Social Entrepreneurship Changing the Way Social Workers Do Business

8/20/2019 Social Entrepreneurship Changing the Way Social Workers Do Business

1/18

Full Terms & Conditions of access and use can be found athttp://www.tandfonline.com/action/journalInformation?journalCode=wasw20

Download by: [36.84.224.252] Date: 04 March 2016, At: 10:33

Administration in Social Work

ISSN: 0364-3107 (Print) 1544-4376 (Online) Journal homepage: http://www.tandfonline.com/loi/wasw20

Social Entrepreneurship: Changing the Way SocialWorkers Do Business

Andrew J. Germak & Karun K. Singh

To cite this article: Andrew J. Germak & Karun K. Singh (2009) Social Entrepreneurship:

Changing the Way Social Workers Do Business, Administration in Social Work, 34:1, 79-95, DOI:10.1080/03643100903432974

To link to this article: http://dx.doi.org/10.1080/03643100903432974

Published online: 07 Jan 2010.

Submit your article to this journal

Article views: 4957

View related articles

Citing articles: 19 View citing articles

http://www.tandfonline.com/doi/citedby/10.1080/03643100903432974#tabModulehttp://www.tandfonline.com/doi/citedby/10.1080/03643100903432974#tabModulehttp://www.tandfonline.com/doi/mlt/10.1080/03643100903432974http://www.tandfonline.com/doi/mlt/10.1080/03643100903432974http://www.tandfonline.com/action/authorSubmission?journalCode=wasw20&page=instructionshttp://www.tandfonline.com/action/authorSubmission?journalCode=wasw20&page=instructionshttp://dx.doi.org/10.1080/03643100903432974http://www.tandfonline.com/action/showCitFormats?doi=10.1080/03643100903432974http://www.tandfonline.com/loi/wasw20http://www.tandfonline.com/action/journalInformation?journalCode=wasw20


2/18

79

Administration in Social Work , 34:79–95, 2010Copyright © Taylor & Francis Group, LLCISSN: 0364-3107 print/1544-4376 onlineDOI: 10.1080/03643100903432974

WASW 0364-31071544-4376 Administration in Social Work, Vol. 34, No. 1, November 2009: pp. 0–0 Administration in Social Work

Social Entrepreneurship: Changing the WaySocial Workers Do Business

Social Entrepreneurship A. J. Germak and K. K. Singh

ANDREW J. GERMAK Mental Health Association of Morris County, Inc., Mountain Lakes, New Jersey, USA

KARUN K. SINGH Hunter College School of Social Work, New York, New York, USA

Social workers are among the best prepared professionals to

respond to the world’s social problems. However, in the current realm of forward-looking, functional solutions to society’s social ills, social workers are not easy to find. This paper makes the argu-

ment that given the tremendous need for solutions to today’s pressing social challenges, it is time for social workers to stand up and embrace much of the straightforward business sense found in

social entrepreneurship, a hybrid of social work macro practice principles and business innovation activities. To address this issue,

the paper examines the imperative for social workers to explore and engage in social entrepreneurship. Ethical considerations concerning practice are discussed and a few examples of social entrepreneurship are described. Finally, the article ends with some

recommendations for educating social workers and conducting future research in this emerging area of inquiry.

KEYWORDS business, ethics, innovation, nonprofit organizations,

social entrepreneurship

INTRODUCTION

On November 13, 2006, The New York Times published a special sectionentitled “Giving,” which discussed recent trends in philanthropy andhighlighted several cutting-edge social programs that have emerged around

Address correspondence to Karun K. Singh, Hunter School of Social Work, 129 East 79th

Street, New York, NY 10075, USA. E-mail: [email protected]


3/18

80 A. J. Germak and K. K. Singh

the world. The cover story profiled several individuals and business organi-zations—Jeffrey Skoll, Stephen Case, Pierre Omidyar, Richard Branson,Bono, Ted Turner, The Acumen Fund, and Google—dedicated to riddingthe world of its multitude of social problems (Strom, 2006). In this lead article

and the subsequent 42 pages of reports regarding groundbreaking socialservice work, there was not one reference to social workers and theircontributions. Undoubtedly, social work professionals are some of theindividuals best prepared to respond to the world’s social problems. Despitetheir training, however, in the current realm of forward-looking, functionalsolutions to complex societal challenges, social workers are not easy to findin the solution mix of societal problem solving.

Given the tremendous need for creative solutions to today’s complexsocial problems, we assert the case that it is time for social workers to standup and embrace the straightforward business sense found in social entrepre-

neurship, essentially a hybrid phenomenon of social work macro practiceprinciples and business innovation activities. Many social workers arealready exposed to the business sector by virtue of their working innonprofit environments. Encompassing nearly 1.6 million organizations andhaving an aggregate budget of approximately $820 billion, the nonprofitsector in the United States is a robust socio-economic influence (Bain &Company, 2006). Not only is the nonprofit industry sizeable and growing,but also it operates in an increasingly competitive marketplace in whichnonprofit administrators routinely vie for limited funds (Salamon, 1999).Social workers and the agencies that they manage sit squarely in the midstof this competition. As responsible social work professionals, we would beremiss not to mind our own business and join the ever-increasing ranks of social entrepreneurs.

