George R. Roberts, the co-founder of investment firm Kohlberg Kravis Roberts & Co., recently wrote a piece in The Wall Street Journal about how social enterprise business entities are putting millions of Americans back to work. Those people would otherwise be locked out of the labor market due to factors such as homelessness, mental illness and limited work experience. One particularly important point Roberts makes is that the social enterprise approach isn't just good for those workers -- it delivers tangible economic results for those making the investment, and for the economy as a whole.
"Striking new evidence shows that a business model called social enterprise can provide these people with training, support and work," writes Roberts. "Social enterprises leverage a business approach to address a social mission, making improvements in human and environmental well-being, rather than maximizing profits for external stakeholders. These businesses earn and reinvest their revenue to provide more people with jobs that build skills and a career path."
Roberts' own social enterprise, Roberts Enterprise Development Fund (REDF) provides training and entry-level jobs for people who are chronically unemployed, and it has placed more than 9,500 Californians in jobs so far. Elsewhere, innovative social enterprise initiatives ranging from big projects like the Clinton Foundation's Clinton Giustra Enterprise Partnership to small initiatives around the world are also proving that the model works. In fact, a growing body of data shows that the model is effective. REDF recently commissioned the research firm Mathematica Policy Research to conduct a study of seven social enterprises in the state of California.
Among other findings, the just-released study reports that, "Social enterprise delivers a positive return on investment for society. For every $100,000 invested, the return is $223,000, including savings to taxpayers with reduced public benefits and avoided incarceration, and social-enterprise business revenues and workers' incomes."
As Mathematica reports in its study, "For the average dollar spent by the social enterprises, there was a $1.34-$2.23 return on investment for society. This includes benefits for taxpayers from reductions in government transfer payments and increases in revenues for social enterprise businesses."
For too long, our collective thinking has positioned business and social change on opposite ends of the spectrum: Businesses are about making money, the thinking goes, while nonprofits and government agencies will fill in the gaps to help those in need.
More and more, as the social enterprise movement spreads around the world, we're finding that the best results actually happen for everyone when businesses look beyond the bottom line and invest in social change -- and that can only be good for everyone.
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