Shopping for a cause

Art brokers that use abandoned office buildings as their galleries; a winery that started moving bottles after promising to donate part of its proceeds to breast cancer research; Bono’s highly publicized (PRODUCT)RED line, which has licensed to multinational corporations like Gap, Apple and Motorola: all of these have become accepted examples of social entrepreneurship.

While most people think of nonprofits, like the United Way, Red Cross or local children’s hospitals, as social entrepreneurship, the social sector is increasingly embracing commercial enterprises as exemplary ventures.

Since 2003, Cleveland’s Civic Innovation Lab has given $1 million to 37 companies and entrepreneurs to seed their social businesses. These ventures all have a component that will contribute directly to social welfare. However, funded companies, which include the art broker example above, as well as a beautification company that plants flowers with money from corporate sponsors, must be potentially successful for-profit ventures.

The idea that making money (or as many would justify, improving the economy) is not at odds with socially conscious ventures is not entirely new. Civic Innovation Lab borrowed its model, in part, from the 28-year-old Ashoka organization, which seeds social entrepreneurs, promotes group enterprises and networking, and builds infrastructure aimed at making businesses successful. In 2006, Ashoka had 160 employees working in 60 countries on a $30 million budget.

Ashoka, the Civic Innovation Lab and similar organizations are well positioned to raise funding for their efforts. The social component each funded company makes investments more acceptable, often allowing for contributions from nonprofit foundations. Ashoka received part of its funding from the Knight Foundation.

Yet, the effort is not without critics. Advertising Age alleged that companies licensing the (PRODUCT)RED name spent more than $100 million advertising their associated gear and donated only $18 million to the (PRODUCT)RED charity. Surely, nonprofits waste millions of dollars of corporate and personal donations on individual salaries and unsuccessful projects, but much of the contributed money goes directly to aid those in need.

While the new face of social entrepreneurship has opponents, its innovation could drive greater availability of funding for the organizations that need it most, as well as recognition that economic growth has tremendous social benefits.