Social entrepreneurship gives students skills and something to believe in

More student-let social enterprises are a financially sound way to fight social injustices where charities might fall short, argues Robert Phillips 

August 10, 2018
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Student entrepreneurship is being encouraged by governments, universities and students worldwide as high-growth entrepreneurial ventures generate money for economies, universities and the founding individuals themselves.

However, students are also at the forefront of a heartening rise of social entrepreneurship across the world in response to societal problems. Discontent with political inaction, austerity measures and government funding cuts is on the rise, while students’ aspirations to change the world for the better are now often as important to them as earning a high salary.

Charities, often the traditional method of tackling societal problems, can suffer from bad management and bad press. Oxfam’s sexual abuse scandal in Haiti, which cost the organisation an estimated £16 million in donations, is just one recent example.

Coupled with worldwide cuts in government funding, there is a need for innovative solutions to social problems that customers (significantly those in the public sector) are prepared to pay for. Community issues already gaining high engagement levels include food and water sustainability, waste reduction, recycling, global poverty, homelessness, the integration of refugees, the empowerment of women, other equality issues and help for the elderly.

Unlike a charity, a social enterprise allows the founder to earn a living and shareholders to profit, like a normal business, from sales or services provided; however, its primary aim is to address a societal problem.

New legal structures have made it easier to create and register businesses that protect both the founder and the beneficiaries of the companies’ activities; recent government figures show that there were some 471,000 social enterprises in the UK in 2017 – nearly 10 per cent of all registered enterprises.

There are impressive figures from elsewhere around the world. It is suggested that, in the US, for example, social enterprises are contributing $500 billion (£380 billion) a year to the national economy. These businesses employ upwards of 10 million people in the US and 2 million in the UK.

Interestingly, data also suggest that social enterprises are doing just as well in terms of profit as comparable “regular” businesses and are more likely to be planning to grow and innovate in the future. To reinforce their ethical standpoint, it has been observed that the typical salary of the head of a social enterprise is much closer to the average employee wages than in other organisations.

Students are ideally placed to get involved in social entrepreneurship. Although they are not likely to have much spare money for simply giving to a charity, they may well have time to involve themselves in extracurricular activities, especially those that can help burnish their CVs. It can be attractive for students to start a business on leaving university as they are less likely to have dependants, they are not used to earning (and spending!) a good salary, and, perhaps, they have not yet replaced their student ideology with a more cynical view of the world.

It is also becoming easier to access financial help to get students’ ideas off the ground both inside and outside the university. Funders such as UnLtd offer grants; university business plan competitions often have social enterprise awards; and the rise of crowdfunding and its innovative methods of rewards for investors can provide financing. Those with a large social media reach can obtain significant funding for worthy projects, accumulating small investments from a large number of people at relatively low personal risk to each individual investor.

The biggest competition for social entrepreneurs, the Enactus World Cup – to be held this year in Silicon Valley – has serious backing from donors and corporate sponsors giving between $20,000 and $50,000 to winning ideas. A team of Indian students won at the 2017 event in London, beating competition from 72,000 worldwide entries, with a project that aims to empower women to work in computer centres in rural India.

Interestingly, The Big Issue, one of the best-known examples of a social enterprise in the UK, also now invests in other social enterprises. Once up and running, helpful government legislation such as the Public Services (Social Value) Act in the UK means that local, national and regional governments can consider using social enterprises if they offer cost-effective solutions. This could potentially provide social enterprises with a large and reliable customer base.

These social enterprises are being founded by students from any subject area, with their field of study not necessarily related to the business. For example, Better World Books, which has sold more than 75 million books and funds literacy programmes worldwide, was set up by business students from the University of Notre Dame. Edwin Broni-Mensah, a mathematics graduate from the University of Manchester, set up GiveMeTap, which has raised more than £120,000 to help provide clean water in Africa.

Although it is unlikely to replace the archetypal student protest, the creation of a social enterprise is an increasingly attractive way for students to take practical action to address the social issues that matter to them in a way that benefits them both financially and spiritually.

Robert A. Phillips is senior lecturer in entrepreneurship at Manchester Enterprise Centre, Alliance Manchester Business School at the University of Manchester.

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