Embracing the practice of social entrepreneurship involves changingthe way social workers do business. This paper will explore the burgeoningpractice of social entrepreneurship, channeling arguments concerning thenonprofit sector as a whole to the field of social work. Consequently, we will frequently view the field of social work through a business-compatiblelens. For instance, this paper will examine practices such as making a profit

in a nonprofit social service agency or the idea of social workers earningsignificant incomes, which might make some social workers uneasy. How-ever, the concepts that we will discuss here are highly relevant to the futureof the social work field and, when executed ethically, stand to greatly enhance the quality of services provided to clients (Bent-Goodley, 2002;Gray, Healy, & Crofts, 2003).

Before analyzing the practice of social entrepreneurship and itsrelevance to social work practice, it is necessary to clarify some of therelated terminology, which is often different from that found in traditionalsocial work literature. According to Mosher-Williams (2006), there is no

commonly accepted definition of what social entrepreneurship is and how


4/18

Social Entrepreneurship 81

it may be distinguished from companion terms such as social enterprise,nonprofit entrepreneurship, and venture philanthropy. To obtain some clarity, we looked at several definitions. First, social entrepreneurship is broadly defined as the programmatic and fiscal innovation associated with realizing

social change (Harding, 2004; Roberts & Woods, 2005). Dart (2004a)supposes that nonprofit agencies that embrace social entrepreneurshipoperate in a much more businesslike fashion than do straightforwardnonprofits. Likewise, Brewster (2006) illustrates that social entrepreneurshiplooks vastly different from traditional fundraising and development.

Despite the different conceptualizations, we discovered that the coreconcept is always identical: Social entrepreneurship comprises innovativeideas for social change executed utilizing sound business strategies andskills. Ultimately, we selected Paul Light’s (2006) working definition of asocial entrepreneur to frame the basis for this article. Light describes a social

entrepreneur as “an individual, group, network, organization, or alliance of organizations that seeks sustainable, large-scale change through pattern-breaking ideas in what or how governments, nonprofits, and businesses doto address significant social problems” (p. 50).

A central purpose of this paper is to sensitize social workers to thecontinuing funding crisis in the nonprofit sector coupled with the increasingdemand for services among clients, and to subsequently view some aspectsof social work practice as akin to a commercial business. In reality,nonprofit agency-based social work is an enterprise more similar to for-profit business endeavor than many administrators can understand or wouldlike to believe (Tuckman, 2004). Moreover, according to Jaskyte (2004), dueto increased competition for funding it is now essential that human serviceleaders foster business innovation by embracing an entrepreneurial mindsetand transforming the cultures of their organizations to establish sustainability of services. In short, when those in the mainstream discuss new strategiesfor social change, social workers should be part of that discussion andshould be ready to lead the path toward transformation. To enable a bettercomprehension of the context and evolution of social entrepreneurship, wenow begin with a brief history of the growth and development of this

phenomenon.

SOCIAL ENTREPRENEURSHIP: A RESULT OF EVOLVED ATTITUDES AND POLICIES

According to Dees and Anderson (2003) and LeRoux (2005), enterprisingbehavior in the nonprofit sector, especially the drive to earn income ratherthan simply to receive it, is a result of the changing nature of charitable giving.The change is due mainly to the ever-growing threat of more competition

for increasingly scarce funds, as well as more demands for professionally


5/18


prepared proposals requiring accountability for the financial metrics,program milestones, and revenue and service targets. Additionally, sometheorists attribute the advent of entrepreneurial activity among nonprofits tothe rise of conservative American policies since the mid-1970s in which the

federal government has sought to decrease welfare spending and shift theresponsibility for social welfare funding to the nonprofits themselves or toinduce for-profit alternatives, such as privatized social services (Abramovitz,2004; Gibelman & Demone, 2002). Political arguments aside, whatever thedrive toward social entrepreneurship, it is now a viable, functional, andincreasingly popular alternative to traditional operating funding models inthe nonprofit sector.

To further illustrate the rise of social entrepreneurship from a policy perspective, it is necessary to examine the income tax policies surroundingcharitable donations. First, according to the Internal Revenue Service of the

United States (2006), a nonprofit corporation serving certain public needsmay meet the definition of a charitable organization under section 501(c)(3)of the tax code. With this status, a nonprofit organization is exempt frompaying federal and state income taxes, and can accept charitable donationsfrom individuals, groups, and corporations, the dollar amount of which canbe itemized as deductions on the donors’ federal and state income taxreturns (Hopkins, 1988). Therefore, due to the nature of the Americanincome tax system, 501(c)(3)s have been funded historically throughgovernment grants and contracts, charitable donations, and a variety of other funding sources that contribute smaller amounts (usually less than30% of the overall budget). The table below, adapted from Singh (2005, p. 75),displays the different types of revenue streams utilized by 501(c)(3)nonprofit human service organizations to diversify their funding portfoliosand to support their operations.

At first glance, this tax exemption scenario appears to be a win-winsituation in which both the grantor and the grantee benefit. However, asReich (2005) explains, some less desirable grantees, such as inner-city schoolsystems, often are shortchanged by donors focused on more attractive charitiessuch as art museums or cancer research centers. To illustrate this phenomenon,

in a study of nonprofit performance in the city of Seattle, Richter (2006)describes how the city has one of the highest densities of nonprofit organi-zations in the nation, yet its metropolitan area ranks as one of the nation’s worst performers in quality of hospital care, nursing home care, and publiceducation. Clearly, the charitable donations paradigm described above isnot functioning properly in Seattle when the very organizations designed tohelp disenfranchised populations are not doing so in an equitable fashion.

