Administration in Social Work

ISSN: 0364-3107 (Print) 1544-4376 (Online) Journal homepage: http://www.tandfonline.com/loi/wasw20

Social Entrepreneurship: Changing the Way Social

Workers Do Business
Andrew J. Germak & Karun K. Singh
To cite this article: Andrew J. Germak & Karun K. Singh (2009) Social Entrepreneurship:
Changing the Way Social Workers Do Business, Administration in Social Work, 34:1, 79-95, DOI:
10.1080/03643100903432974
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Administration in Social Work, 34:7995, 2010

Copyright Taylor & Francis Group, LLC
ISSN: 0364-3107 print/1544-4376 online
DOI: 10.1080/03643100903432974

Social Entrepreneurship: Changing the Way

Social Workers Do Business

1544-4376
0364-3107
WASW
Administration
in Social Work
Work, Vol. 34, No. 1, November 2009: pp. 00

Social
A.
J. Germak
Entrepreneurship
and K. K. Singh

ANDREW J. GERMAK

Mental Health Association of Morris County, Inc., Mountain Lakes, New Jersey, USA

KARUN K. SINGH
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Hunter College School of Social Work, New York, New York, USA

Social workers are among the best prepared professionals to

respond to the worlds social problems. However, in the current
realm of forward-looking, functional solutions to societys social
ills, social workers are not easy to find. This paper makes the argument that given the tremendous need for solutions to todays pressing
social challenges, it is time for social workers to stand up and
embrace much of the straightforward business sense found in
social entrepreneurship, a hybrid of social work macro practice
principles and business innovation activities. To address this issue,
the paper examines the imperative for social workers to explore
and engage in social entrepreneurship. Ethical considerations
concerning practice are discussed and a few examples of social
entrepreneurship are described. Finally, the article ends with some
recommendations for educating social workers and conducting
future research in this emerging area of inquiry.
KEYWORDS business, ethics, innovation, nonprofit organizations,
social entrepreneurship

INTRODUCTION
On November 13, 2006, The New York Times published a special section
entitled Giving, which discussed recent trends in philanthropy and
highlighted several cutting-edge social programs that have emerged around

Address correspondence to Karun K. Singh, Hunter School of Social Work, 129 East 79th
Street, New York, NY 10075, USA. E-mail: kksingh@hunter.cuny.edu
79

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A. J. Germak and K. K. Singh

the world. The cover story profiled several individuals and business organizationsJeffrey Skoll, Stephen Case, Pierre Omidyar, Richard Branson,
Bono, Ted Turner, The Acumen Fund, and Googlededicated to ridding
the world of its multitude of social problems (Strom, 2006). In this lead article
and the subsequent 42 pages of reports regarding groundbreaking social
service work, there was not one reference to social workers and their
contributions. Undoubtedly, social work professionals are some of the
individuals best prepared to respond to the worlds social problems. Despite
their training, however, in the current realm of forward-looking, functional
solutions to complex societal challenges, social workers are not easy to find
in the solution mix of societal problem solving.
Given the tremendous need for creative solutions to todays complex
social problems, we assert the case that it is time for social workers to stand
up and embrace the straightforward business sense found in social entrepreneurship, essentially a hybrid phenomenon of social work macro practice
principles and business innovation activities. Many social workers are
already exposed to the business sector by virtue of their working in
nonprofit environments. Encompassing nearly 1.6 million organizations and
having an aggregate budget of approximately $820 billion, the nonprofit
sector in the United States is a robust socio-economic influence (Bain &
Company, 2006). Not only is the nonprofit industry sizeable and growing,
but also it operates in an increasingly competitive marketplace in which
nonprofit administrators routinely vie for limited funds (Salamon, 1999).
Social workers and the agencies that they manage sit squarely in the midst
of this competition. As responsible social work professionals, we would be
remiss not to mind our own business and join the ever-increasing ranks of
social entrepreneurs.
Embracing the practice of social entrepreneurship involves changing
the way social workers do business. This paper will explore the burgeoning
practice of social entrepreneurship, channeling arguments concerning the
nonprofit sector as a whole to the field of social work. Consequently, we
will frequently view the field of social work through a business-compatible
lens. For instance, this paper will examine practices such as making a profit
in a nonprofit social service agency or the idea of social workers earning
significant incomes, which might make some social workers uneasy. However, the concepts that we will discuss here are highly relevant to the future
of the social work field and, when executed ethically, stand to greatly
enhance the quality of services provided to clients (Bent-Goodley, 2002;
Gray, Healy, & Crofts, 2003).
Before analyzing the practice of social entrepreneurship and its
relevance to social work practice, it is necessary to clarify some of the
related terminology, which is often different from that found in traditional
social work literature. According to Mosher-Williams (2006), there is no
commonly accepted definition of what social entrepreneurship is and how

