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Rengasamy - Understanding Social Entrepreneurship

Social Entrepreneurs

"Social entrepreneurs are not content just to give a fish or teach how to fish. They
will not rest until they have revolutionized the fishing industry."- Bill Drayton, CEO
Founder of Ashoka,

"Nonprofits have to recognize that they're businesses, not just causes. There's a
way to combine the very best of the not-for-profit, philanthropic world with the
very best of the for-profit, enterprising world. This hybrid is the wave of the
future for both profit and nonprofit companies." Bill Strickland, CEO of the Manchester
Craftsmen's Guild

The nonprofit environment has changed.


 Community needs are growing in size and diversity.
 More nonprofits are competing for government and philanthropic funds.
 Traditional forms of funding are becoming smaller and less reliable.
 New for-profit businesses are competing with nonprofits to serve community needs.
 Funders and donors are demanding more accountability.

"In the face of this new reality, an increasing number of


forward-looking nonprofits are beginning to appreciate the
increased revenue, focus and effectiveness that can come from
adopting "for profit" business approaches. Increasingly, they are reinventing themselves as social

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entrepreneurs, combining "the passion of a social mission with an image of business-like


discipline, innovation, and determination." J. Gregory Dees.

What do the following great people have in common? All are exemplary social entrepreneurs,
leaders who have identified sustainable solutions to social problems that have fundamentally
changed society.
 Jane Addams founded Hull-House in 1889, a social settlement to improve conditions in a
poor immigrant neighborhood in Chicago, then expanded her efforts nationally. Addams gained
international recognition as an advocate of women's rights, pacifism and internationalism, and
served as the founding president of the Women's International League for Peace and Freedom.
Her work ultimately resulted in protective legislation for women and children.
 Maria Montessori, the first female physician in Italy, began working with children in 1906
and created a revolutionary education method that supports each individual child's unique
development. Montessori schools allow each child to realize his or her full potential by fostering
social skills, emotional growth and physical coordination, in addition to cognitive preparation.
 Muhammad Yunus revolutionized economics by founding the Grameen Bank, or "village
bank," in Bangladesh in 1976 to offer "microloans" to help impoverished people attain economic

self-sufficiency through self-employment, a model that has


been replicated in 58 countries around the world.
 Vinoba Bhave (India) - Founder and leader of the Land Gift
Movement, he caused the redistribution of more than 7,000,000
acres of land to aid India's untouchables and landless. Mahatma
Gandhi described him as his mentor
 Dr.Verghese Kurien (India) - Founder of the AMUL Dairy
Project which has revolutionized the dairy industry through the
production chain of milk, small producers, consumer products
and health benefits

Just as entrepreneurs change the face of business, social

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entrepreneurs act as the change agents for society, seizing opportunities others miss and
improving systems, inventing new approaches and creating sustainable solutions to change
society for the better. However, unlike business entrepreneurs who are motivated by profits,
social entrepreneurs are motivated to improve society. Despite this difference, social
entrepreneurs are just as innovative and change oriented as their business counterparts, searching
for new and better ways to solve the problems that plague society.

Social entrepreneurs are:


 Ambitious: Social entrepreneurs tackle major social issues, from increasing the college
enrollment rate of low-income students to fighting poverty in developing countries. These
entrepreneurial leaders operate in all kinds of organizations: innovative nonprofits, social
purpose ventures such as for-profit community development banks, and hybrid organizations that
mix elements of nonprofit and for-profit organizations.
 Mission driven: Generating social value-not wealth-is the central criterion of a successful
social entrepreneur. While wealth creation may be part of the process, it is not an end in itself.
Promoting systemic social change is the real objective.
 Strategic: Like business entrepreneurs, social entrepreneurs see and act upon what others
miss: opportunities to improve systems, create solutions and invent new approaches that create
social value. And like the best business entrepreneurs, social entrepreneurs are intensely focused
and hard-driving-even relentless-in their pursuit of a social vision.
 Resourceful: Because social entrepreneurs operate within a social context rather than the
business world, they have limited access to capital and traditional market support systems. As a
result, social entrepreneurs must be exceptionally skilled at mustering and mobilizing human,
financial and political resources.
 Results oriented: Ultimately, social entrepreneurs are driven to produce measurable returns.
These results transform existing realities, open up new pathways for the marginalized and
disadvantaged, and unlock society’s potential to effect social change.