Conversely, proponents of the classic donor model of philanthropy purport that the government must devise schemes such as tax-deductibledonations to encourage charitable giving from wealthy individuals and

groups (Raymond, 2004). A common belief is that without the allure of tax


6/18


breaks, many people and organizations might not donate, thereby leavingcharitable organizations in the lurch for funding. Essentially, advocates of philanthropy’s status quo believe that charity is a selfish endeavor, revolvingonly around the desire for tax breaks, and that such attitudes must bereinforced for the nonprofit sector to flourish (Harford, 2006). Yet, Tierney

(2006) mitigates such an extreme viewpoint by embracing a so-calledcompassionate capitalism, in which those with the means to donate to charity do so with a sincere interest in making the world a better place in additionto a desire for tax deductions.

Although nonprofit organizations undoubtedly benefit from philan-thropy by means of charitable donations—and donors subsequently benefitfrom tax deductions—Gummer (2001) explains that most charitable dona-tions are slated for specific programs within a nonprofit agency and not foroperating or overhead costs (commonly referred to as general operating or

capacity building expenses). Consequently, an enterprising and innovativenonprofit agency can greatly benefit from generating revenue that is lessconnected to specific program initiatives (Young, 2004). Such revenue iscommonly referred to as unrestricted earned income and the desire for suchincome in an agency’s overall fiscal portfolio is a good starting point forthose interested in social entrepreneurship (Dees, Emerson, & Economy,2002; Skloot, 1988).

In addition, according to Smith and Lipsky (1993), when an agency isable to rely more heavily on unrestricted funds as opposed to frequently restricted charitable donations or government contract revenue, there is

typically more opportunity to develop programs that truly meet clients’

TABLE 1 Different Types of Funding Sources for NonprofitHuman Service Organizations

Fee-For-Service Income*Government Grants and Contracts*Individual Donations*FoundationsSpecial EventsInvestment Income

Workplace GivingCorporationsRentProduct SalesBequestsEndowment IncomeUnrelated Business IncomeInternet Fundraising

*These types of funding sources typically contribute individually

30% or more to the total of an agency’s annual operating budget.


7/18


needs and wants. For example, if an executive director determines througha needs assessment and market research that his or her agency’s adultclients need and want substance abuse treatment, the executive has anobligation to attempt to meet such a demand for services if it falls within the

agency’s mission. If neither a foundation grant nor a government contract isavailable, the executive director should consider an alternative such as amerger with an outside clinic, development of a fee-for-service clinic withinthe agency, or perhaps an unrelated business idea, launched to merely generate revenue, some of which would be funneled back into the operatingbudget of the substance abuse clinic. These types of enterprising ideasencompass the essence of social entrepreneurship.

Although the benefits of starting new ventures are indeed significant,social entrepreneurial endeavors are subject to certain regulations that mustbe understood and followed. For instance, according to Brinckerhoff (2000),

there is no regulation against nonprofit organizations earning a profit (usually referred to as a surplus in the nonprofit arena); however, commercial activity unrelated to an agency’s mission could incur Unrelated Business Income Tax(UBIT). Watson (2006) explains that the allowance for UBIT is currently $10,000, meaning that if a social service agency generates income greater than$10,000 in a given year from selling mission-unrelated goods or services, theagency must pay taxes on that income and the Internal Revenue Service may ask that agency to furnish financial statements certifying that no more thanone-third of its total revenue has come from unrelated business. If an agency continually generates more than one-third of its revenue from unrelatedcommercial activity, it could lose its 501(c)(3) tax-exempt status. If UBITsounds complicated, it is, and therefore its details fall far beyond the scope of this paper. As a result, it is likely that some social work administrators avoiddeveloping unrelated businesses due to the very complexity of the taxsituation. However, unrelated business is a viable option for diversifyingrevenue in a nonprofit organization and administrators can easily overcomethis hurdle by seeking professional tax advice (Brewster, 2006; Watson, 2006).

Finally, as nonprofits begin looking more like for-profit firms, it isadvised that such agencies pay attention to corporate governance and

accountability regulations. For instance, the Public Company AccountingReform and Investor Protection Act of 2002, commonly known as Sarbanes-Oxley , is a set of regulations passed by the United States Congress that setsstandards for corporate governance among publicly traded companies. Mostprovisions of this act do not pertain to nonprofit corporations. However,given the increasing scrutiny of American companies and recent scandalsinvolving both nonprofit (United Way, American Red Cross) and for-profit(Enron, Tyco, WorldCom) corporations, it would behoove enterprising non-profits to follow such standards for corporate governance and accountability to the extent possible, especially as nonprofits venture toward profit-making

activities (Jackson & Fogarty, 2005).


8/18


ETHICAL CONSIDERATIONS FOR SOCIAL WORKERS PRACTICINGSOCIAL ENTREPRENEURSHIP

In addition to the above caveats regarding legal and regulatory concerns,

social work professionals desiring to become social entrepreneurs must pay attention to ethical considerations affecting their practice. Social work is aprofession governed by ethics and values; therefore, any social workerpracticing social entrepreneurship must abide by the Code of Ethics of theNational Association of Social Workers (NASW, 1999). The ethical dilemmasinitially encountered by the practice of social entrepreneurship involve thefollowing ethical standards as presented in the NASW Code of Ethics(NASW, 1999): (a) commitment to clients and (b) payment for services.Indeed, as the field of social entrepreneurship grows and more social workerspartake in enterprising activities, more ethical dilemmas will most definitely

arise and need to be resolved.First, according to the NASW Code of Ethics (NASW, 1999), a client’s

interests must be of primary concern to a social worker. However, social work administrators need to respond to many stakeholders in addition toclients such as funding sources, government regulatory agencies, the media,and so forth. According to Gummer (1997), the NASW Code of Ethics, in itsethical standard involving commitment to clients, focuses incompletely onrelations between practitioner and client. Gummer explains, “The notionthat the social agency is responsible primarily to clients is both unrealisticand undesirable” (p. 143).