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81

it may be distinguished from companion terms such as social enterprise,

nonprofit entrepreneurship, and venture philanthropy. To obtain some clarity,
we looked at several definitions. First, social entrepreneurship is broadly
defined as the programmatic and fiscal innovation associated with realizing
social change (Harding, 2004; Roberts & Woods, 2005). Dart (2004a)
supposes that nonprofit agencies that embrace social entrepreneurship
operate in a much more businesslike fashion than do straightforward
nonprofits. Likewise, Brewster (2006) illustrates that social entrepreneurship
looks vastly different from traditional fundraising and development.
Despite the different conceptualizations, we discovered that the core
concept is always identical: Social entrepreneurship comprises innovative
ideas for social change executed utilizing sound business strategies and
skills. Ultimately, we selected Paul Lights (2006) working definition of a
social entrepreneur to frame the basis for this article. Light describes a social
entrepreneur as an individual, group, network, organization, or alliance of
organizations that seeks sustainable, large-scale change through patternbreaking ideas in what or how governments, nonprofits, and businesses do
to address significant social problems (p. 50).
A central purpose of this paper is to sensitize social workers to the
continuing funding crisis in the nonprofit sector coupled with the increasing
demand for services among clients, and to subsequently view some aspects
of social work practice as akin to a commercial business. In reality,
nonprofit agency-based social work is an enterprise more similar to forprofit business endeavor than many administrators can understand or would
like to believe (Tuckman, 2004). Moreover, according to Jaskyte (2004), due
to increased competition for funding it is now essential that human service
leaders foster business innovation by embracing an entrepreneurial mindset
and transforming the cultures of their organizations to establish sustainability
of services. In short, when those in the mainstream discuss new strategies
for social change, social workers should be part of that discussion and
should be ready to lead the path toward transformation. To enable a better
comprehension of the context and evolution of social entrepreneurship, we
now begin with a brief history of the growth and development of this
phenomenon.

SOCIAL ENTREPRENEURSHIP: A RESULT OF EVOLVED

ATTITUDES AND POLICIES
According to Dees and Anderson (2003) and LeRoux (2005), enterprising
behavior in the nonprofit sector, especially the drive to earn income rather
than simply to receive it, is a result of the changing nature of charitable giving.
The change is due mainly to the ever-growing threat of more competition
for increasingly scarce funds, as well as more demands for professionally

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A. J. Germak and K. K. Singh