Today, social entrepreneurs are working in many countries to create avenues for independence
and opportunity for those who otherwise would be locked into lives without hope. They range
from Jim Fruchterman of Benetech, who uses technology to address pressing social problems
such as the reporting of human rights violations, to John Wood of Room to Read, who helps
underprivileged children gain control of their lives through literacy. They include Marie Teresa
Leal, whose sewing cooperative in Brazil respects the environment and fair labor practices, and
Inderjit Khurana, who teaches homeless children in India at the train stations where they beg
from passengers.

Whether they are working on a local or international scale, social entrepreneurs share a
commitment to pioneering innovation that reshape society and benefit humanity. Quite simply,
they are solution-minded pragmatists who are not afraid to tackle some of the world’s biggest
problems.

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Social entrepreneurs are solution-minded pragmatists who are not afraid to tackle some of
the world’s biggest problems. They recognize the extraordinary potential in the billions of
poor people who inhabit the planet, and they are absolutely committed to helping them use
their talents and abilities to achieve their potential. Social entrepreneurs use inspiration,
creativity, courage, fortitude and, most importantly, direct action, to create a new reality –
a new equilibrium – that results in enduring social benefit and a better future for everyone.

Social Entrepreneurs are the equivalent of true business entrepreneurs but they operate in
the social, not-for-profit sector building 'something from nothing' and seeking new and
innovative solutions to social problems.
Their aim is to build 'social capital' and 'social profit' to improve the quality of life in
some of the most 'difficult' and 'excluded' communities.
They identify unmet social need and generate solutions based upon a close reading of
the views of those most directly affected.
They normally work in creative partnership with central and local government, business,
religious institutions, charities and other local and national institutions and they are
skilled at constructing such partnerships.
They are skilled at redirecting, using and regenerating underused, abandoned, redundant
or derelict human and physical resources (skills, expertise, contacts, buildings,
equipment and open spaces).
Their work reaches the parts of society other policy initiatives do not touch.
They recognise, encourage and employ skills from different faiths, cultures, traditions
and backgrounds bringing them together in new and creative ways to address practical
problems.

Who is a Social Entrepreneur?


Entrepreneurs are essential drivers of innovation and progress. In the business world, they act as
engines of growth, harnessing opportunity and innovation to fuel economic advancement. Social
entrepreneurs act similarly, tapping inspiration and creativity, courage and fortitude, to seize
opportunities that challenge and forever change established, but fundamentally inequitable
systems.
Bunker Roy is an example to understand who is a social entrepreneur. He created the
Barefoot College in rural communities in India to train illiterate and semiliterate men and
women, whose lack of educational qualifications keeps them mired in poverty. Today
Barefoot College graduates include teachers, health workers and architects who are
improving communities across India, including hundreds of "barefoot" engineers who have
installed and maintain solar-electrification systems in over 500 villages, reaching over 100,000
people.

Distinct from a business entrepreneur who sees value in the creation of new markets, the social
entrepreneur aims for value in the form of transformational change that will benefit
disadvantaged communities and, ultimately, society at large. Social entrepreneurs pioneer
innovative and systemic approaches for meeting the needs of the marginalized, the
disadvantaged and the disenfranchised – populations that lack the financial means or political
clout to achieve lasting benefit on their own.

