Executive Summary: Despite the promise of an increasingly educated population of young people, youth bulge generates pressure on education

systems, labor markets, health care, natural resources and infrastructure. In this context, and with constrained public and private resources, traditional development frameworks are proving inadequate and are in need of transformation. Within the complex ecosystem of domestic governments, international donors, private businesses and individual philanthropists, the emerging model of social entrepreneurship offers potential as being one model to address the multi-sectoral challenges young people face.

This report draws on existing literature to focus on four central principles of social entrepreneurship:

Achievement of positive social impact: Social entrepreneurship responds to communities that have been marginalized or excluded by existing market actors and non-market institutions;

Non-conventional thinking: Social entrepreneurship aims for what Joseph Schumpeter called creative destruction, a revolutionary transformation of a pattern of production which is often associated with entrepreneurship at large but, in the case of social entrepreneurship, are applied to social challenges;

Use of sustainable methods: Social entrepreneurship must include a strategy for achieving financial sustainability, such as earning income; and,

Innovation that can be adapted and scaled up beyond the local context: It is by pioneering ideas that can be applied at a larger scale that social entrepreneurship is able to contribute to systemic and path-breaking change.

Social entrepreneurship often requires more than one individual to achieve impact and, often, a dedicated organization through which to carry out its work. The social enterprise is an organization with a clear social mission and a strategy that combines resourcefulness and innovation, which allow it to be financially sustainable. Social enterprises can assume a variety of legal and organizational models, but generally can be divided into four categories:

Leveraged nonprofits capitalize on the interest of a variety of stakeholders to operate and to secure ongoing support based on a diversified portfolio of funding. Enterprising nonprofits have a self-financing component contributing to the organizations sustainability.

Hybrid enterprises combine aspects of the for-profit and nonprofit legal models, either through an innovative legal structure or by using a for-profit subsidiary to support the social activities of the nonprofit.

Social businesses are those that can demonstrate market-level financial performance and competitiveness while expressing an equal or greater commitment to a social aim. Several trends in the region point to the important role that social entrepreneurship can play in capitalizing on the youth bulge, including an increased sense of social commitment expressed by a growing youth population, the incremental yet increasing ease of doing business in many of the countries, and the growing strategic orientation that is being adopted by the regions philanthropic donors. Together, these represent promising trends for social entrepreneurs seeking talent and capital to start their own enterprises. Yet only with a conducive institutional

The idea of .social entrepreneurship has struck a responsive chord. It is a phrase well suited to our times. It combines the passion of a social mission with an image of business-like discipline, innovation, and determination commonly associated with, for instance, the high-tech pioneers of Silicon Valley. The time is certainly ripe for entrepreneurial approaches to social problems. Many governmental and philanthropic efforts have fallen far short of our expectations. Major social sector institutions are often viewed as inefficient, ineffective, and unresponsive. Social entrepreneurs are needed to develop new models for a new century.

The language of social entrepreneurship may be new, but the phenomenon is not. We have always had social entrepreneurs, even if we did not call them that. They originally built many of the institutions we now take for granted. However, the new name is important in that it implies a blurring of sector boundaries. In addition to innovative not-for-profit ventures, social entrepreneurship can include social purpose business ventures, such as for-profit community development banks, and hybrid organizations mixing not-for-profit and for-profit elements, such as homeless shelters that start businesses to train and employ their residents. The new language helps to broaden the playing field. Social entrepreneurs look for the most effective methods of serving their social missions. Though the concept of .social entrepreneurship. is gaining popularity, it means different things to different people. This can be confusing. Many associate social entrepreneurship exclusively with not-forprofit organizations starting for-profit or earned-income ventures. Others use it to describe anyone who starts a not-for-profit organization. Still others use it to refer to business owners who integrate social responsibility into their operations. What does .social entrepreneurship. really mean? What does it take to be a social entrepreneur? To answer these questions, we should start by looking into the roots of the term entrepreneur.