prepared proposals requiring accountability for the financial metrics,

program milestones, and revenue and service targets. Additionally, some
theorists attribute the advent of entrepreneurial activity among nonprofits to
the rise of conservative American policies since the mid-1970s in which the
federal government has sought to decrease welfare spending and shift the
responsibility for social welfare funding to the nonprofits themselves or to
induce for-profit alternatives, such as privatized social services (Abramovitz,
2004; Gibelman & Demone, 2002). Political arguments aside, whatever the
drive toward social entrepreneurship, it is now a viable, functional, and
increasingly popular alternative to traditional operating funding models in
the nonprofit sector.
To further illustrate the rise of social entrepreneurship from a policy
perspective, it is necessary to examine the income tax policies surrounding
charitable donations. First, according to the Internal Revenue Service of the
United States (2006), a nonprofit corporation serving certain public needs
may meet the definition of a charitable organization under section 501(c)(3)
of the tax code. With this status, a nonprofit organization is exempt from
paying federal and state income taxes, and can accept charitable donations
from individuals, groups, and corporations, the dollar amount of which can
be itemized as deductions on the donors federal and state income tax
returns (Hopkins, 1988). Therefore, due to the nature of the American
income tax system, 501(c)(3)s have been funded historically through
government grants and contracts, charitable donations, and a variety of
other funding sources that contribute smaller amounts (usually less than
30% of the overall budget). The table below, adapted from Singh (2005, p. 75),
displays the different types of revenue streams utilized by 501(c)(3)
nonprofit human service organizations to diversify their funding portfolios
and to support their operations.
At first glance, this tax exemption scenario appears to be a win-win
situation in which both the grantor and the grantee benefit. However, as
Reich (2005) explains, some less desirable grantees, such as inner-city school
systems, often are shortchanged by donors focused on more attractive charities
such as art museums or cancer research centers. To illustrate this phenomenon,
in a study of nonprofit performance in the city of Seattle, Richter (2006)
describes how the city has one of the highest densities of nonprofit organizations in the nation, yet its metropolitan area ranks as one of the nations
worst performers in quality of hospital care, nursing home care, and public
education. Clearly, the charitable donations paradigm described above is
not functioning properly in Seattle when the very organizations designed to
help disenfranchised populations are not doing so in an equitable fashion.
Conversely, proponents of the classic donor model of philanthropy
purport that the government must devise schemes such as tax-deductible
donations to encourage charitable giving from wealthy individuals and
groups (Raymond, 2004). A common belief is that without the allure of tax

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TABLE 1 Different Types of Funding Sources for Nonprofit

Human Service Organizations

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Fee-For-Service Income*
Government Grants and Contracts*
Individual Donations*
Foundations
Special Events
Investment Income
Workplace Giving
Corporations
Rent
Product Sales
Bequests
Endowment Income
Unrelated Business Income
Internet Fundraising
*These types of funding sources typically contribute individually
30% or more to the total of an agencys annual operating budget.

breaks, many people and organizations might not donate, thereby leaving
charitable organizations in the lurch for funding. Essentially, advocates of
philanthropys status quo believe that charity is a selfish endeavor, revolving
only around the desire for tax breaks, and that such attitudes must be
reinforced for the nonprofit sector to flourish (Harford, 2006). Yet, Tierney
(2006) mitigates such an extreme viewpoint by embracing a so-called
compassionate capitalism, in which those with the means to donate to charity
do so with a sincere interest in making the world a better place in addition
to a desire for tax deductions.
Although nonprofit organizations undoubtedly benefit from philanthropy by means of charitable donationsand donors subsequently benefit
from tax deductionsGummer (2001) explains that most charitable donations are slated for specific programs within a nonprofit agency and not for
operating or overhead costs (commonly referred to as general operating or
capacity building expenses). Consequently, an enterprising and innovative
nonprofit agency can greatly benefit from generating revenue that is less
connected to specific program initiatives (Young, 2004). Such revenue is
commonly referred to as unrestricted earned income and the desire for such
income in an agencys overall fiscal portfolio is a good starting point for
those interested in social entrepreneurship (Dees, Emerson, & Economy,
2002; Skloot, 1988).
In addition, according to Smith and Lipsky (1993), when an agency is
able to rely more heavily on unrestricted funds as opposed to frequently
restricted charitable donations or government contract revenue, there is
typically more opportunity to develop programs that truly meet clients