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Who is an Entrepreneur?
An entrepreneur is person who:
• Creates something new, something different;
• Changes or transmutes values
• Drastically upgrades yield from resources
• Creates new market and new customer by applying
management concepts & techniques
• Is a creator of wealth
• Is innovative; innovation is the specific instrument
of entrepreneurship
Who is a social entrepreneur?
 The job of a social entrepreneur is to recognize what part of the society is stuck and to provide new
ways to get it un-stock.
 Finds what is not working and solves the problem by changing the system.
 Spreading solution and persuading entire societies to take new leaps.
 Not content just to give a fish or teach how to fish but instead to revolutionize the entire fishing
industry, so to speak.
 Has the committed vision and inexhaustible determination to persist until they have transformed the
entire system
 Creative both as goal setting visionaries and in the essential follow-up problem solving
 An ultimate realist- do not make political statements nor want to be burned at stake
 Obsessed by an idea to change social norms and patterns but when there is a flaw in the design, he is
most willing to change the design.
 Not ideological in broader sense: ideology closes the mind to absorbing reality sensitively.
 Cannot rest until his/her vision has become the new norm society wide.
 Great visionaries and detailed engineers committed to the persistent pursuit of all practical “how to”
issues that must be resolved for the idea to fly.
 Possesses an idea that spread with its own merits.
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Who is an Entrepreneur?
An innovator or developer who recognizes and seizes opportunities; converts these opportunities
into workable / marketable ideas; adds value through time, effort, money, or skills; assumes the
risks of the competitive marketplace to implement these ideas; and realizes the rewards from
these efforts.
According to some reports, globally this is the fastest growing sector and perhaps the only sector
that is creating gainful employment worldwide
Defining Social Entrepreneurship
Peter Drucker’s views
“Innovation is the specific tool of entrepreneurs, the means by which they exploit changes
as an opportunity for a different business or a different service. It is capable of being
presented as a discipline, capable of being learned and practised. Entrepreneurs need to
search purposefully for the sources of innovation, the changes and their symptoms that
indicate opportunities for successful innovation. And they need to know and to apply the
principles of successful innovation.”

Indian Entrepreneurs
1. Dhirubhai Ambani 2. JRD Tata & Ratan Tata 3. Adi Godrej 4. Anil Ambani
5. Dr K Anji Reddy 6. Azim Premji 7. Bhai Mohan Singh 8. B M Munjal
9. Ekta Kapoor 10.Ghanshyam Das Birla 11. Karsan Bhai Patel 12. Kiran Mazumdar Shaw
13. K.P. Singh 14. Kumar Mangalam Birla 15. Lalit Suri 16. M S Oberoi
17. Mukesh Ambani 18. Nandan Nilekani 19. Narayan Murthy 20. Naresh Goyal
21. Rahul Bajaj 22. Dr C Pratap Reddy 23. Shiv Nadar 24. Vijay Mallya
24. Raunaq Singh 25. Subhash Chandra 26. Subrato Roy 27. Verghese Kurien
And innumerable others

Social Entrpreneurship in Teaching & Research


Skoll Center for Social Entrepreneurship (Oxford Said Business School)
Center for Advancement of Social Entrepreneurship (Faqua Business School, Duke University)
Catherine B Reynold Program for Social Entrepreneurship (New York University)
Entrepreneurship in Social Sector Program (Harvard Business School)
Schwab Foundation for Social Entrepreneurs (University of Geneva) and
Social Entrepreneurship Course Series (Stanford University)

Social Entrepreneurship is the process of recognizing and resourcefully pursuing opportunities


to create social value and craft innovative approaches to addressing critical social needs.
By “Social Entrepreneurs,” we mean leaders of social-purpose organizations
Two types of entrepreneurs according to motivation
Profit-centered entrepreneur: An entrepreneur who creates wealth for himself and his
immediate family, regardless of adverse consequences to society and the environment.
The Socially Responsible Entrepreneur or Social Entrepreneur: An entrepreneur who helps
creates wealth not only for his benefit but also for the benefit of his workers and the community
at large, while protecting the environment for future generation.

