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US to Lead in Social Enterprise?

Report ranks top nations
for social ventures

Ian Bryan

Founder & Producer

There hasn’t been a better time to dive into social entrepreneurship. With fast moves in IoT and the rise of access to audience via social/digital media, we – and just about everyone else that wants to do good work, are now able to collectively solve tough problems faster than ever before.

In 2016, the Thomson Reuters, Deutsche Bank, the Global Social Entrepreneurship Network (GSEN) and UnLtd collaborated to conduct one of the broadest inquiries to date into which countries offer the best environment for social entrepreneurs. The online survey polled 900 experts in every country. Their full report is divided into six categories:

  • Government Support
  • Attracting Skilled Staff
  • Public Understanding
  • Making a Living
  • Gaining Momentum
  • Access to Capital

United States

Overall, the US is perceived as the most supportive country for social entrepreneurship among the world’s 45 largest economies (Iran was excluded due to lack of access to respondents). USA came in 3rd for access to equity or debt financing, 2nd in increasing social entrepreneurship momentum and 1st for ease of attracting a staff with the required skills. Ease of selling to the public. Ease of selling to businesses; and having favorable conditions for social entrepreneurs to start and grow their business.

This ranking caught most of the world by surprise, because America also ranked 12th for public understanding about social entrepreneurship. The federal government in the United States has been largely on mute, despite years of on-and-off campaigns to inspire an LLC entity classification and the supports that would go with it. Although the United States is still ranked the most charitable country on earth (Iraqi’s are the kindest to strangers, while Myanmar’s residents give the most of their own possessions away, according to the CAF World Giving Index 2016), its entrepreneurship culture is more often defined by Silicon Valley startups and classic formats (brewery, anyone?).

Social What?

While no comprehensive survey is to be found, we are pretty sure that most Americans don’t understand the term “social enterprise” and even fewer have a working definition for “impact investment”. As an employer in the mountain city of Asheville, North Carolina, WorldChanging surveys all applicants to assess their understanding of the terms “social enterprise” and “impact investment” and less than 8% are able to give accurate answers when queried on social entrepreneurship.

The same was likely true in England before CAN opened its doors over a decade ago in London Tower. Today the United Kingdom leads the world in supporting social enterprise, with over 190,000 registered entities and incubators in every major city. Europe’s 3rd Sector began to take off in the mid-90’s, when coordinated investments into government, charity and public awareness campaigns began in London and Manchester. Today the UK is home to over 190,000 registered social ventures and economically acts as the sector hub – largely thanks to that 2 decades of community organization and investments in public awareness campaigns.

Women, Living Wage, Inclusivity

The USA has a lot of work to do before it can compare its potential to what has been accomplished in the UK. In addition to the need for public awareness and policy support, the US also ranked 22nd for access to grant funding for social enterprises and 17th on Ease of selling to the government. When asked if social entrepreneurs can make a living doing their work, respondents ranked America 13th. Responses suggest that social entrepreneurs are better able to make a living in Canada (1st), the UK (2nd) or Australia (3rd).

The US is perceived as the 2nd worst in the realm of female entrepreneurship. It is ranked 43rd out of 44 on The Best Place to Be a Female Entrepreneur. The report concludes that this is due to concerns among respondents that women are paid less than men.

According to this study, the top 3 countries for female entrepreneurs are the Philippines, Russia, and Norway. 6 of the top 10 countries for women social entrepreneurs are in Asia and respondents attribute that to a “fairer playing field and higher drive to put compassion over valuation.”

Five urban hotspots emerged as the best cities for social entrepreneurship: Berlin, London, Hong Kong, Santiago (Chile) and Nairobi (Kenya). #notetoself

According to the 2017 Annual Impact Investor Survey by the Global Impact Investing Network (GIIN) and JP Morgan, impact investors (who create positive impact alongside financial return) funded businesses tackling social and environmental problems to the tune of $22 billion in 2016. That is up nearly 47% from $15 billion in 2015 and $4.3 billion more than predicted.

With so many amazing things happening in the realm of social entrepreneurship, one begins to wonder if perhaps it could be the future of capitalism. However, the poll found two significant over-arching challenges facing social entrepreneurs globally: lack of access to capital and a lack of understanding about social entrepreneurship among the general public and governments. The former can be helped along by the improving the latter.

With a better-informed public we will create better-informed investors. Better informed investors will yield better returns and fund more social ventures. An informed public will also lead to better-informed governments. Better-informed governments will support social enterprise with grants, tax benefits and an inclusive economy.

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