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A. J. Germak and K. K. Singh

needs and wants. For example, if an executive director determines through

a needs assessment and market research that his or her agencys adult
clients need and want substance abuse treatment, the executive has an
obligation to attempt to meet such a demand for services if it falls within the
agencys mission. If neither a foundation grant nor a government contract is
available, the executive director should consider an alternative such as a
merger with an outside clinic, development of a fee-for-service clinic within
the agency, or perhaps an unrelated business idea, launched to merely
generate revenue, some of which would be funneled back into the operating
budget of the substance abuse clinic. These types of enterprising ideas
encompass the essence of social entrepreneurship.
Although the benefits of starting new ventures are indeed significant,
social entrepreneurial endeavors are subject to certain regulations that must
be understood and followed. For instance, according to Brinckerhoff (2000),
there is no regulation against nonprofit organizations earning a profit (usually
referred to as a surplus in the nonprofit arena); however, commercial activity
unrelated to an agencys mission could incur Unrelated Business Income Tax
(UBIT). Watson (2006) explains that the allowance for UBIT is currently
$10,000, meaning that if a social service agency generates income greater than
$10,000 in a given year from selling mission-unrelated goods or services, the
agency must pay taxes on that income and the Internal Revenue Service may
ask that agency to furnish financial statements certifying that no more than
one-third of its total revenue has come from unrelated business. If an agency
continually generates more than one-third of its revenue from unrelated
commercial activity, it could lose its 501(c)(3) tax-exempt status. If UBIT
sounds complicated, it is, and therefore its details fall far beyond the scope of
this paper. As a result, it is likely that some social work administrators avoid
developing unrelated businesses due to the very complexity of the tax
situation. However, unrelated business is a viable option for diversifying
revenue in a nonprofit organization and administrators can easily overcome
this hurdle by seeking professional tax advice (Brewster, 2006; Watson, 2006).
Finally, as nonprofits begin looking more like for-profit firms, it is
advised that such agencies pay attention to corporate governance and
accountability regulations. For instance, the Public Company Accounting
Reform and Investor Protection Act of 2002, commonly known as SarbanesOxley, is a set of regulations passed by the United States Congress that sets
standards for corporate governance among publicly traded companies. Most
provisions of this act do not pertain to nonprofit corporations. However,
given the increasing scrutiny of American companies and recent scandals
involving both nonprofit (United Way, American Red Cross) and for-profit
(Enron, Tyco, WorldCom) corporations, it would behoove enterprising nonprofits to follow such standards for corporate governance and accountability
to the extent possible, especially as nonprofits venture toward profit-making
activities (Jackson & Fogarty, 2005).

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85

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ETHICAL CONSIDERATIONS FOR SOCIAL WORKERS PRACTICING

SOCIAL ENTREPRENEURSHIP
In addition to the above caveats regarding legal and regulatory concerns,
social work professionals desiring to become social entrepreneurs must pay
attention to ethical considerations affecting their practice. Social work is a
profession governed by ethics and values; therefore, any social worker
practicing social entrepreneurship must abide by the Code of Ethics of the
National Association of Social Workers (NASW, 1999). The ethical dilemmas
initially encountered by the practice of social entrepreneurship involve the
following ethical standards as presented in the NASW Code of Ethics
(NASW, 1999): (a) commitment to clients and (b) payment for services.
Indeed, as the field of social entrepreneurship grows and more social workers
partake in enterprising activities, more ethical dilemmas will most definitely
arise and need to be resolved.
First, according to the NASW Code of Ethics (NASW, 1999), a clients
interests must be of primary concern to a social worker. However, social
work administrators need to respond to many stakeholders in addition to
clients such as funding sources, government regulatory agencies, the media,
and so forth. According to Gummer (1997), the NASW Code of Ethics, in its
ethical standard involving commitment to clients, focuses incompletely on
relations between practitioner and client. Gummer explains, The notion
that the social agency is responsible primarily to clients is both unrealistic
and undesirable (p. 143).
Given the complexity of social work administration, social work entrepreneurs must make a sincere effort to balance their commitments to clients
and to external stakeholders simultaneously. Using the example regarding
substance abuse treatment mentioned previously, if the administrator were
to lose focus on the market demand for services and improperly forecast
future revenues, the clients would perhaps be well served in the short term,
but the enterprise would probably need to be shut down in the long term
due to inadequate fiscal foresight on the part of the executivean ethical
impropriety of enormous scale. In essence, social workers practicing social
entrepreneurship will continuously face an ethical dilemma regarding
commitment to clients: There is no way to avoid an administrators responsibilities to the myriad of stakeholders in both the internal and external
environments. To address this dilemma in social enterprises, it would be
prudent to establish a committee to periodically review the social entrepreneurs adherence to his or her commitment to clients because without such
commitment, albeit a balanced one, the entrepreneur loses sight of the
social aspect of social entrepreneurship.
In addition to commitment to clients, payment for services is a second
ethical dilemma encountered by social workers involved in social entrepreneurship. On the one hand, Masi (1992) suggests that there is no good reason