Origins of the Word .Entrepreneur. In common parlance, being an entrepreneur is associated with starting a business, but this is a very loose application of a term that has a rich history and a much more significant meaning. The term entrepreneur originated in French economics as early as the 17th and 18th centuries. In French, it means someone who undertakes, not an .undertaker. in the sense of a funeral director, but someone who undertakes a significant project or activity. More specifically, it came to be used to identify the venturesome individuals who stimulated economic progress by finding new and better ways of doing things. The French economist most commonly credited with giving the term this particular meaning is Jean Baptiste Say. Writing around the turn of the 19th century, Say put it this way, .The entrepreneur shifts economic

resources out of an area of lower and into an area of higher productivity and greater yield.. Entrepreneurs create value. In the 20th century, the economist most closely associated with the term was Joseph Schumpeter. He described entrepreneurs as the innovators who drive the .creative-destructive. process of capitalism. In his words, .the function of entrepreneurs is to reform or revolutionize the pattern of production. They can do this in many ways: .by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by opening up a new source of supply of materials or a new outlet for products, by reorganizing an industry and so on Schumpeter.s entrepreneurs are the change agents in the economy. By serving new markets or creating new ways of doing things, they move the economy forward. It is true that many of the entrepreneurs that Say and Schumpeter have in mind serve their function by starting new, profit-seeking business ventures, but starting a business is not the essence of entrepreneurship. Though other economists may have used the term with various nuances, the Say-Schumpeter tradition that identifies entrepreneurs as the catalysts and innovators behind economic progress has served as the foundation for the contemporary use of this concept.

Defining Social Entrepreneurship

Any definition of social entrepreneurship should reflect the need for a substitute for the market discipline that works for business entrepreneurs. We cannot assume that market discipline will automatically weed out social ventures that are not effectively and efficiently utilizing resources. The following definition combines an emphasis on discipline and accountability with the notions of value creation taken from Say, innovation and change agents from Schumpeter, pursuit of opportunity from Drucker, and resourcefulness from Stevenson. In brief, this definition can be stated as follows:

Social entrepreneurs play the role of change agents in the social sector, by:

Adopting a mission to create and sustain social value (not just private value), Recognizing and relentlessly pursuing new opportunities to serve that mission, Engaging in a process of continuous innovation, adaptation, and learning, Acting boldly without being limited by resources currently in hand, and Exhibiting heightened accountability to the constituencies served and for the outcomes created.

This is clearly an idealized definition. Social sector leaders will exemplify these characteristics in different ways and to different degrees. The closer a person gets to satisfying all these conditions, the more that person fits the model of a social entrepreneur. Those who are more innovative in their work and who create more significant social improvements will naturally be seen as more entrepreneurial. Those who are truly Schumpeterian will reform or revolutionize their industries. Each element in this brief definition deserves some further elaboration. Lets consider each one in turn. Change agents in the social sector: Social entrepreneurs are reformers and revolutionaries, as described by Schumpeter, but with a social mission. They make fundamental changes in the way things are done in the social sector. Their visions are bold. They attack the underlying causes of problems, rather than simply treating symptoms. They often reduce needs rather than just meeting them. They seek to create systemic changes and sustainable improvements. Though they may act locally, their actions have the potential to stimulate global improvements in their chosen arenas, whether that is education, health care, economic development, the environment, the arts, or any other social field.

Adopting a mission to create and sustain social value: This is the core of what distinguishes social entrepreneurs from business entrepreneurs even from socially responsible businesses. For a social entrepreneur, the social mission is fundamental. This is a mission of social improvement that cannot be reduced to creating private benefits (financial returns or consumption benefits) for individuals. Making a profit, creating wealth, or serving the desires of customers may be part of the model, but these are means to a social end, not the end in itself. Profit is not the gauge of value creation; nor is customer satisfaction; social impact is the gauge. Social entrepreneurs look for a long-term social return on investment. Social entrepreneurs want more than a quick hit; they want to create lasting improvements. They think about sustaining the impact.

Recognizing and relentlessly pursuing new opportunities: Where others see problems, social entrepreneurs see opportunity. They are not simply driven by the perception of a social need or by their compassion, rather they have a vision of how to achieve improvement and they are determined to make their vision work. They are persistent. The models they develop and the approaches they take can, and often do, change, as the entrepreneurs learn about what works and what does not work. The key element is persistence combined with a willingness to make adjustments as one goes. Rather than giving up when an obstacle is encountered, entrepreneurs ask, .How can we surmount this obstacle? How can we make this work?

