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Social Entrepreneurship: Businesses that Help the Poor

Posted By Michelle Kaffenberger On August 24, 2011 @ 1:15 pm In International | Comments Disabled

Foreign aid as a development tool has been tried and found wanting. Decades of handouts from developed countries to developing countries have done little more than promote corruption [1] among developing country leaders and continue a cycle of dependency [2].

As governments and large, bureaucratic international organizations are slow to change their ways, innovators and entrepreneurs are stepping into the gap with some creative ideas. Social entrepreneurship is a growing phenomenon among business-minded people who want to make a difference for those in poverty. Social entrepreneurship is different from current corporate social responsibility [3] efforts, which involve projects such as building a well while in the process of building a factory in Africa. For social entrepreneurs, the social good is the end goal rather than an afterthought. But it is also different from nonprofit organizations and many other nongovernmental organizations focusing on social ends, as social entrepreneurs use business to create self-sustaining enterprises.

Take Nokero [4] as an example. Short for “No Kerosene,” the company was started by inventor Steve Katsaros, who developed a solar-powered light bulb [5] that could provide light for those without access to electricity. Currently many of “the 1.4 billion people around the world who don’t have access to an electrical grid…use fuel lamps that burn kerosene, which is costly, dirty and can also be unhealthy.” Rather than continually looking for grants to produce the bulbs and then handing them out to people who may not recognize their value or may not be the most in need, Katsaros made the bulbs cheaply enough that he can sell them in the developing world. By selling the bulbs, Katsaros can also stay in business as long as people want his bulbs, rather than becoming unable to provide when the grants dry up.

In a CNN interview [5], Paul Polak, author of a book on alternative poverty solutions [6], says of the benefits of social entrepreneurship: “You can feel really good about yourself giving stuff away…but if you are going to sell things to people, you need to have respect for them, because no one is going to buy something if you have contempt for them.” By promoting respect for the poor, social entrepreneurship allows them, as consumers, to use market signals to show which products they actually want and need. The article goes on to say of Polak, “He says market forces will ensure that the right products get into the marketplace and ultimately lead to empowering people in developing countries to be better able to fend for themselves.”

In addition to stimulating development, social entrepreneurship inherently promotes economic freedom [7]. It recognizes that the poor have the ability to determine their greatest needs, and they deserve the respect and freedom to make their own choices about how to meet those needs. Social entrepreneurs are providing these kinds of opportunities in a cost-effective, sustainable way.

Michelle Kaffenberger is a former research assistant at The Heritage Foundation and is currently a graduate student in Economic Development at Vanderbilt University.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2011/08/24/social-entrepreneurship-businesses-that-help-the-poor-and-it%e2%80%99s-not-about-charity/

URLs in this post:

[1] promote corruption: http://www.heritage.org/Research/Reports/2010/09/UN-Millennium-Development-Goals-Foreign-Aid-v-Economic-Freedom

[2] cycle of dependency: http://www.dambisamoyo.com/books/?book=dead-aid

[3] corporate social responsibility: http://www.nonprofitquarterly.org/index.php?option=com_content&view=article&id=15131:the-never-ending-debate-how-real-is-corporate-social-responsibility&catid=155:nonprofit-newswire&Itemid=986

[4] Nokero: http://www.nokero.com/

[5] solar-powered light bulb: http://www.cnn.com/2011/TECH/innovation/08/14/solar.light.bulbs/index.html?hpt=hp_bn7

[6] alternative poverty solutions: http://www.paulpolak.com/html/about.html

[7] economic freedom: http://www.heritage.org/index/

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