Given the complexity of social work administration, social work entre-preneurs must make a sincere effort to balance their commitments to clientsand to external stakeholders simultaneously. Using the example regardingsubstance abuse treatment mentioned previously, if the administrator wereto lose focus on the market demand for services and improperly forecastfuture revenues, the clients would perhaps be well served in the short term,but the enterprise would probably need to be shut down in the long termdue to inadequate fiscal foresight on the part of the executive—an ethicalimpropriety of enormous scale. In essence, social workers practicing social

entrepreneurship will continuously face an ethical dilemma regardingcommitment to clients: There is no way to avoid an administrator’s responsi-bilities to the myriad of stakeholders in both the internal and externalenvironments. To address this dilemma in social enterprises, it would beprudent to establish a committee to periodically review the social entrepre-neur’s adherence to his or her commitment to clients because without suchcommitment, albeit a balanced one, the entrepreneur loses sight of the

social aspect of social entrepreneurship.In addition to commitment to clients, payment for services is a second

ethical dilemma encountered by social workers involved in social entrepre-

neurship. On the one hand, Masi (1992) suggests that there is no good reason


9/18


why social workers cannot work in for-profit, proprietary settings or behaveentrepreneurially, compensating themselves accordingly for innovativepractice. In fact, other helping professionals such as physicians typically donot have qualms about charging market-rate fees to patients with the ability

to pay. Such professionals are usually compensated accordingly. Likewise,social workers should not necessarily take a vow of poverty even thoughthey frequently work with populations stricken by poverty. Arguably, a for-profit mentality, such as higher compensation levels for social workers orbonus schemes, could attract more talent to the field and bolster the moraleof those already practicing at marginally acceptable income levels (Giffords,2000; Guo, 2006).

On the other hand, Egan and Kadushin (1999) and Kurzman (1976)rightly assert that social workers not only have the responsibility to serveclients who can pay for services, but also to accommodate those clients

perhaps so marginalized that they may not have any health insurance coverage,let alone money, to pay for social work services. Further, as the NASW (1998) adeptly argues, social workers must never let the desire for increasedcompensation steer their judgment concerning which clients to serve.

Essentially, social workers must treat all clients fairly. For example, if social workers in a hospital setting receive a monetary bonus for treatingclients with third-party insurance, these social workers cannot discriminateagainst clients with Medicaid, for instance. Froelich (1999) describes such adiscriminatory practice as creaming, which can have longstanding negativeeffects on the well-being of the client population. A solution to such apredicament would be to set aside ample time to see Medicaid-insuredclients each day, regardless of how many profitable clients may be present.In a sense, this would be an affirmative action type of policy for social work. Such a mentality will be increasingly important as social workersembark on social entrepreneurship initiatives, and entrepreneurial managers will face the imperative to instill such values in their employees.

It is important to recognize that as a social worker bound by the NASW Code of Ethics, one must advocate for clients for whom no one else advocates.If one is organized at work, there will be many opportunities to work with

clients tied to increased compensation and, in addition, with clients who donot have the ability to pay. Ultimately, administrators must strive to balancecommitments to clients with commitments to external stakeholders, includingfunding sources. This creates an additional ethical task for entrepreneurialsocial workers. According to Kurzman (2000), social workers operating inindustries outside of traditional social work must not only abide by theNASW Code of Ethics, but also establish a “normative discipline of morality that underscores the principles of advocacy and equity” (p. 160).

One final note regarding ethics: It is imperative that social work admin-istrators maintain a practical perspective regarding ethical dilemmas and the

reality of their agencies’ external environments. As Ayers, Mindel, Robinson,


10/18


and Wright (1981) point out, after all ethical dilemmas have been considered,human service administrators must view fees for service as essential to thesurvival of their agencies. This study was published in 1981. It would be atremendous understatement to imply that earned income, such as client

fees, is more essential today to the sustainability of social service agencies when, in fact, the practice of charging client fees has been a commonly accepted practice for over two decades.

SOCIAL ENTREPRENEURSHIP: CURRENT PRACTICE

Hitherto, our discussion of the potential benefits of social entrepreneurshiphas been mainly academic. In this section, we will expand upon our previousintroduction of social entrepreneurship by moving on to a discussion of

current practices of social entrepreneurs and providing some examples of this exploding phenomenon. Due to the decreased availability of governmentgrants and the earmarked nature of charitable donations, social entrepre-neurs typically begin their work by developing non-traditional avenues forgenerating sufficient revenue to run social programs so that they canultimately provide quality services for clients. According to Froelich (1999)and Anderson, Dees, and Emerson (2002), such revenue diversificationstrategies in a nonprofit organization might include development of mission-related businesses, commercial activity unrelated to an agency’smission, mergers with other nonprofits, partnerships with venture philan-thropists, and so forth. In fact, Weisbrod (1998) posits that of all revenuestreams available to nonprofit organizations, revenue from commercialactivity is the most useful to an agency’s mission due to its unrestrictednature, and therefore such income should become more utilized by non-profits seeking to sustain their services.

