Dowser reports on a new study on Social Entrepreneurship. The study is based on data of fellowship applicants to Echoing Green (a company that invests in Social Entrepreneurship ventures). It finds a diversity of revenue models -- from those that depend on donations, to others that are self-sustainable. Hybrid models are becoming more common. The study goes beyond the big names and players in the field -- it includes "those who were starting from scratch."
One important caveat is that our study is not meant to be normative--I do not mean to say that all organizations should have one kind of revenue model. It makes sense for some organizations to have a commercial business model, but not all. In the social sector one has to understand that some interventions will never be commercially viable, but they are needed and it’s important to continue supporting these initiatives philanthropically through grants and other types of giving.
The method of the study:
We decided to partner with Echoing Green, a fellowship organization that aims to promote social entrepreneurship. They attract applications from thousands of social entrepreneurs from around the world, and every year they fund between 15 and 20 social entrepreneurs. Together with Cheryl Dorsey and Lara Galinsky from Echoing Green (EG), Matt and I started brainstorming about the type of study we could do. It was obvious to us that the best approach was to look at the whole group that had applied. It's not an unbiased sample, because these are self-selected people who wanted to become EG fellows. Fortunately, EG has a definition of social entrepreneur that is very inclusive. We looked at the people who applied for the fellowship between 2006 and 2011--there were thousands. Then we took a random sample of 40 percent of all the applications--that was 3500 applicants-either in the process of launching their social enterprise or getting ready to launch. We created a codebook with 100 variables—basically a list of items corresponding to qualitative factors about the applicants. For example, one has to do with the type of revenue model that these applicants might be using. We created a code for the three different kinds of revenue models—based on donations only, on commercially generated revenues only, or on the mix of the two. [Note: The study also had codes for the aims of the projects and the beneficiaries, as well as plans for legal incorporation.] Throughout the process, we had multiple researchers review each application to make sure that their interpretations were consistent. The whole coding process took over a year.