Social enterprises have been dubbed as a new breed of business models that advance social change. These models have social purpose imbedded in their DNA and strive to become sustainable. For India, a country with many living under the poverty line, social enterprises have emerged to bring change. Yet according to Krishna Tanuku, Executive Director of Wadhwani Center for Entrepreneurship Development at the Indian School for Business, there are impediments that discourage such entrepreneurial culture in India.
One such impediment lies in capital markets. The mechanisms for mobilizing and monitoring funds towards developmental initiatives are not well developed in India. Bain & Company reports that there is “lack of accountability” and “low awareness of channels for routing money” from high net worth individuals. Without a proper platform for facilitating the flow of funds in the development sector, many genuine and high-performing organizations are left scrambling for funds.
The second is government policy. There needs to be legislation that acknowledges social enterprises who integrate social performance in their mission. Legislation similar to benefit corporations in the U.S. and other schemes such as the UK’s Social Impact Bond will give India’s social enterprises a framework to flourish.
Finally, education needs to play a role in breeding entrepreneurs for the social economy. Social entrepreneurs need to be equipped with an empathetic understanding of societal issues, a mindset of collaboratively creating shared value, a capability to “do more with less for more”, and embedded principles of ethical responsibility and stewardship.
Tanuku concludes that to successfully engage social entrepreneurs requires a critical look at the current frameworks of policy, financing, education, innovation, and governance.