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A. J. Germak and K. K. Singh

why social workers cannot work in for-profit, proprietary settings or behave

entrepreneurially, compensating themselves accordingly for innovative
practice. In fact, other helping professionals such as physicians typically do
not have qualms about charging market-rate fees to patients with the ability
to pay. Such professionals are usually compensated accordingly. Likewise,
social workers should not necessarily take a vow of poverty even though
they frequently work with populations stricken by poverty. Arguably, a forprofit mentality, such as higher compensation levels for social workers or
bonus schemes, could attract more talent to the field and bolster the morale
of those already practicing at marginally acceptable income levels (Giffords,
2000; Guo, 2006).
On the other hand, Egan and Kadushin (1999) and Kurzman (1976)
rightly assert that social workers not only have the responsibility to serve
clients who can pay for services, but also to accommodate those clients
perhaps so marginalized that they may not have any health insurance coverage,
let alone money, to pay for social work services. Further, as the NASW
(1998) adeptly argues, social workers must never let the desire for increased
compensation steer their judgment concerning which clients to serve.
Essentially, social workers must treat all clients fairly. For example, if
social workers in a hospital setting receive a monetary bonus for treating
clients with third-party insurance, these social workers cannot discriminate
against clients with Medicaid, for instance. Froelich (1999) describes such a
discriminatory practice as creaming, which can have longstanding negative
effects on the well-being of the client population. A solution to such a
predicament would be to set aside ample time to see Medicaid-insured
clients each day, regardless of how many profitable clients may be present.
In a sense, this would be an affirmative action type of policy for social
work. Such a mentality will be increasingly important as social workers
embark on social entrepreneurship initiatives, and entrepreneurial managers
will face the imperative to instill such values in their employees.
It is important to recognize that as a social worker bound by the NASW
Code of Ethics, one must advocate for clients for whom no one else advocates.
If one is organized at work, there will be many opportunities to work with
clients tied to increased compensation and, in addition, with clients who do
not have the ability to pay. Ultimately, administrators must strive to balance
commitments to clients with commitments to external stakeholders, including
funding sources. This creates an additional ethical task for entrepreneurial
social workers. According to Kurzman (2000), social workers operating in
industries outside of traditional social work must not only abide by the
NASW Code of Ethics, but also establish a normative discipline of morality
that underscores the principles of advocacy and equity (p. 160).
One final note regarding ethics: It is imperative that social work administrators maintain a practical perspective regarding ethical dilemmas and the
reality of their agencies external environments. As Ayers, Mindel, Robinson,

Social Entrepreneurship

87

and Wright (1981) point out, after all ethical dilemmas have been considered,
human service administrators must view fees for service as essential to the
survival of their agencies. This study was published in 1981. It would be a
tremendous understatement to imply that earned income, such as client
fees, is more essential today to the sustainability of social service agencies
when, in fact, the practice of charging client fees has been a commonly
accepted practice for over two decades.