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Even then why do people normally equate business and entrepreneurship with the profit motive?
Because of mental models
Mental models are deeply ingrained assumptions, generalizations, or even pictures or images that
influence how we understand the world and how we take action.
Very often, we are not aware of our mental models or the effects they have on our behavior
Most people become imprisoned by mental models? This has to be changed

Paradigm Shift in Mental Models


Old Economy Socially Responsible Economy
profit is supreme ―triple bottom line‖
―invisible hand‖ rules organized stakeholders get a handle of market
free access to information stakeholders‗ participation in market systems design & application
resources are depleted resources can be renewed, recycled
people can adjust to build learning organizations that economic dislocations allow people to
acquire new knowledge/skills

Mother Theresa as one of the greatest


entrepreneurs of our time. She started with an
Examples of Social Entrepreneurs angel investment of five rupees in 1948 from the
1. Amul and Verghese Kurien in Anand Archbishop of Calcutta. By the turn of the
century, her Missionaries of Charity had 602
2. Basix and Vijay Mahajan, Hyderabad
homes in 125 countries and her band of 4,000
3. Bhagavatula Charitable Trust, Vizag, sisters from as many as 40 different national
AP origins marched to the same mission, vision and
4. Child Relief (Rights) and You (CRY) core values.
5. Grameen Bank, Bangladesh How did she build that institution? What was the
6. FINCA – Village Banking impetus? Disease and death that crawled in the
gutters of Calcutta and nudged her sari each time
7. Food King – Sarath Babu, Chennai she walked past? Was it the negative energy of
8. Lizzat Papad (SGMU), Mumbai her surroundings? Or was it the possibility of
9. Polyhydron, Suresh Hundre, Belgaum positive outcomes? Or spreading love, joy, seeing
10. SEWA, Ahmedabad a dying destitute as an angel of peace? It wasn’t
the former. She was to recall later that she had,
in fact, ‘received’ her call….

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Social Entrepreneurship Definition Matrix


(Adopted from Change Fusion )
Prepared by S. Dev Appanah & Brooke Estin

Definitions by Organizations/ Individuals Innovation Social Business Impact Organizational


Mission model structure
J. Gregory Dees, Professor of Social Entrepreneurship Attack Education Social purpose Create social/ Not-for-profit
at Duke University underlying Health-care business environmental Social purpose
Social entrepreneurs are reformers and revolutionaries, as causes Economic Community value business
described by Schumpeter, but with a social mission. They development development Local action w/
make fundamental changes in the way things are done in the Environment banks potential for
social sector. Their visions are bold. They attack the Hybrid global
underlying causes of problems, rather than simply treating Organizations improvement
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.
In addition to innovative not-for-profit ventures, social Arts Shelters Large scale Hybrid
entrepreneurship can include social purpose business starting Systemic organizations
ventures, such as for-profit community development banks, businesses change
and hybrid organizations mixing not-for-profit and for-profit Sustainable
elements, such as homeless shelters that start businesses to improvements
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.

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Bill Drayton, CEO and Chair of Ashoka Innovative Societyʼs Wide/ large
―A leading social entrepreneur sees a new opportunity, solutions most scale
figures it out and then starts introducing it at the local Seizing pressing change
level.‖ new social Changing
Social entrepreneurs are individuals with innovative solutions opportuniti problems the system
to society most pressing social problems. They are es Spreading
ambitious and persistent, tackling major social issues and the solution
offering new ideas for wide-scale change. Social
entrepreneurs find what is not working and solve the
problem by changing the system, spreading the solution,
and persuading entire societies to take new leaps. Social
entrepreneurs act as the change agents for society, seizing
opportunities others miss and
improving systems, inventing new approaches, and creating
solutions to change society for the better. While a business
entrepreneur might create entirely new industries, a social
entrepreneur comes up with new solutions to social
problems and then implements them on a large scale.
Professor Muhammad Yunus, Founder of Grameen Any Serving Social Long-term For-profit
Bank innovative people, business; social goals Not-for-profit
Social entrepreneurship is a very broad idea. As it is initiative planet; non-loss, non-
generally defined, any innovative initiative to help people disadvantage dividend
may be describes as social entrepreneurship. The initiative d groups business
may be economic or non-economic, for-profit or not-for- Surplus
profit. reinvested for
Social business is a subset of social entrepreneurship. All long-term
those who design and run social businesses are social social
entrepreneurs. But not all social entrepreneurs are engaged goals
in social businesses.
A social business can be defined as a non-loss, non-dividend
business. Rather than being passed on to investors, the
surplus generated by the social business is reinvested in the
business in order to support the pursuit of long-term social
goals. The bottom line of a social business is to operate
without incurring losses while serving the people and the
planet- and in particular those among us who are most
disadvantaged- in the best possible manner.