Engaging in a process of continuous innovation, adaptation, and learning: Entrepreneurs are innovative. They break new ground, develop new models, and pioneer new approaches. However, as Schumpeter notes, innovation can take many forms. It does not require inventing something wholly new; it can simply involve applying an existing idea in a new way or to a new situation. Entrepreneurs need not be inventors. They simply need to be creative in applying what others have invented. Their innovations may appear in how they structure their core programs or in how they assemble the resources and fund their work. On the funding side, social entrepreneurs look for innovative ways to assure that their ventures will have access to resources as long as they are creating social value. This willingness to innovate is part of the modus operandi of entrepreneurs. It is not just a one-time burst of creativity. It is a continuous process of exploring, learning, and improving. Of course, with innovation comes uncertainty and risk of failure. Entrepreneurs tend to have a high tolerance for ambiguity and learn how to manage risks for themselves and others. They treat failure of a project as a learning experience, not a personal tragedy.

Acting boldly without being limited by resources currently in hand: Social entrepreneurs do not let their own limited resources keep them from pursuing their visions. They are skilled at doing more with less and at attracting resources from others. They use scarce resources efficiently, and they leverage their limited resources by drawing in partners and collaborating with others. They explore all resource options, from pure philanthropy to the commercial methods of the business sector. They are not bound by sector norms or traditions. They develop resource strategies that are likely to support and reinforce their social missions. They take calculated risks and manage the downside, so as to reduce the harm that will result from failure. They understand the risk tolerances of their stakeholders and use this to spread the risk to those who are better prepared to accept it.

Exhibiting a heightened sense of accountability to the constituencies served and for the outcomes created: Because market discipline does not automatically weed out inefficient or ineffective social ventures, social entrepreneurs take steps to assure they are creating value. This means that they seek a sound understanding of the constituencies they are serving. They make sure they have correctly assessed the needs and values of the people they intend to serve and the communities in which they operate. In some cases, this requires close connections with those communities. They understand the expectations and values of their investors, including anyone who invests money, time, and/or expertise to help them. They seek to provide real social improvements to their beneficiaries and their communities, as well as attractive (social and/or financial) return to their investors.

Key Principles of Social Entrepreneurship

Over the past two decades, the concept of social entrepreneurship has increasingly entered public discourse. However, the concept is still, by nature, open to multiple interpretations. How much should social entrepreneurship focus on individuals versus organizations? How sustainable must the social entrepreneurs efforts be? What qualifies as positive social impact, and on what scale must this impact be achieved? Leaders in the field still differ in their responses to these questions. Many definitions of social entrepreneurship have been proposed, each of which emphasizes different elements of the phenomenon, such as pattern-breaking, systemic, or permanent social change; i entrepreneurial innovation; or financial sustainability. Instead of creating another definition in an already densely populated field, this report draws on existing literature to focus on four central principles of social entrepreneurship: Achievement of positive social impact: Social entrepreneurship responds to communities that have been marginalized or excluded by existing market actors and nonmarket institutions; Non-conventional thinking: Social entrepreneurship aims for what Joseph Schumpeter called creative destruction, a revolutionary transformation of a pattern of production that is often associated with entrepreneurship at large but, in the case of social entrepreneurship, is applied to social challenges; Use of sustainable methods: Social entrepreneurship must include a strategy for achieving financial sustainability, such as earning income; and, Innovation that can be adapted and scaled up beyond a particular local context: It is by pioneering ideas that can be applied at a larger scale that social entrepreneurship is able to contribute to systemic and path breaking change. From these principles, it follows that the social entrepreneur is innovative, resourceful, and results oriented, drawing on the best thinking in both the business and nonprofit worlds to develop strategies ii that maximize their social impact. The social entrepreneur is often regarded as possessing a unique set of characteristics. For example, Ashoka claims that it is looking for the Andrew Carnegies, Henry Fords, iii and Steve Jobses of the citizen sector. Organizations such as Ashoka, the Schwab Foundation for Social Entrepreneurship, and the Skoll Foundation have been on the leading edge of supporting social entrepreneurs and social entrepreneurship globally. Yet some argue that their focus on the distinctiveness of the social entrepreneur can be interpreted as overly exclusive and therefore deter iv potential social entrepreneurs. Thus, there is an active debate about whether social entrepreneurship is more about the individual or the organization (or team). On this question, cultureand the relative emphasis on the individual versus the groupmay play a role in how social entrepreneurship is interpreted and received. This report argues that the seeds for social entrepreneurship can be sowed in any context: an existing informal community group or network, a nonprofit organization, a for-profit company, or a government office. However, more often than not, social entrepreneurship requires more than one individual to have an impact and a dedicated organization through which to execute its activities. Thus, the social enterprise is an organization with a clear social mission and a strategy that combines resourcefulness and innovation, allowing it to be financially sustainable. Social entrepreneurship cannot succeed without social investment, or the financial resources required to achieve positive social change. Though the primary motivation for the social investor is to make a social impact, some include a minimum financial return in their definition of a social investment. For instance, the Monitor Institute defines investing for impact as actively placing capital in businesses and funds that generate social and/or environmental good and at v least return nominal principal to the investor (see figure) . This report defines social investors more broadly as those that can be seeking anywhere from pure social returns to a blend of social and financial returns.

