Social enterprises can solve societal problems

There are a number of obstacles facing social entrepreneurs; here’s how we can help them take root and flourish

Updated - May 15, 2016 10:09 am IST

Published - May 15, 2016 10:06 am IST

The concept of ‘social entrepreneurs’ — entrepreneurs whose organisations aim to solve societal problems, either for-profit or non-profit — has existed for years.

When we started Unltd India, though, the support was skewed largely towards large, proven organisations. The scene has changed a lot since.

Today, there are more resources, and a lot more awareness around the concept. Perhaps not so much in the mainstream, but some people in the corporate sector are beginning to get used to the idea, and sections of the government have started showing an openness too.

When we started out a decade ago, we believed that not all the solutions to India’s problems could come from the government or corporates, even though they are the key players in this space. We understood that solutions would also come from entrepreneurs, individuals who have a strong relationship with an issue and are committed to designing a solution for it.

Especially in Mumbai, it is key to support these people for various reasons.

The first is simply for the sake of innovation. In the commercial world, there are startups, incubators, as well as research and development departments constantly prototyping new products and services. Why not proactively encouraging innovation in the social sector?

Second, it is good strategy to start in Mumbai — or Delhi or Bengaluru — and then move across the country. Not because the entrepreneurs here are smarter than in the rest of the country, but because these cities provide proximity to resources.

n And third, Mumbai has enough money to support good ideas. Even if the richest high net worth individuals only picked entrepreneurs in their geographical area, they would find enough people to support.

That’s why Mumbai is a great hub to support a number of ideas that will not just solve issues of the city, but also those of the country.

Basic problems

Since Independence, and probably even before, there have been a number of great initiatives across the country that have been working on some of our biggest issues, whether it’s education, poverty, health or sanitation. But very few of them have been able to do so at scale. In a country like India, we need a mix of models that work at scale as well as a variety of smaller city- and community-level models that are addressing real needs and issues.

Additionally, while there are funders, investors, even individual donors, who want to support interesting initiatives, they have criteria, like organisational size, legal requirements, or the ability to handle a large sum of money. And they look for proof that a product or service works, which makes them less willing to support innovative, but unproven ideas and models.

Many individuals and early-stage teams want to take ownership of a certain issue and start something, a social enterprise or a non-profit, and that number has only increased in the last three or four years. But very few of them are able to take their ideas off the ground; of those, even fewer can continue running their enterprises for a long duration.

Good entrepreneurs will figure out these barriers. Persistence, determination and resilience to challenges being thrown at you are key to being an entrepreneur. Having said that, certain barriers are unnecessary. They are there because of the lack of access to the right person or funding organisation or information, and they skew the chances of survival to a certain profile of entrepreneurs. Those are barriers we should address.

The funding gap

It’s tough to raise between Rs 20 lakh and Rs 50-60 lakh; it’s actually easier to raise below Rs 20 lakh and above Rs 1 crore. That means that there are many organisations that might not be ready for more than Rs 1 crore of funding, but might need more than Rs 20 lakh that aren’t able to access the funds they need.Theoretically there’s a lot of money available — from funds, investors and donors — but it doesn’t always find its way to organisations.

Debt, which is of great use to entrepreneurs, is a big gap in India. It’s not easy to provide debt unless you’re a bank or non-banking financial company, meaning many of the players in the social entrepreneurship support space can’t offer this service. Another gap: flexible financing. There is no single source that can provide a mix of different forms of capital. If you’re a social venture with both a for-profit as well as non-profit element, you may need to go to different sources for financing — foundations for grants, individuals for money, investors for equity — and each of those have different expectations. This forces early-stage entrepreneurs to run after different incentives and outcomes simultaneously.

The talent dilemma

In order to get scale, you need great people in your team. Many social entrepreneurs either can’t afford the talent or have trouble finding people right skills. This is especially important in the second or third line of leadership, where organisations need to build capacity.

The problem is that the models being developed are not usually your traditional non-profit models. Even those that are, because they’re being headed by a different type of person, demand a certain level of productiveness from the employee.

Typically people who apply for these jobs come from the corporate sector, which means they’re taking huge pay cuts. As a sector, we rely on their commitment rather than being able to match their previous salaries. And while many who come in from the corporate sector do stay, a lot of them also tend to leave because they don’t find it as structured as what they’re used to; or they’re let go of because of a cultural mismatch.

Often, social entrepreneurship support programmes focus entirely on the organisation: get the product, the marketing, the service, the impact measurement right. But we tend to forget that the individuals heading these ventures are not like serial entrepreneurs. It may be their first go at starting an organisation and they may not have business acumen or experience. Not every entrepreneur is a natural leader and not every leader is a natural entrepreneur. In order to ensure that these social organisations are as strong as they can be, it’s critical we develop both the organisation and the leadership capacity of the entrepreneurs. More than mentoring, it’s about equipping the individual with leadership ability, which can be built, much as you can build organisation capacity.