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Social Enterprise Alliance USA Social Earned Non-profit


A social enterprise is an organization or venture that mission income For-profit
advances its social mission through entrepreneurial, earned strategies Hybrid
income strategies. Market-based corporate
Social enterprise describes any non-profit, for-profit or strategies to form
hybrid corporate form that utilizes market-based strategies advance social Earned income
to advance a social mission mission strategies
Social Enterprise Coalition UK Social and Business to Greater Not-for-profit
Social enterprises are businesses set up to tackle a social or environment tackle social/ equity of Social purpose
environmental need. al environmental economic business
Many commercial businesses would consider themselves to need need power and a Hybrid
have social objectives, but social enterprises are distinctive Social or Generate more organisations
because their social or environmental purpose is central to environment profit sustainable
what they do. Rather than maximizing shareholder value their al to further society
main aim is to generate profit to further their social and objectives social/
environmental goals. Social enterprise is a business model are environmental
which offers the prospect of a greater equity of economic central to the goals
power and a more sustainable society - by combining market organisation
efficiency with social and environmental justice.
Jed Emerson, Stanford Graduate School of Business Social issues Business Non-profit
By ―social enterprise‖ we mean the application of business models and For-profit
models and acumen to address social issues, whether acumen to corporate
through non-profit or for-profit corporate structures. address social
issues
New Profit Inc Transforma Infusion of High-quality Not-for-profit
Social entrepreneurs are visionaries who generate tional financial and social impact Social purpose
innovations with the potential to transform a problem or innovation strategic business
field; possess exceptional abilities to rally the human and Social resources to Hybrid
financial resources to transform their vision into a reality; innovations scale social organizations
and deliver high-quality social impact. innovations
Social entrepreneurs have powerfully demonstrated their
models, and with an infusion of financial and strategic
resources can take their social innovations to scale.

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Schwab Foundation for Social Entrepreneurs New Large scale,


A social enterprise is an organization that achieves large invention systemic and
scale, systemic and sustainable social change through a new Different sustainable
invention, a different approach, a more rigorous application Approach social
of known technologies or strategies, or a combination of Rigorous change
these. application
Social entrepreneurs are leaders, change driven, passionate, of known
innovative, risk-takers, believers in people, high standards. technologies
A social entrepreneur combines the characteristics /
represented by Richard Branson and Mother Teresa strategies
Skoll Foundation Inventing Disadvantaged Sustainable Transformational Not-for-profit
The social entrepreneur aims for value in the form of new communities solutions change Social purpose
transformational change that will benefit disadvantaged approaches and society at for profit
large business
communities and ultimately society at large.
Hybrid
Just as entrepreneurs change the face of business, social
organizations
entrepreneurs act asthe change agents for society, seizing
opportunities others miss by improving systems, inventing
new approaches and creating sustainable solutions to
change society for the better.
The Small Enterprise Education and Promotion New Socially Market-based improvement Non-profit
(SEEP) Network invention oriented approaches Economic Socially oriented
A social enterprise is a nonprofit organization or socially Different Poverty Financial Improvement
oriented venture that advances its social mission through Approach alleviation sustainability Quantitative
entrepreneurial market-based approaches to increase its Value chain Linking and
effectiveness and financial sustainability with the ultimate development financial Qualitative
goal of creating social impact or change. Market and moral measure
Social enterprise is about linking financial and moral development incentives in Policy
incentives in business and the marketplace. Social enterprise Microfinance business and Change
has synergies with existing poverty alleviation approaches— the
value chain development, market development, and marketplace
microfinance—and can augment and add value to current
initiatives as well as provide new tools.
The Roberts Foundation Homeless Economic Create Revenue
Development Fund economic generating
A revenue generating venture founded to create economic opportunities venture
opportunities for very low income individuals, while Financial
simultaneously operating with reference to the financial bottom-line
bottom-line.