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SOCIAL ENTREPRENEURSHIP: CURRENT PRACTICE

Hitherto, our discussion of the potential benefits of social entrepreneurship
has been mainly academic. In this section, we will expand upon our previous
introduction of social entrepreneurship by moving on to a discussion of
current practices of social entrepreneurs and providing some examples of
this exploding phenomenon. Due to the decreased availability of government
grants and the earmarked nature of charitable donations, social entrepreneurs typically begin their work by developing non-traditional avenues for
generating sufficient revenue to run social programs so that they can
ultimately provide quality services for clients. According to Froelich (1999)
and Anderson, Dees, and Emerson (2002), such revenue diversification
strategies in a nonprofit organization might include development of
mission-related businesses, commercial activity unrelated to an agencys
mission, mergers with other nonprofits, partnerships with venture philanthropists, and so forth. In fact, Weisbrod (1998) posits that of all revenue
streams available to nonprofit organizations, revenue from commercial
activity is the most useful to an agencys mission due to its unrestricted
nature, and therefore such income should become more utilized by nonprofits seeking to sustain their services.
Further, it is argued that as commercial activity increases in a nonprofit,
the more its leadership must embrace common business principles (Firstenberg,
1986). The most common business principle understood by social entrepreneurs involves the classic economic theory of supply and demand. Simply
stated, price is in equilibrium (optimal) when the quantity of a product or
service offered equals the price someone is willing to pay for the product or
service (Samuelson & Marks, 2003). In social work settings, this theory can
be applied by first determining the total capacity of a service, then examining
the client utilization rate. The higher the utilization rate, the closer a service
is to being in equilibrium. However, according to Brinckerhoff (2000),
practitioners too often create programs based on what they think clients
need instead of services in which they are willing to partake. Thus,
programs endure for years (the supply part of the theory) without regard for
the actual demand. How often do social work managers perform market
research to determine whether a true market demand exists for the services

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TABLE 2 Examples of Social Entrepreneurship in Practice

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Organization name

Industry

Grameen Bank

Micro-credit

Institute for Oneworld

Health

Pharmaceuticals

Google.Org

Venture
Philanthropy

Key service
Issues loans as small as $30 to
economically disadvantaged people in
Bangladesh.
Redistributes surplus medications from
American pharmaceutical companies to
people living in poverty in Africa.
For-profit philanthropic arm of Google
investing in projects working in the
areas of global development, global
public health, and climate change.

they provide? On the contrary, Bornstein (2004) argues that successful social
entrepreneurs listen closely to what people want and respond with optimal
programs that address their specific demands.
One example of an entrepreneurial social program developed to
address a market demand is Grameen Bank. The joint winners of the 2006
Nobel Peace Prize, Muhammad Yunus and Grameen Bank, have successfully addressed the demand for economic independence in Bangladesh by
establishing a vast system of micro-credit. Since 1976, Yunus Grameen
Bank has made micro-loansas little as $30 eachto economically disadvantaged Bangladeshis and, consequently, helped 5.3 million people build
credit, support their families, construct homes, and move toward economic
independence. Historically, since few micro-loans have defaulted and there
exists an ever-increasing demand for such loans, Yunus has been able to
develop his bank to a point at which it both makes a profit and serves the
poora truly sustainable social enterprise (Norwegian Nobel Committee,
2006). In addition, Sappenfield and Trumbull (2006) describe how Yunus,
building on his success with Grameen Bank, is preparing to launch
Grameen Phone, a partnership with a Norwegian mobile phone provider
that will bring solar-powered cellular phone service to some 260,000
villages in Bangladesh.
From this short profile of the work of Muhammad Yunus, one should
realize that social entrepreneurship, when successful, can alleviate certain
social problems and potentially spawn other much needed enterprises.
Essentially, the fiscal stability of a social enterprise and the availability of
profits allow for business growth, which is not frequently seen in traditional
social work organizations. For instance, how many social workers ask themselves, If only we had funding for that service. Social workers who
embrace social entrepreneurship can stop asking that question and begin
realizing the services they desire.
Another example of social entrepreneurship is the Institute for Oneworld Health, a nonprofit pharmaceutical company based in San Francisco,
founded and led by pharmacologist Victoria Hale. According to Day (2006),

