“Social Enterprise” and “Social Impact” Confuse Me.

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I always found it curious, and mildly offensive, when well-meaning peers in school would speak so enthusiastically about basket-weavers in Uganda, using the term ‘social enterprise’.

It felt at times condescending and paternalistic – it’s not a real business, because a “black woman in Africa” is doing it.

Sometimes it felt irresponsible – TOMS shoes may capture far more value than they create. And they may even hurt the very communities they purport to help.

But most of all, it’s confusing. “scalable impact” is what you’re measuring, right? Isn’t Wal-Mart creating vastly more economic opportunity and access to goods and services than that basket-weaver, or that whole network of basket weavers? (I don’t think Wal-Mart is a social enterprise by any definition, but using the extreme case to make the point.)

In the United States, economic inequality today is at its greatest level in the modern era, Spain has an unemployment rate hovering around 20%, and Nigeria and Venezuela have seen 300% increases in GDP per capita over the last decade. Is a feature phone-based gaming company started by a Kenyan for East Africa a social enterprise, but Lyft not? The macroeconomic shifts brought about by the unequal recovery of the USA and EU coupled with the inexorable rise of China, Africa, and Latin America suggests that the idea of classifying businesses’ social impact racially, geographically, or even structurally, is more and more complex; it is perhaps folly.

Bill Gates said, in reference to Google Loon a project whose goal would be to provide internet services, delivered by balloon, across the far-flug remote corners of the world, “When you’re dying of malaria, I suppose you’ll look up and see that balloon, and I’m not sure how it’ll help you.” It sparked a conversation on the internet about whether or not the social impact companies like Google and Twitter were manifesting through their work was indeed social impact. I think it was a healthy debate, and I’m torn on the issue, to be honest. It speaks to the confounding nature of social impact. What actually does make the world better?

I love what B Lab is doing to standardize the class of businesses that are focused on improving people’s lives, with ethos’ that are aspirational about society, because it starts to tell a story about enterprise, without infantilizing, being self-satisfied, and defining terms in a way that is rigorous (no one would argue that Patagonia, Etsy, or Warby Parker aren’t real businesses).

The question I hope I’m leaving you with: what type of business makes the world better? Why? At Collaborative Fund, we wrestle with this all the time, and I’m sure – well, I’m hopeful – many funds and businesspeople more generally are having this debate internally, among their leadership. The piece of the pie devoted to non-profit organizations around the world is tiny. If we’re going to vibrate goodness into the world, all hands need to be on deck, business hands especially.

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