Why Social Ventures Are More Popular Than Ever
More than a passing fad, the desire to use business for good has been driven by a variety of factors.
The continued growth of social ventures is an accepted fact that’s rarely—if ever—formally quantified. This is likely due, at least in part, to varying definitions and terminology used to describe the same trend: using the methods and disciplines of business and the power of the marketplace to advance social, environmental, and human justice agendas.
LinkedIn reports a 41 percent annualized increase in those listing “Social Ventures” within skills and experience, and a 27 percent increase for “Social Entrepreneurship” over the same time period.
More than a passing fad, the desire to use business for good has been driven by 1) increased awareness of societal problems, 2) idealistic millennials seeking employment, 3) national debt limiting government’s ability to take progressive action, 4) heightened consumer pressure, 5) impact investing going mainstream, and 6) legacy-focused baby boomers.
Increased Awareness of Societal Problems
A 2011 study by SC Johnson and GfK Roper Consulting found that “73 percent of Americans say they know a lot or fair amount about environmental issues and problems—up 20 percentage points since 1995.” Increased internet usage and the prevalence of 24-hour news have contributed, broadening exposure to social and environmental issues.
Formalized education is also playing a role. According to a review by the Association for the Advancement of Sustainability in Higher Education (AASHE), “Nearly 60 percent of all new higher-education programs or training opportunities in 2011 focused on renewable energy and green careers, with $543 million recorded toward the effort.” The result is a growing number of graduates with an interest in solving societal problems.
Idealistic Millennials Seeking Employment
A recent Forbes article says that "88 percent of Millennials choose employers based on strong corporate social responsibility (CSR) values, and 86 percent would consider leaving if the companies’ CSR values no longer met their expectations." That may sound foolishly picky when considering the number of jobs available to this generation of seekers.
A 2010 Pew Research study found that “37 percent of 18- to 29-year-olds are unemployed or out of the workforce, the highest share among this age group in more than three decades.” More recently, The Huffington Post cites data pulled from a 2011 population survey stating that, “About 1.5 million, or 53.6 percent, of bachelor's degree-holders under the age of 25 last year were jobless or underemployed, the highest share in at least 11 years.” If desirable jobs aren’t available, why not create a social venture of your own?
National Debt Limiting Government Ability to Take Progressive Action
The United States’ national debt is now over $16 trillion dollars, increasing widespread demand for decreased spending. While political parties argue about how this is best achieved, social programs remain a consistent casualty.
In an attempt to fill the needs gap, there’s been an enormous growth in the nonprofit sector. The Urban Institute reports that, “Between 2001 and 2011, the number of nonprofits has increased 25 percent, surpassing the rate of both the business and government sectors.” In 2012 there are an estimated 2.3 million nonprofit organizations in America, and many of these generate revenue, thus qualifying as social ventures.
Heightened Consumer Pressure
Results from a global study in 2011 by Cone Communications and Echo Research indicate that “81 percent of consumers say companies have a responsibility to address key social and environmental issues beyond their local communities.” Business is listening, with spending on sustainability totaling $28 billion in 2010 and projected to reach $60 billion by 2014.
The nonprofit sector is feeling the heat as well, partially due to highly publicized scandals such as Greg Mortenson’s Central Asia Institute, United Way, Red Cross, Susan G. Komen, and Kony 2012’s Invisible Children creating an unfortunate atmosphere of distrust. A recent Bloomberg article adds to this, calling for increased scrutiny of nonprofit CEOs with salaries exceeding $1 million. If both for-profit and nonprofit organizations are being criticized, the creation of a hybrid model seems a logical evolution.
Impact Investing Going Mainstream
The Global Impact Investing Network, a nonprofit group, expects the impact investment market to grow to “$500 billion by 2014, representing an average annual growth rate of nearly 60 percent since 2009.”
In March of 2012 PwC released a report stating, “Nearly 1 out of every 8 dollars under professional management in the United States today—12.2 percent of the $25.2 trillion in total assets—is involved in sustainable and responsible investing." Investor confidence implying healthy returns are indeed possible with social ventures will work to further increase engagement.
Legacy-Focused Baby Boomers
Recent research confirms there is a growing number of “encore entrepreneurs”—approximately 25 million Americans ages 44 to 77—seeking to launch income-generating ventures that make a positive difference in their communities over the next 10 years. How fitting that a generation whose conviction and noise helped end the Vietnam War and progress civil rights is now infusing work with purpose, and refusing to go out quietly.