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89

the institutes mission is to supply much needed pharmaceuticals to residents of poor countries, primarily in Africa. To meet its mission, Oneworld
Health has collaborated with major pharmaceutical companies to obtain
unused drugs, such as medicines that have not sold well in the United States
market, and to redistribute such drugs to sick residents of poor areas.
Thus, by obtaining drugs as gifts-in-kind, Oneworld Health circumvents
the tremendous costs associated with research and development of pharmaceuticals and meets its other funding needs through charitable donations,
including gifts from the Bill and Melinda Gates Foundation. Oneworld
Health is an example of a social enterprise that incorporates some traditional philanthropy with entrepreneurial activity. Such a combination of old
and new methods of fundraising is an encouraging example of social entrepreneurship for social workers who might be intimidated by developing a
full-scale enterprise subject to market economics and the potentially higher
levels of risk they entail.
Finally, a novel practice available to social work administrators that is
gaining ground in the arena of social entrepreneurship is venture philanthropy. Frumkin (2003) equates venture philanthropy in the nonprofit sector
to venture capital and private equity investing in the business world. Likewise, Firstenberg (2003) explains how venture philanthropists make grants
to nonprofits in order to enhance the management capacity of a nonprofit
as opposed to simply funding a program initiative. For example, a venture
grant will typically last five to seven years (similar to a venture capital
investment), during which time the venture philanthropist participates in a
partnership with the grantee, advising its management and remaining fully
invested in the success of the venture. Contrarily, a typical foundation grant
lasts for one or two years and does not include much needed technical support.
It is essentially the notion of donor as investor that makes venture
philanthropy extremely different from traditional giving (Grace, 1997; 2002;
Hodgkinson & Nelson, 2001). As investors, venture philanthropists are interested in building management expertise so that the nonprofit agency (or the
for-profit social enterprise) can eventually sustain its operations without
continued venture investment and can achieve a social return on investment
in the future as planned. The effectiveness of venture philanthropy has not
yet been decisively determined; however, many business firms, including
Google, are establishing venture philanthropy divisions to invest in social
entrepreneurship (Hafner, 2006).

CRITICAL RESEARCH QUESTIONS FOR SOCIAL ENTREPRENEURS

The impact of social entrepreneurship has yet to be empirically proven.
Although many entrepreneurial social programs exist such as those
described above, little is known about the success of social entrepreneurship

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A. J. Germak and K. K. Singh

projects as compared to that of more traditional social work initiatives.

Gibelman and Demone (2002) explain this predicament by citing the lack of
available empirical data comparing nonprofits with for-profits, and the fact
that some social service agencies operate on a hybrid model, engaging in
both for-profit and nonprofit practices. Thus, we leave our readers with an
important question to consider: Are social enterprises, some of which operate
as for-profit ventures, more or less effective than traditional nonprofit social
service programs?
In essence, much more research must be conducted to compare the
effectiveness of social entrepreneurship with that of traditional social service
management interventions. Since business activities are becoming more
common among nonprofits, such research will be important to the successful
continuation of enterprising activity. However, it is recommended that
research be jointly conducted by social workers and business professionals
because when conducted by each field independently, biases could emerge
that could skew the conclusions. Moreover, when doing social entrepreneurship research generally, it would be useful to heed the advice of
Mosher-Williams (2006) to develop an evidence-based definition of social
entrepreneurship and a theory of social entrepreneurship for purposes of
analysis, discussion, and generalizability of findings. While it goes beyond
the scope of this paper to supply the frameworks and methodologies for
answering these and other research questions (see Mosher-Williams, p. 8),
we hope that we have provided a starting point for researchers to help
move the nascent field of social entrepreneurship forward.