SEGMENTS OF IMPACT INVESTORS

The Different Organizational Models of Social Enterprise Leveraged nonprofit: A leveraged nonprofit is one that does not have an income-earning strategy but has secured sustainable partnerships and funding to move beyond the traditional donor-dependent model.
Enterprising nonprofit: An enterprising nonprofit is a registered nonprofit organization with a strategy for earning a part or all of its income and thus recouping a part or all of its costs. Because they are less reliant on, or even completely independent from, subsidies and grants, these types of nonprofit social enterprises are able to afford greater innovation, creativity, and long-term planning. Hybrid enterprise: A hybrid enterprise combines aspects of the for-profit and nonprofit legal models, either through an innovative legal structure such as the low-profit, limited liability company (L3C) in the United States, or the community interest company (CIC) in the United Kingdom or by using a for-profit subsidiary to support the social activities of the nonprofit . Social business: A social enterprise that is a registered for-profit company is called a social business. Unlike traditional for-profit business, which is primarily profit-driven, the social business is primarily and explicitly driven by social objectives. Muhammad Yunus, the founder of Grameen Bank, defines social business as a company that is cause-driven rather than profit-driven and that can be called a non-loss, non-dividend business. It generates revenues from its products or services but, by Yunuss definition, all revenues are fed back into the business instead of being returned to its shareholders or investors as profit. There is some debate as to whether a full 100 percent of the revenues of a social business must be recycled, or whether a small share can be distributed and the enterprise can still be considered a social business. For the purpose of this report, we have adopted the position that a social business is one where at least 50 percent of revenues are reinvested in the enterprise.

Sources: For more on leveraged nonprofi ts, see: John Elkington and Pamela Hartigan, The Power of Unreasonable People: How Social Entrepreneurs Create Markets That Change the World (Harvard Business Press, 2008); and About the organizational models, Schwab Foundation for Social Entrepreneurship, http://www.schwabfound.org/sf/SocialEntrepreneurs/Profi les/Abouttheorganizationalmodels/index.htm. On enterprising nonprofi ts, see: J. Gregory Dees, Jed Emerson and Peter Economy, Enterprising Nonprofi ts: A Toolkit for Social Entrepreneurs (Hoboken, NJ: Wiley, 2001). On social businesses, see: Muhammad Yunus, Creating a World Without Poverty: Social Business and the Future of Capitalism (New York, NY: PublicAffairs, 2008), 22-24.

