In dialogue - CSR

Viewpoints and trends on key issues related to Cotton made in Africa

The movers and shakers
Social entrepreneurship is growing worldwide, and that includes Germany. An interview with David Bornstein.

David Bornstein grew up in Montreal. His work as a journalist and writer is focused on social innovation, and has earned him numerous honours. His book How to Change the World is based on five years of research worldwide, and has so far been translated into ten languages.

Mr. Bornstein, the world is currently very short of optimism of all kinds. The dominant issues are subjects like global warming, religious conflicts, and famine. You set out to find effective drivers for change - and found Social Entrepreneurs. How did you get the idea?
In the mid 1990s I wrote a book that led me towards this subject. It was about the Grameen Bank - a bank which lends money to very poor women in small villages around the world. I discovered that bank when I was in Bangladesh to collect information about the situation there. I stayed for nearly a year. I simply happened to run into that organisation one day - it was helping people to lift themselves out of poverty, by giving them microcredits. Today, the Grameen Bank has more than 5.8 million female clients, and its idea has spread throughout the world. I asked myself at the time "How did they do it? Where did the idea come from? How can a small idea from a village in Bangladesh change development in the world?"
Muhammad Yunus, the founder of the bank, was a social entrepreneur. A fascinating man. His method was as professional as that of any other businessman - he motivated people, put together a fantastic team, and ensured a sound financial basis. He had a sense of the potentials that existed in these people - all they needed was money. Yunus' goal was not to earn money, but to combat poverty.

The result of your five years of research is impressive - the number of social entrepreneurs is growing. The importance of non-profit non-governmental organisations (NGOs) is growing, too. For example in Indonesia, 20 years ago there was only one NGO, but today there are 2,000. At the same time, social enterprises are springing up everywhere. Why is that?
Firstly, if we look around the world today, we meet up with a whole lot of unsolved problems, which cannot be solved by the existing institutions. Poverty, inadequate education, environmental pollution, global warming, and the emergence of China with her population of well over a billion. Of course there is also much that has changed for the better. Today, people no longer die at the age of 40, and most of us are educated. But no-one has got the major problems of our society under control - neither governments not companies, because the latter are not interested in activities that give no profits. The reason why social entrepreneurship has developed with such explosive dynamism is simply that its capabilities are urgently needed. For educating the street children in India, or for improving the health of children in Brazilian slums.
Secondly, the framework conditions have changed. Access to education, the media and information has improved enormously, and the same applies to social mobility. The political conditions have improved, and dictatorships are on the retreat throughout the world. Social entrepreneurship is not conceivable in repressive systems, because they prevent anything that could upset the status quo. Now the doors are open. And in addition, financial flows can now move worldwide - international funding of projects is much easier than it used to be.

But if they don't make a profit, or at least no financial profit, what is the motivation for social entrepreneurs to do what they do?
I believe the greatest motivation is to see that ideas can really be put into practice. It is similar to what artists do. Entrepreneurs are mostly entrepreneurs because they want to create something. There are many studies which show that this is the most important motivation for entrepreneurs, and not profit. They want to be creative, to do their own thing, and to realize their own ideas. It is like with three-year-old children who have fun with Lego. They want to build something. That is what makes social entrepreneurs tick, as well. And in addition they have a deep-rooted need to solve problems.

Do most social entrepreneurs act in large companies, or in SMEs? Do they work more on their own, or do they work more to change things in big companies?
Most social entrepreneurs set up their own organisations. They want to do their own thing. Some try for a while to persuade the management of their company of their idea. Then, if they meet with little understanding, which is what almost always happens, they start their own company. But there are also intrapreneurs, that is players who take over a larger organisation and completely revamp it. James Grant is an example of that, taking over UNICEF in 1980. He made it a hundred times as effective as it was before, by completely re-defining the jobs of all the employees; and yet social entrepreneurship is a global phenomenon. Ashoka, the first and largest international organisation for promotion of Social Entrepreneurship, is active worldwide. Most of the social entrepreneurs outside of the United States are to be found in Thailand, Mexico, South Africa and India.

... and Germany?
... Germany's not bad. Ashoka had no difficulty finding social entrepreneurs in the German market. And they are very choosy - they only take people who have really great ideas. I think there are plenty of people ready to start in Germany. It's just that we don't hear about them. It's no different in the USA and Canada. I had never even heard of social entrepreneurship until I was 33. When I thought about the non-profit sector, the idea that came to mind was lazy people just sitting around and wasting other people's money. And it seemed to me to be absurd to set oneself the professional goal of being a social entrepreneur.

What kind of problems can social entrepreneurs solve? Don't we overestimate the potential for them to take over activities from the state?
Of course social entrepreneurs should not replace the state, they should just complement it. They can be partners for the public institutions, and in particular of Foundations, which may be convinced by their ideas and provide funds. The State should also give the good ideas a chance. The role which investors play in the economy can be played by the State for social entrepreneurs. And the State should be aware that it cannot itself be the driving force for innovation, but that it can support innovators in this way. Sometimes it is possible to integrate the innovations into the public system. Thus a relief organisation for street children in Bombay became a project of the Ministry of Social Justice. Today, it operates in 70 Indian cities. The government provides funds for this organisation, but could not have invented it. In the USA there are private initiatives that help public schools to give better support to educationally disadvantaged children. "College Summit" is the name of this initiative, and it can only work because the government gives it the financial, legal and organisational means to do so.

On the role of business - for many years there has been intensive discussion of Corporate Social Responsibility (CSR). And yet, all too often, it seems to be no more than a marketing gimmick. Why do companies show so little social responsibility?
Unlike the stock exchange listed companies, family businesses live the values of the owners, and act accordingly. The big conglomerates cannot do that, simply because they have to follow the interests of their shareholders. And they want the highest possible yield. The managers are legally obliged to ensure that they look after shareholder interests. So what counts is for these managers to persuade their shareholders that, in the long term, CSR increases the company's profit. That is proven by practically all CSR studies. It means fewer risks in their business fields, and it helps them to find good employees.

What is your forecast? What role will Social Entrepreneurship play in 20 years' time?
Social entrepreneurship will unquestionably continue to grow and establish itself. People will no longer look primarily to the government or to academia for solutions to problems, but to social entrepreneurs. And social entrepreneurs will increasingly work together with profit-oriented business people. There are many social problems for which market-compatible solutions can be found. And if social entrepreneurs come up with profitable business models, that enables them to grow faster than they could if they are dependent only on donations and funding from Foundations.

Interview by Anja Dilk
Photo: Alberto Cuellar