Social Impact Core of Social Businesses

Social Impact Core of Social Businesses

Global Agents for Change president envisions social businesses as mainstream

Shawn Smith, Global Agents for Change president, says social-purpose businesses are those that put social impact at its core, and may pursue financial returns as well.

“A social-purpose business then places its social impact at the forefront and all decisions are guided by what will maximize this bottom line,” he says.

“Impact is the reason for existence, and profits serve this goal by attracting growth capital or otherwise sustaining growth of the enterprise and investment in its model.”

Smith notes that profit has a role because if the business fails there wouldn’t be a social impact.

“It may be possible to argue that the long-term results of building a thriving enterprise outweigh sacrificing financial returns for social benefit early on,” he says, noting this is often debated in discussions around how to maximize social benefit of a microfinance organization.

He envisions social business being mainstream, and says any business that does not have a net positive impact on society will have a hard time competing in the future.

“The playing field is shifting,” he says, adding the shift could come from regulation forces accounting for negative externalities or investors/tax systems recognizing positive effects of socially beneficial enterprises.

Like other sectors of the economy, Smith says social-purpose businesses require effective market infrastructure to assist them in connecting with like-minded capital and support. This includes capital market intermediaries, advisory services, knowledge centres and more, he says.

Social-purpose businesses also need movement building, and platforms like the website www.socialfinance.ca have a role to play in Canada to build a “public face for portions of this movement,” he says.

“It will be important that those that believe in this evolution learn to speak with a common voice, and agree on a common agenda though they may disagree on some of the details,” he tells Axiom News.

“What we don't need is for this movement to be hived off and marginalized as the ‘social’ side of business and investing,” he notes.

Global Agents for Change catalyzes entrepreneurial solutions to global poverty.

“We seek out emerging leaders with a potentially groundbreaking solution, then deliver the funding, advice, and connections that will help them take the idea to scale,” he says.

Smith says there are “phenomenal” organizations that give him hope for the future. This includes Better World Books with its example to the sector of the trials and tribulations of attracting and assimilating investment capital, Mobile Transactions Zambia for its viable business model improving access to financial services in Zambia, clean technology company Habitat Carbon, as well as organic and Fair Trade produce company Discovery Organics.

— Read more about Global Agents for Change in an upcoming article

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Writer Bio

Jennifer Neutel's picture
Jennifer Neutel

Jennifer Neutel is a Story Advocate and Generative Journalist at Axiom News. She completed her Bachelor of Journalism at Carleton University in Ottawa in 2006, and joined Axiom News in 2007. She has taken on a variety of roles at Axiom including new social media intiatives and has a passion for creating strengths-based questions that can lead to positive change.

Contact Jennifer: jennifer@axiomnews.ca, or 705-741-4421 ext. 26.

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