Further, it is argued that as commercial activity increases in a nonprofit,the more its leadership must embrace common business principles (Firstenberg,1986). The most common business principle understood by social entrepre-neurs involves the classic economic theory of supply and demand. Simply

stated, price is in equilibrium (optimal) when the quantity of a product orservice offered equals the price someone is willing to pay for the product orservice (Samuelson & Marks, 2003). In social work settings, this theory canbe applied by first determining the total capacity of a service, then examiningthe client utilization rate. The higher the utilization rate, the closer a serviceis to being in equilibrium. However, according to Brinckerhoff (2000),practitioners too often create programs based on what they think clientsneed instead of services in which they are willing to partake. Thus,programs endure for years (the supply part of the theory) without regard forthe actual demand . How often do social work managers perform market

research to determine whether a true market demand exists for the services


11/18


they provide? On the contrary, Bornstein (2004) argues that successful socialentrepreneurs listen closely to what people want and respond with optimal

programs that address their specific demands.One example of an entrepreneurial social program developed to

address a market demand is Grameen Bank. The joint winners of the 2006Nobel Peace Prize, Muhammad Yunus and Grameen Bank, have success-fully addressed the demand for economic independence in Bangladesh by establishing a vast system of micro-credit. Since 1976, Yunus’ GrameenBank has made micro-loans—as little as $30 each—to economically disadvantaged Bangladeshis and, consequently, helped 5.3 million people buildcredit, support their families, construct homes, and move toward economicindependence. Historically, since few micro-loans have defaulted and thereexists an ever-increasing demand for such loans, Yunus has been able todevelop his bank to a point at which it both makes a profit and serves thepoor—a truly sustainable social enterprise (Norwegian Nobel Committee,2006). In addition, Sappenfield and Trumbull (2006) describe how Yunus,building on his success with Grameen Bank, is preparing to launchGrameen Phone, a partnership with a Norwegian mobile phone providerthat will bring solar-powered cellular phone service to some 260,000 villages in Bangladesh.

From this short profile of the work of Muhammad Yunus, one should

realize that social entrepreneurship, when successful, can alleviate certainsocial problems and potentially spawn other much needed enterprises.Essentially, the fiscal stability of a social enterprise and the availability of profits allow for business growth, which is not frequently seen in traditionalsocial work organizations. For instance, how many social workers ask them-selves, “If only we had funding for that service.” Social workers whoembrace social entrepreneurship can stop asking that question and beginrealizing the services they desire.

Another example of social entrepreneurship is the Institute for One- world Health, a nonprofit pharmaceutical company based in San Francisco,

founded and led by pharmacologist Victoria Hale. According to Day (2006),

TABLE 2 Examples of Social Entrepreneurship in Practice

Organization name Industry Key service

Grameen Bank Micro-credit Issues loans as small as $30 toeconomically disadvantaged people in

Bangladesh.Institute for Oneworld

HealthPharmaceuticals Redistributes surplus medications from

American pharmaceutical companies topeople living in poverty in Africa.

Google.Org VenturePhilanthropy

For-profit philanthropic arm of Googleinvesting in projects working in theareas of global development, globalpublic health, and climate change.


12/18


the institute’s mission is to supply much needed pharmaceuticals to resi-dents of poor countries, primarily in Africa. To meet its mission, OneworldHealth has collaborated with major pharmaceutical companies to obtainunused drugs, such as medicines that have not sold well in the United States

market, and to redistribute such drugs to sick residents of poor areas.Thus, by obtaining drugs as gifts-in-kind, Oneworld Health circumventsthe tremendous costs associated with research and development of pharma-ceuticals and meets its other funding needs through charitable donations,including gifts from the Bill and Melinda Gates Foundation. OneworldHealth is an example of a social enterprise that incorporates some tradi-tional philanthropy with entrepreneurial activity. Such a combination of oldand new methods of fundraising is an encouraging example of social entre-preneurship for social workers who might be intimidated by developing afull-scale enterprise subject to market economics and the potentially higher

levels of risk they entail.Finally, a novel practice available to social work administrators that is

gaining ground in the arena of social entrepreneurship is venture philan-thropy. Frumkin (2003) equates venture philanthropy in the nonprofit sectorto venture capital and private equity investing in the business world. Like- wise, Firstenberg (2003) explains how venture philanthropists make grantsto nonprofits in order to enhance the management capacity of a nonprofitas opposed to simply funding a program initiative. For example, a venturegrant will typically last five to seven years (similar to a venture capitalinvestment), during which time the venture philanthropist participates in apartnership with the grantee, advising its management and remaining fully invested in the success of the venture. Contrarily, a typical foundation grantlasts for one or two years and does not include much needed technical support.

It is essentially the notion of donor as investor that makes venturephilanthropy extremely different from traditional giving (Grace, 1997; 2002;Hodgkinson & Nelson, 2001). As investors, venture philanthropists are inter-ested in building management expertise so that the nonprofit agency (or thefor-profit social enterprise) can eventually sustain its operations withoutcontinued venture investment and can achieve a social return on investment

in the future as planned. The effectiveness of venture philanthropy has not yet been decisively determined; however, many business firms, includingGoogle, are establishing venture philanthropy divisions to invest in socialentrepreneurship (Hafner, 2006).