THE SPECTRUM OF SOCIAL ENTERPRISES (ARRANGED BY LEGAL FORM AND REVENUE SOURCE)

INTERNATIONALLY RECOGNIZED SOCIAL ENTREPRENEURS BY ENTERPRISE TYPE

Ecosystem for Social Entrepreneurship: Description of Main Components

Government: Government establishes the regulatory framework under which social enterprises operate. These include establishing legal organizational types, labor laws, tax policies, regulation of capital markets and the like. Beyond creating and enforcing this framework, the government can engage with social enterprises through publicprivate partnerships, contracting and outsourcing, or adopting social enterprise models within the government itself. Modes of governance, in general, not only shape the macro regulatory and policy environment, including market flexibilities or rigidities, but also the day-to-day incentives for businesses and NGOs. Corporate sector: The corporate sector offers the opportunity for partnerships critical to expanding the activities of social enterprises. Partnerships between corporations and social enterprises can help corporations see value in new markets, reposition their brands, and provide deeper engagement in solving social problems as a talent retention strategy. With the right level of awareness and tax and other incentives, the corporate sector can provide social enterprises, especially enterprising nonprofits, with in-kind and/or financial support. For a corporation that wishes to work with a for-profit social enterprise, there are rarely tax incentives; however, there are other forms of partnership whereby social enterprises can be included as suppliers in corporate sector value chains. Social enterprises can also provide the space for experimentation with new models that can later be adopted by corporations. Investors: Without individual investors and more organized social investment funds or networks, social entrepreneurs are not able to effectively grow their ideas. In the United States and other countries, social investment funds have a tax-exempt status under which their donors can claim tax write-offs. While angel and seed investors provide early-stage capital, social venture investment funds usually provide second-round funding for scaling up and are able to provide a range of funding options, including equity, debt, grants, or a combination. The ability of nonprofits to access social venture funds is limited; when available, they are usually only in grant form. For social businesses registered as for-profit, all financing options are normally open whether debt, equity, grant, or a combination. Intermediaries: These are organizations, support networks, or information providers that offer a variety of services connecting social entrepreneurs and enterprises with the capital and services they need to build their organizations. In the global social investment landscape, there is some overlap between investors and intermediaries, with a number of organizations providing a blend of financial investment and technical assistance. Intermediaries are needed to cut transaction costs and clarify risks to potential investors. International donors: International donorsincluding official bilateral and multilateral donors as well as philanthropic foundationswork with social enterprises (mostly nonprofit organizations) through grants. Social businesses have limited access to funding from philanthropic foundations or companies due to their inability to provide tax exemptions on donations in most cases. Generally, enterprising nonprofits are prohibited from using these funds to support commercial activity for sustainability and scalability or core funding. Education system: Educational institutions have several roles in a healthy social entrepreneurship ecosystem. They can create an environment for social entrepreneurs to be discovered and nourished by (i) exposing students to the needs of their local communities and (ii) ensuring skills development through community work and business planning exercises. These institutions also can create mechanisms for ongoing support to social enterprises by (i) encouraging professors and students to provide assistance to social enterprises through service learning and other mechanisms, and (ii) analyzing case studies and providing impact evaluation services. Finally, they can engage in research and development that benefit social enterprises in developing and improving products and services.
Source: Quote on partnerships between the corporate sector and social enterprises excerpted from: Schwab Foundations Global Agenda Council on Social Entrepreneurship, January 2010.

Social Entreprenuer in Pakistan

Organization

Sector

Akhuwat Acumen Fund ADORN-Artisans Development Online Retail Network

Microfinance [Donor/Network]

Description Empowers socially and economically marginalized families through interest-free microfinance, capacity building and social guidance Venture philanthropy organization and major investor in Pakistan

Entrepreneurship

Promotes products made by individual artisans and non-profit organizations Law firms that provides new entrepreneurs with inexpensive and efficient legal information and advice Dairy cooperative venture APF identifies and supports scalable socioeconomic initiatives by collaborating with partners on the ground in Pakistan, and by mobilizing intellectual and financial resources via the Pakistani-America diaspora towards these programs A low-cost housing development and management company that aims to scale affordable housing in the country

Altar Initiative AMAL

Entrepreneurship Agriculture

American Pakistan Foundation

Donor/Network

Ansaar Management Company (AMC) Association for the Development of Pakistan (ADP) Business & Life Skills School (BLISS) EcoEnergy Finance First Microinsurance Agency (FMIA)