Access missing

As an entrepreneur, even if you’re an expert at certain aspects of your venture, you need external parties and vendors with different skills and expertise to support your work. For instance, I might need a lawyer for registration; a designer for collateral. I might need someone to help me figure out which follow-on funder is applicable for me or who I should approach for a Rs. 10 lakh budget or a Rs. 1 crore budget. Which senior entrepreneur should I go to because they’ve done similar work? Pure access to the right people at the right time is missing. There are 50 lawyers, yet nobody has a lawyer they can trust or afford, and that’s a problem.

While we’ve found at UnLtd India that we can help bridge some of those gaps—for instance, providing access to mentors and experts—each social entrepreneur has different needs, and we can’t possibly fill all the gaps. Additionally, there may just not be enough people with the expertise in the social sector to meet all the need that exists.

The regulatory morass

While the government is making progress, legislation often takes time to catch up with and adapt to newly emerging models. Today, for instance, there is no legal structure that allows you to take a grant, give an exemption, and also generate as much money as you want, even though there are many social ventures that operate as hybrid organisations with both a non-profit and social enterprise entity.

Only three registrations are required to start a non-profit,however, there is an endless list of questions authorities have just on those three. If you go to the income tax office in Mumbai, from an external perspective, it appears you just need three months and five documents for a registration. Ten months later, you’re still submitting documents. And that’s just for registration. It should be noted that the people we’ve interacted with at the income tax office at Mumbai have all been very smart, but getting to them is difficult because the process is opaque. This is an unnecessary barrier that can be fixed by making the process more transparent.

What the government can do

We need gates opened: to existing resources, to schemes, incubators and banks. And a huge buy-in from the government would help.

Instead of the government waiting for entrepreneurs to approach them, can they proactively identify them locally? The Brihanmumbai Municipal Corporation (BMC) could identify entrepreneurs and say, ‘We have an issue with healthcare for poor children,’ and open a bid for five social enterprises to work on it

The government has a huge number of certified incubators in the country, mainly focused on great ideas in science and technology. How about using that existing infrastructure for social enterprises? Create a vertical portfolio under the incubator and say, ‘while we’re looking for the next Facebook and Ola, can we also look for local companies offering social impact or local solutions?’

The government can also help with debt provision. Banks have a huge amount of debt to provide, especially government banks, and they lend to priority sectors. But unless you go to them with a really large proposal, they will laugh it off, saying it’s too much paperwork for a small debt. The government could stipulate that X per cent of a local bank’s portfolio must comprise small social enterprises, which would open a tremendous amount of opportunities.

Multiple partnerships

Many social enterprises and non-profits could help the government to better deliver services in local areas. In fact, some of the best partnerships are between the government and non-profits or social enterprises. But the onus of forming that partnership is almost always on the non-profit or social enterprise. This could be reversed.

The BMC could say, ‘This year our priority is sanitation, and we want 10 people who have great ideas to solve this issue, with so-and-so requirements, and we will get external advisors to pick people who we will then experiment with in a few wards.’ You could structure it as a challenge for the city: ‘This quarter we’re going to work with garbage disposal. We’re going to highlight the five best practices and take those to the government to see how a partnership can be formed.’

Corporate secondments to bring in expensive talent

Finding talent is tricky, not just within this sector, but across sectors, industries, zones, the whole country. But it is a bigger problem for us because we’re not able to offer large salaries.

But not all talent solutions need to be solved by a full-time paid employee; you can have someone coming in for a few months who can offer their expertise. In other parts of the world, corporates offer their employees sabbaticals, secondments to the social sector. This could be made a part of the guidelines on volunteering, in the CSR (corporate social responsibility) Bill: if corporates second someone from their organisation, give them points. That could be a game-changer.


We need innovation, but we could tap existing solutions better.

Someone needs to shine a spotlight on innovation, not just through methods like prizes, but also in terms of making the connection with the government or corporates. This could be facilitated by a body or an individual trusted by both parties, that understands what would incentivise corporates and a corporate that understands the value that a social enterprise or nonprofit organisation can bring. And there needs to be a carefully designed way in which this body or individual can bring these two parties together to craft a partnership.

You need someone from the corporate side to get the conversation going. You could start at the city level: someone with a political or bureaucratic mandate and priority works with the corporate body to identify the next five best social innovations in a particular area.

What you and I can do

We need a collective effort. As individuals, we can find startups to mentor or support, or partner with organisations like Unltd India and Dasra.

People often glorify social entrepreneurship, but the reality is that one group can solve everything; you need everyone to step up. A famous mentor once said, “If a business model could solve all the problems in the world, it would probably have by now.”

As told to Shubha Sharma

About the author

Pooja Warier is co-founder and CEO of UnLtd India, a Launchpad for early stage social entrepreneurs in India. Previously she worked with a range of organisations and initiatives like the World Social Forum & M.V. Foundation. In addition to UnLtd India, she also co-founded Journeys for Change, an organization that runs immersive journeys to help leaders make more impact on the world, and Bombay Connect, a co-working space for entrepreneurs. She has a MA in Social Work from the Tata Institute of Social Sciences in Mumbai.

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