CRITICAL RESEARCH QUESTIONS FOR SOCIAL ENTREPRENEURS

The impact of social entrepreneurship has yet to be empirically proven. Although many entrepreneurial social programs exist such as those

described above, little is known about the success of social entrepreneurship


13/18


projects as compared to that of more traditional social work initiatives.Gibelman and Demone (2002) explain this predicament by citing the lack of available empirical data comparing nonprofits with for-profits, and the factthat some social service agencies operate on a hybrid model, engaging in

both for-profit and nonprofit practices. Thus, we leave our readers with animportant question to consider: Are social enterprises, some of which operateas for-profit ventures, more or less effective than traditional nonprofit socialservice programs?

In essence, much more research must be conducted to compare theeffectiveness of social entrepreneurship with that of traditional social servicemanagement interventions. Since business activities are becoming morecommon among nonprofits, such research will be important to the successfulcontinuation of enterprising activity. However, it is recommended thatresearch be jointly conducted by social workers and business professionals

because when conducted by each field independently, biases could emergethat could skew the conclusions. Moreover, when doing social entrepre-neurship research generally, it would be useful to heed the advice of Mosher-Williams (2006) to develop an evidence-based definition of socialentrepreneurship and a theory of social entrepreneurship for purposes of analysis, discussion, and generalizability of findings. While it goes beyondthe scope of this paper to supply the frameworks and methodologies foranswering these and other research questions (see Mosher-Williams, p. 8), we hope that we have provided a starting point for researchers to helpmove the nascent field of social entrepreneurship forward.

DISCUSSION

The practice of social entrepreneurship is not currently an area of interestand expertise for most social workers. Since social workers are wellpositioned for this type of work, this paper offers definitions of social entre-preneurship, explores current policies and practices, and explores the ethicaldilemmas that could arise through its practice. In addition, the paper further

illuminates the need for social workers to develop a set of competencies insocial entrepreneurship. It concludes by raising questions to lead futureresearch in the field.

Given the funding crisis in the nonprofit sector combined with theprofessional training and motivation of social workers to respond to socialproblems, we have reached an overarching conclusion: Social work admin-istrators must take more risks by embracing entrepreneurial endeavors intheir practice. In fact, according to Healy (2002), “If social workers are toachieve service outcomes consistent with their values, they must be conversant with the new public management discourses now shaping the field” (p.

529). Such field-shaping management discourses now involve applications


14/18


of business sector practices such as strategic planning, market research, andresponse to consumer demand. According to Wuenschel (2006), if Master’s-level social workers do not reclaim such discourse and establish themselvesas leaders in a changing environment, other professionals may lead social

work agencies in greater proportions, and the impact on the clients served would be a result of the values and ethics of professions other than social work.

A core concept that social workers should consider when implementingservices is that which Brinckerhoff (2000) so adeptly explains: Client need versus client demand. The understanding of market demand is so funda-mental to the success of a for-profit business, but it can also be explored ina social services context. What do our clients truly want? Is what we determinethat they need really what they want? In a sense, a client’s right to self-deter-mination is hampered by programs that dictate what a client needs. Questions

such as these can be more easily resolved in a social entrepreneurshipparadigm. When an organization is freed from dependence on governmentcontracts and earmarked charitable donations, the organization can respondto market demand and, in fact, develop services in response to whatconsumers are willing to pay for. Obviously, this is contrary to the mannerin which many nonprofit agencies have been established to operate. Still, asthe title of this paper suggests, social workers can change the way they dobusiness. There is ample room for experimentation in the nonprofit sector.Social entrepreneurship can be worth the effort and is potentially a goodmatch for social workers. At the very least, as Dart (2004b) explains, beingbusinesslike in the human services can result in new service delivery modelsthat would not have been established under traditional auspices. It is theresponsibility of professional social workers to experimentally test the effec-tiveness of such models to determine whether to continue them or to revertto traditional models.

RECOMMENDATIONS FOR THE ROAD AHEAD

We end this article with two major recommendations. First, to address thechanging environment of the nonprofit sector, schools of social workshould take a beacon role in educating social work students regarding thepractice of advanced management techniques. According to the Council onSocial Work Education (2001), the educational policy of schools of social work must promote “excellence, creativity, and innovation in social workeducation and practice” (p. 3). Excellence, creativity, and innovation are key components of social entrepreneurship, and there is no reason why social work educational institutions cannot incorporate such teaching into theircurricula. Healy (2002) states emphatically that social workers need more

training in management practices currently shaping the field of social work.


15/18


Both Wuenschel (2006) and Hoefer (2003) contend that the MSW degree isthe most appropriate qualification for leaders of human service organizations.However, they caution that unless social work schools enhance their man-agement curricula, individuals with MPA, MPH, or MBA degrees will begin

to dominate the leadership of the nonprofit sector.Second, it is highly recommended that empirical research be performedto determine the effectiveness of social enterprises as compared to that of more traditional nonprofit organizations. Again, schools of social workshould take the lead in these research efforts by supporting faculty anddoctoral students in related projects. Moreover, social work administratorsshould work collaboratively with entrepreneurs to research the effectivenessof their respective organizations. The ultimate goal of these investigations isto verify that client needs are truly being met in an effective and ethicalmanner.

In short, social entrepreneurship is an exciting new field in which theexpertise of social workers is undoubtedly helpful and appropriate. Beingbusinesslike should no longer connote a negative attribute of a social worker or a social service organization. Paradoxically, business acumenappears increasingly to be a necessary quality in a dynamic marketplace of increased competition and shifting demands for social work services.