Housing

[Donor/Network]

Volunteer-driven philanthropy organization

BLISS empowers adolescent girls in rural Pakistan through education and Education/Entrepreneurship entrepreneurship Energy Non-profit that provides renewable energy to the rural poor in Pakistan FMIA develops, markets and manages life and health insurance for low-income communities in Pakistan Social enterprise that provides housing insulation to low-income communities

Health

Ghonsla

Housing

Jassar Farms

Agriculture

Kashf Foundation

Microfinance

A dairy and breed improvement project working to increase the milk yields of cows in Pakistan Provides cost effective microfinance services to low income households, especially women, in order to enhance their economic role and decision-making capacity Prepares communities to support street children in a connection-based, community centric context A drip irrigation company that develops and provides products and services as poverty alleviation solutions to farmers in Pakistan's arid regions A not-for-profit social enterprise that provides micro health insurance to the urban poor Network of action-oriented people aiming to promote sustainability E-marketplace powered by SMS-to-Web software that provides job-match services and employee-employer networking between the working poor and elite Provides safe & clean drinking water to lowincome communities through a Reverse Osmosis and UV filtration process. A female embroidery collective that works mainly in Chitral Community-based non-profit organization that aims to empower youth in rural communities with computer education Non-profit that provides low-cost affordable housing for slum-dwellers For-profit company that empowers small farmers by providing access to information, markets, suppliers and finance

LettuceBee Kids

Education

Microdrip

Water/Agriculture

Naya Jeevan Pakistan Sustainability Network

Health

[Donor/Network]

Pakistan Urban Link & Support (PULS)

ICT4D

Pharmagen Health Polly & Me

Water Entrepreneurship

Saharo Welfare Organization Saiban

ICT4D Housing

SEC Access

Agriculture

Virtual Education for All Pakistan (VEFA Pakistan) Youthistan

Non-profit that records lectures covering topics in the national curriculum and making them accessible free of cost to children in Education/Entrepreneurship Pakistan's state-run schools [Donor/Network] Brings students and mentors from different classes of society via educational camps in order to foster independent and critical thinking

Rabtt

Education

See J. Gregory Dees, The Meaning of Social Entrepreneurship (2001). http://cdi.mecon.gov.ar/biblio/docelec/dp4012.pdf. J. Gregory Dees, Social Ventures as Learning Laboratories, Innovations (Davos and Cambridge: Klosters and MIT Press, 2009), 15. http://www.caseatduke.org/documents/Articles-Research/INNOVATIONS- Davos-2009_Dees.pdf; Paul Light, The Search for Social Entrepreneurship (Washington: Brookings Institution, 2008), 1115. Center for the Advancement of Social Entrepreneurship (CASE), Fuqua School of Business, Developing the Field of Social Entrepreneurship, (Durham, NC: Duke University, 2008). Alex Nicholls with Cathy Pharaoh, The Landscape of Social Investment: A Holistic Topology of Opportunities and Challenges, Skoll Center for Social Entrepreneurship Working Paper (Oxford: Oxford Said Business School, 2008), 7. Roger L. Martin and Sally Osberg, Social Entrepreneurship: The Case for Definition, Stanford Social Innovation Review 5, no. 2 (2007). Ana Mara Peredo and Murdith McLean, Social Entrepreneurship: A Critical Review of the Concept, Journal of World Business 41, no. 1 (2006): 5665. ii What Is Social Entrepreneurship?, CASE, http://www.caseatduke.org/about/whatissocialentrepreneurship/. iii Selection Criteria, Ashoka, http://www.ashoka.org/support/criteria. iv Christian Seelos and Johanna Mair, Social Entrepreneurship: The Contribution of Individual Entrepreneurs to Sustainable Development, IESE Business School Working Paper 553, (Madrid: IESE Business School Universidad de Navarra, 2004). Light, The Search for Social Entrepreneurship. v Monitor Institute, Investing for Social and Environmental Impact: A Design for Catalyzing an Emerging Industry (San Francisco: Monitor Institute, 2009).