DISCUSSION
The practice of social entrepreneurship is not currently an area of interest
and expertise for most social workers. Since social workers are well
positioned for this type of work, this paper offers definitions of social entrepreneurship, explores current policies and practices, and explores the ethical
dilemmas that could arise through its practice. In addition, the paper further
illuminates the need for social workers to develop a set of competencies in
social entrepreneurship. It concludes by raising questions to lead future
research in the field.
Given the funding crisis in the nonprofit sector combined with the
professional training and motivation of social workers to respond to social
problems, we have reached an overarching conclusion: Social work administrators must take more risks by embracing entrepreneurial endeavors in
their practice. In fact, according to Healy (2002), If social workers are to
achieve service outcomes consistent with their values, they must be conversant
with the new public management discourses now shaping the field (p.
529). Such field-shaping management discourses now involve applications

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of business sector practices such as strategic planning, market research, and

response to consumer demand. According to Wuenschel (2006), if Masterslevel social workers do not reclaim such discourse and establish themselves
as leaders in a changing environment, other professionals may lead social
work agencies in greater proportions, and the impact on the clients served
would be a result of the values and ethics of professions other than social
work.
A core concept that social workers should consider when implementing
services is that which Brinckerhoff (2000) so adeptly explains: Client need
versus client demand. The understanding of market demand is so fundamental to the success of a for-profit business, but it can also be explored in
a social services context. What do our clients truly want? Is what we determine
that they need really what they want? In a sense, a clients right to self-determination is hampered by programs that dictate what a client needs. Questions
such as these can be more easily resolved in a social entrepreneurship
paradigm. When an organization is freed from dependence on government
contracts and earmarked charitable donations, the organization can respond
to market demand and, in fact, develop services in response to what
consumers are willing to pay for. Obviously, this is contrary to the manner
in which many nonprofit agencies have been established to operate. Still, as
the title of this paper suggests, social workers can change the way they do
business. There is ample room for experimentation in the nonprofit sector.
Social entrepreneurship can be worth the effort and is potentially a good
match for social workers. At the very least, as Dart (2004b) explains, being
businesslike in the human services can result in new service delivery models
that would not have been established under traditional auspices. It is the
responsibility of professional social workers to experimentally test the effectiveness of such models to determine whether to continue them or to revert
to traditional models.

RECOMMENDATIONS FOR THE ROAD AHEAD

We end this article with two major recommendations. First, to address the
changing environment of the nonprofit sector, schools of social work
should take a beacon role in educating social work students regarding the
practice of advanced management techniques. According to the Council on
Social Work Education (2001), the educational policy of schools of social
work must promote excellence, creativity, and innovation in social work
education and practice (p. 3). Excellence, creativity, and innovation are key
components of social entrepreneurship, and there is no reason why social
work educational institutions cannot incorporate such teaching into their
curricula. Healy (2002) states emphatically that social workers need more
training in management practices currently shaping the field of social work.

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Both Wuenschel (2006) and Hoefer (2003) contend that the MSW degree is
the most appropriate qualification for leaders of human service organizations.
However, they caution that unless social work schools enhance their management curricula, individuals with MPA, MPH, or MBA degrees will begin
to dominate the leadership of the nonprofit sector.
Second, it is highly recommended that empirical research be performed
to determine the effectiveness of social enterprises as compared to that of
more traditional nonprofit organizations. Again, schools of social work
should take the lead in these research efforts by supporting faculty and
doctoral students in related projects. Moreover, social work administrators
should work collaboratively with entrepreneurs to research the effectiveness
of their respective organizations. The ultimate goal of these investigations is
to verify that client needs are truly being met in an effective and ethical
manner.
In short, social entrepreneurship is an exciting new field in which the
expertise of social workers is undoubtedly helpful and appropriate. Being
businesslike should no longer connote a negative attribute of a social
worker or a social service organization. Paradoxically, business acumen
appears increasingly to be a necessary quality in a dynamic marketplace of
increased competition and shifting demands for social work services.

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