REFERENCES

Abramovitz, M. (2004). Saving capitalism from itself. New England Journal of Public Policy, 20 (1), 21–31.

Anderson, B. B., Dees, J. G., & Emerson, J. (2002). Developing viable earnedincome strategies. In J. G. Dees, J. Emerson, & P. Economy (Eds.), Strategictools for social entrepreneurs: Enhancing the performance of your enterprising

nonprofit (pp. 191–233). New York: John Wiley & Sons. Ayers, G. W., Mindel, C. H., Robinson, L., & Wright, J. (1981). Fees in a human

service agency: Why do clients pay? Social Work, 26 (3), 245–248.Bain & Company (2006). Bain & Company’s nonprofit & public sector snapshot .

Retrieved November 8, 2006, from http://www.bain.com/bainweb/consulting_

expertise/industries_detail.asp?IndID=11Bent-Goodley, T. B. (2002). Defining and conceptualizing social entrepreneurship. Journal of Social Work Education, 38 (2), 291–302.

Bornstein, D. (2004). How to change the world: Social entrepreneurs and the power of new ideas . New York: Oxford University Press.

Brewster, R. (2006). Social enterprise: Introducing earned income ventures into your nonprofit organization. [Lecture at Baruch College’s School of Public Affairs,October 12, 2006].

Brinckerhoff, P. C. (2000). Social entrepreneurship: The art of mission-based venture development . New York: John Wiley & Sons.

Council on Social Work Education. (2001). Educational policy and accreditation

standards . Washington, DC: Author.


16/18


Dart, R. (2004a). The legitimacy of social enterprise. Nonprofit Leadership & Management, 14 (4), 411–424.

Dart, R. (2004b). Being business-like in a nonprofit organization: A grounded andinductive typology. Nonprofit and Voluntary Sector Quarterly, 33(2), 290–310.

Day, P. (2006). Young, gifted and not for profit . Retrieved May 22, 2006, from theBBC Web site: http://newsvote.bbc.co.uk/mpapps/pagetools/print/news.bbc.co.uk/1/hi/business/4939642

Dees, J. G., & Anderson, B. B. (2003). Sector-bending: Blurring lines betweennonprofit and for-profit. Society, 40 (4), 16–27.

Dees, J. G., Emerson, J., & Economy, P. (Eds.). (2002). Strategic tools for social entrepreneurs: Enhancing the performance of your enterprising nonprofit . New

York: John Wiley & Sons.Egan, M., & Kadushin, G. (1999). The social worker in the emerging field of home care:

Professional activities and ethical concerns. Health & Social Work, 24 (1), 43–55.Firstenberg, P. B. (1986). Managing for profit in the nonprofit world . New York:

The Foundation Center.Firstenberg, P. B. (2003). Philanthropy’s challenge: Building nonprofit capacity

through venture grantmaking . New York: The Foundation Center.Froelich, K. A. (1999). Diversification of revenue strategies: Evolving resource

dependence in nonprofit organizations. In J. S. Ott (Ed.), Understanding nonprofit organizations: Governance, leadership, and management (pp. 182–194).Boulder, CO: Westview Press.

Frumkin, P. (2003). Inside venture philanthropy. Society, 40 (4), 7–15.Gibelman, M., & Demone, H. W. (2002). The commercialization of health and

human services: Natural phenomenon or cause for concern? Families in Society,83(4), 387–397.

Giffords, E. D. (2000). A study of employee commitment in public, not-for-profitand proprietary social service organizations. Dissertation Abstracts Interna-tional, 61(03), AAT9965250.

Grace, K. S. (1997). Beyond fundraising: New strategies for nonprofit innovationand investment . New York: John Wiley & Sons.

Grace, K. S. (2002). Treating your donors as investors. In J. G. Dees, J. Emerson, &P. Economy (Eds.), Strategic tools for social entrepreneurs: Enhancing the per-

formance of your enterprising nonprofit (pp. 117–139). New York: John Wiley & Sons.

Gray, M., Healy, K., & Crofts, P. (2003). Social enterprise: Is it the business of social

work? Australian Social Work, 56 (2), 141–154.Gummer, B. (1997). Is the code of ethics as applicable to agency executives as it is

to direct service providers? No. In E. Gambrill & R. Pruger (Eds.), Controversial issues in social work ethics, values, and obligations (pp. 143–150). Boston: Allynand Bacon.

Gummer, B. (2001). Innovate or die: The necessity for change in contemporary organizations. Administration in Social Work, 25 (3), 65–84.

Guo, B. (2006). The marketization of human service nonprofits: Charity at risk? Dissertation Abstracts International, 66 (10), AAT3191288.

Hafner, K. (2006, September 13). Philanthropy Google’s way: Not the usual. The New York Times , p. A1.


17/18


Harding, R. (2004). Social enterprise: The new economic engine. Business Strategy Review, 15 (4), 39–43.

Harford, T. (2006). Charity is selfish. Retrieved October 22, 2006, from Slate’s Website: http://www.slate.com/toolbar.aspx?action=print&id=2151244

Healy, K. (2002). Managing human services in a market environment: What role forsocial workers? British Journal of Social Work, 32 (5), 527–540.

Hodgkinson, V. A., & Nelson, K. E. (2001). Major issues facing America’s nonprofitsector. The Nonprofit Review, 1(2), 113–118.

Hoefer, R. (2003). Administrative skills and degrees: The “best place” debate rageson. Administration in Social Work, 27 (1), 25–46.

