1-in-2 Social Enterprise Companies Are Women-Owned
This article originally appeared in Fortuna. If you’d like to subscribe to the free Fortuna eNewsletter to gain early access to articles like this, sign up here.
Social enterprise companies are in business to address — and mitigate — social, environmental, or community shortcomings. But they are also in business, which can prove to be a challenge for some.
During my career as a founder and mentor, I've seen many social enterprises lose their way by putting too much emphasis on their efforts to make a positive impact and too little on ensuring their organizations are financially sustainable. Recently Martin Zwilling, founder and CEO of Startup Professionals, wrote about this conundrum, reminding would-be, social-minded founders that the “mission is profit always, social impact maybe.”
The World Economic Forum (WEF) came to a similar conclusion several years ago after finding that 38 percent of social enterprises failed within the first year of operation, while about 45 percent remained in operation for one and three years. Only slightly more than 5 percent of social enterprise organizations stayed in business for 10 or more years. The WEF determined one leading reason the social enterprise businesses failed was because they lacked the financial resources and insights needed to scale.
“A piece of advice for social entrepreneurs: in order to create an impact, you need the hard financial skills that will help you obtain investment and grow your business,” wrote the WEF.
Globally, Women Now Manage About Half of Social Enterprises
Years later, the WEF has released a new report indicating that social enterprise businesses have gained significant ground in the last decade. The State of Social Enterprise 2024, which draws on a wide array of aggregated data sources, confirms social enterprises have come into their own, earning both global recognition and financial traction during the last decade.
“More and more companies are collaborating with social entrepreneurs to explore new ways of working that address business, sustainability and societal goals,” according to the WEF. “Governments are recognizing the role of social enterprises in strengthening our societies and are starting to implement policies to support them.”
The new study is far-reaching, examining 10 years' worth of data from social enterprises operating in more than 80 countries worldwide. According to the report, there are now about 10 million such enterprises, which generate approximately $2 trillion worldwide in annual revenues — while creating nearly 200 million jobs. One key development stands out: social enterprise businesses are doing a much better job bridging the gender gap than “regular” businesses do. On average, half of today’s social enterprises around the world are led by women, while only about one in five mainstream companies are women-led.
Social enterprise organizations in Bangladesh, the Democratic Republic of the Congo, and India report the lowest levels of female leadership with slightly less than 25 percent being overseen by women managers. Conversely, nearly 70% of social enterprise businesses in Latvia, Ireland and Sweden are women-led. This is only one important change identified in the WEF’s new report. The report’s overall takeaway is that most social enterprise businesses are now succeeding as both agents of change and as successful companies.
“Social enterprises are not merely catalysts of change,” say researchers. “They embody a fundamental shift in how businesses can tackle societal problems on a global scale. At the same time, they prioritize benefits for employees, communities, and the planet alongside financial returns. They are at the forefront of the transition towards a fair, sustainable, and equitable economy – the stakeholder economy.”
As someone who has long worked to strike a balance between facilitating a better tomorrow while, at the same time, incubating thriving and groundbreaking startups, I am thrilled to see social enterprise companies — particularly those founded and managed by women — are now earning the success and recognition they deserve.
Next Steps
You can download The WEF’s The State of Social Enterprise 2024 here. If you would like to determine if women-owned social enterprise companies belong in your investment strategy, find out more about the Avestix Fortuna Fund.