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Nonprofit Enterprise and Self-sustainability Team Entreprene Critical social Self-financing Non-profit
(NESsT) ur problem methods
The term social enterprise to refers to "the myriad of ial Generate own
entrepreneurial or 'self-financing' methods used by nonprofit Social income to
organizations to generate some of their own income in innovator support social
support of their social mission. mission
The term social entrepreneur is currently used to mean very Non-profit
different, albeit interesting things. Some use the term social enterprise
entrepreneur to refer to ―social innovator‖ (i.e. an individual Social purpose
that is addressing a critical social problem in a particularly business
effective or innovative way). Others, including NESsT, use Revenue
the term social entrepreneur (or social enterprise) to refer to generating
a CSO (civil society organization) that uses entrepreneurial, venture
business activities as a means to generate income and/or Double
otherwise further its mission impact (e.g., to create Bottom
employment opportunities for underserved constitutes). A Line
social enterprise is also referred to as a ―nonprofit Financial
enterprise,‖ ―social-purpose business,‖ or ―revenue return
generating venture‖ that operates with a ―double bottom w/ social
line‖ of generating financial return while simultaneously mission
advancing a social mission.
Virtue Ventures Mitigating/ Business Social value Not-for-profit
A social enterprise is any business venture created for a reducing a venture Social purpose
social purpose--mitigating/reducing a social problem or a social Financial for profit
market failure--and to generate social value while operating problem discipline business
with the financial discipline, innovation and determination of or market Hybrid
a private sector business. failure organisations
Third Sector Enterprises Social aims Profits Social
Social enterprise is not defined by its legal status but by its through outcomes
nature: its social aims and outcomes, the basis on which its trading
social mission is embedded in it's structure and governance, activities
and the way it uses the profits it generates through its
trading activities.

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Social Enterprise Ambassadors Social or Profit-making


Social enterprises are profit-making businesses set up to environment businesses
tackle a social or environmental need. Many commercial al Generate
businesses would consider themselves to have social need profit
objectives, but social enterprises are distinctive because their Social or to further
social or environmental purpose is central to what they do. environment social
Rather than maximizing al and
shareholder value, their main aim is to generate profit to purpose is environmental
further their social and environmental goals. central to goals
By combining a public service ethos with a commercial focus activities Commercial
on efficiency and good business practice, social enterprises Public service focus
are able to deliver on the things that really matter, whilst ethos Independent
remaining both independent and sustainable. and
sustainable
Social Ventures Australia Employment Non-profit Non-profit
At SVA, we define a social enterprise as a non-profit business for business business
whose purpose is to create employment for marginalized marginalized
people
people. Marginalized people include people with disability,
people with mental illness, refugees, indigenous Australians
and other long-term unemployed people.
The Non-profit Good Practice Guide Non-profit
A non-profit venture that combines the passion of a social
mission with the discipline, innovation and determination
commonly associated with for-profit businesses.

University of Wisconsin- Madison Innovative Solve social Create


Social Entrepreneurship is the application of innovative ideas problem change
ideas to solve social problems. A social entrepreneur is
someone who recognizes a social problem and uses
entrepreneurial principles to organize, create, and manage a
venture to create change.
Enterprising Non-Profits Selling product Create Non-profit
Social enterprises are businesses operated by non-profits, with the or service social/ Societies
dual purpose of generating income by selling a product or service in environment Charities
the marketplace andcreating a social, environmental or cultural al value Co-operatives
value.
The term "social enterprise" to refer to business ventures operated
by non-profits,whether they are societies, charities, or co-
operatives.

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The following is the number of times each element is highlighted in In summary, the central elements of social entrepreneurship/ enterprises
each definition: include:
• Innovation – 11 times • Advancing a social mission
• Social Mission – 17 times • Applying innovative processes/ technologies
• Business model – 15 times • Having measurable and scalable impact
• Impact – 12 times Integrating financial sustainability

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