Hopkins, B. R. (1988). The legal context of nonprofit enterprise. In E. Skloot (Ed.),The nonprofit entrepreneur: Creating ventures to earn income (pp. 11–25).New York: The Foundation Center.

Internal Revenue Service of the United States. (2006). Internal Revenue Code,Section 501. Retrieved October 6, 2006, from Lexis/Nexis database.

Jackson, P. M., & Fogarty, T. E. (2005). Sarbanes-Oxley for nonprofits: A guide to gaining competitive advantage . Hoboken, NJ: John Wiley & Sons.

Jaskyte, K. (2004). Transformational leadership, organizational culture, and innova-tiveness in nonprofit organizations. Nonprofit Management & Leadership,15 (2), 153–168.

Kurzman, P. A. (1976). Private practice as a social work function. Social Work,21(5), 363–369.

Kurzman, P. A. (2000). Bakalinsky’s conundrum: Should social workers practice inthe world of work? Administration in Social Work, 23(3/4), 157–161.

LeRoux, K. M. (2005). What drives nonprofit entrepreneurship? A look at budgettrends of metro Detroit social service agencies. American Review of Public

Administration, 35 (4), 350–362.Light, P. C. (2006). Reshaping social entrepreneurship. Stanford Social Innovation

Review, 4 (3), 47–51.Masi, D. A. (1992). Should social workers work for for-profit firms? Yes. In E. Gambrill

& R. Pruger (Eds.), Controversial issues in social work (pp. 28–30). Boston: Allynand Bacon.

Mosher-Williams, R. (Ed.). (2006). Research on social entrepreneurship: Understand-ing and contributing to an emerging field . Indiana: ARNOVA.

National Association of Social Workers (1999). NASW’s code of ethics . RetrievedOctober 25, 2006, from http://www.ncsss.cua.edu/Docs/NASWCodeofEth-

ics.pdf National Association of Social Workers (1998). Current controversies in social work

ethics: Case examples . Washington, DC: NASW Press.Norwegian Nobel Committee (2006). Norwegian Nobel Committee’s 2006 Nobel

Peace Prize Announcement (2006). Retrieved October 22, 2006, from the NobelPrize Web site: http://www.nobelprize.org/nobel_prizes/peace/laureates/2006/press.html

Raymond, S. U. (2004). The future of philanthropy: Economics, ethics, and manage-ment . New York: John Wiley & Sons.

Reich, R. (2005). A failure of philanthropy: American charity shortchanges the poor, andpublic policy is partly to blame. Stanford Social Innovation Review, 3(4), 24–33.


18/18


Richter, M. (2006). Utopia aflame: The organizations established to save humanity are dying . Retrieved May 22, 2006, from The Stranger Web site: http://

www.thestranger.com/seattle/Content?oid=31985Roberts, D., & Woods, C. (2005). Changing the world on a shoestring: The concept

of social entrepreneurship. University of Auckland Business Review, 7 (1), 45–51.Salamon, L. M. (1999). America’s nonprofit sector: A primer . New York: The Foun-

dation Center.Samuelson, W. F., & Marks, S. G. (2003). Managerial economics . New York: John

Wiley & Sons.Sappenfield, M., & Trumbull, M. (2006). Big banks find little loans a Nobel winner,

too: The world of finance is realizing Muhammad Yunus’ idea is more than

mere charity – it is good business . Retrieved October 22, 2006, from the Chris-tian Science Monitor Web site: http://www.csmonitor.com/2006/1016/p01s03-

wogi.htmlSingh, K. K. (2005). The impact of strategic planning process variation on superior

organizational performance in nonprofit human service organizations provid-ing mental health services. Dissertation Abstracts International (UMI No.3174894).

Skloot, E. (1988). How to think about enterprise. In E. Skloot (Ed.), The nonprofit entrepreneur: Creating ventures to earn income (pp. 27–36). New York: TheFoundation Center.

Smith, S. R., & Lipsky, M. (1993). Dilemmas of management in nonprofit organiza-tions. In J. S. Ott (Ed.), Understanding nonprofit organizations: Governance,leadership, and management (pp. 256–266). Boulder, CO: Westview Press.

Strom, S. (2006, November 13). A fresh approach: What’s wrong with profit? The New York Times , p. F1.

Tierney, J. (2006, September 16). Capitalism with a heart. The New York Times ,p. A15.

Tuckman, H. P. (2004). Nonprofit commercial ventures and their funding agents’responses. In D. R. Young (Ed.), Effective economic decision-making by non-

profit organizations (pp. 121–147). New York: The Foundation Center. Watson, D. (2006). Social enterprise development: Is your nonprofit ready for an

entrepreneurial venture? [Lecture at New York University’s Stern School of Business, June 10, 2006].

Weisbrod, B. A. (1998). Commercialism and the road ahead. In J. S. Ott (Ed.),Understanding nonprofit organizations: Governance, leadership, and manage-

ment (pp. 231–238. Boulder, CO: Westview Press. Wuenschel, P. (2006). The diminishing role of social work administrators in social

service agencies: Issues for consideration. Administration in Social Work, 30 (4), 5–17.

Young, D. R. (2004). The seven insights of effective nonprofit economic decisionmaking. In D. R. Young (Ed.), Effective economic decision-making by nonprofit organizations (pp. 191–218). New York: The Foundation Center.

Documents

Social Entrepreneurship Changing the Way Social Workers Do Business