debt of gratitude by helping others.
However, when resources are offered based on trust, honesty becomes especially important. Greed or opportunism could cause the network to break down, and the social enterprise to fail. So relationships are a vital part of a social entrepreneur’s income, and should be valued as such.
2. Cultural capital. Cultural capital includes assets like a person’s education, qualifications, skills, interests, and social and cultural background. These can unlock useful resources. For example, a social entrepreneur could meet a potential benefactor in an art gallery. If both people have a genuine interest in art, their conversation could lead to friendship and support. A social entrepreneur should be well-versed in the culture of the people they wish to do business with.
3. Environmental capital. To reduce running costs, it pays to consider environmental capital. A social entrepreneur should find out what resources exist already, by walking around their community. Taking stock of environmental resources in this way can save a lot of money. For example, when looking for an event space for an activity, a natural resource such as an open field could be a free alternative to renting a facility.
Every community, even the financially poorer ones, may have assets that can be used for social good. For example, a disused government building could become a social enterprise headquarters, which is what happened in Nigeria with Youth for Technology, a non-profit organisation.
4. Human capital. Human capital is a business word for ‘people’. People are what makes any social enterprise. However, these resources are sometimes wasted. In many European countries, a significant number of people of working age can’t find work, while various public works are non-existent or in a state of disrepair. Here lies an excellent opportunity for social enterprises to develop projects that could make the most of human capital.
The unemployed could volunteer to work in not-for-profit organisations where they could learn new skills for free, so they would be ready when a skilled job presents itself. This is what Dorothy Stoneman did in East Harlem, New York, which had high youth unemployment and hundreds of abandoned buildings. She set up a construction business, YouthBuild, to hire young people and get the empty houses back in use.
5. Symbolic capital. When a celebrity supports a social enterprise by rallying people to support a project in cash or kind, symbolic capital is at play. One example is the Hollywood actor Hugh Jackman, whose chain of coffee shops supports fairly paid work for farmers in Ethiopia; another is celebrity chef Jamie Oliver’s ‘Fifteen’ restaurant chain, which has trained young people to become chefs.
6. Spiritual capital. Spiritual capital is when religion is used to transform society for the better. When social entrepreneurs work with religious institutions, they can access a range of valuable resources, such as buildings, equipment, and potential volunteers who adhere to that faith.
A British Council survey found that social entrepreneurs in Ghana singled out religious institutions as especially supportive partners to their business development agendas. Religious organisations tend to have deep roots in communities, and a track record of mobilising people to do charitable and community development work.
7. Economic capital. Finally, there’s economic capital. Money should not be used just because it is available to spend. A better approach is to use money as a last resort. This practice saves social entrepreneurs a considerable amount of money.
Lacking funds is not the end of your social enterprise. It is an opportunity to tap into other forms of capital. Doing so will help you increase your impact and run a more sustainable enterprise.