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Social Enterprise: The Missing Stage of Economic Development


Unlocking the untapped potential between the stages of aid and full-scale industrialization, social enterprise emerges as the missing link in the narrative of economic development. Donovan Gillman, shedding light on this transformative concept, challenges the traditional binary perspective that has long dominated the discourse on global economic progress.

The prevailing notion of economic development often adheres to a two-stage approach — provide aid until a nation or region is deemed capable, then withdraw support and treat it as a self-sufficient member of the global economy. Gillman, however, highlights the flaw in this linear thinking, drawing a parallel between the growth of places and individuals. Acknowledging that countries seldom transition seamlessly from aid dependency to full autonomy, he introduces the concept of social enterprise as a vital intermediate stage.

In his exploration, Gillman references Dambisa Moyo’s insights from “Dead Aid,” emphasizing the detrimental effects of prolonged dependency on free goods and services. Social enterprise emerges as a dynamic force capable of steering economies away from stagnation, offering a pathway that transcends the limitations of traditional aid and fosters a self-sustaining development model.

Defining social enterprises as “mission-driven initiatives that apply market-based strategies to maximize social impact,” Gillman presents the diversity within this realm. From boutique consulting and venture capital firms in cosmopolitan hubs like New York and London to grassroots micro-enterprises, the spectrum of social enterprise spans organizations like Social Finance, New Profit, and the IGNIA fund. These entities focus on enhancing the “social return on investment,” reshaping the landscape of accountability and efficiency in the non-profit sector.

While the glamorous side of social enterprise captures attention with high-profile players, Gillman argues that the true potential lies in the less heralded micro-enterprises. These small businesses, often overlooked by major funders, marry social consciousness with tangible economic outcomes. From community-involved bike shops to distributors of maternal health kits and local soup kitchen-run catering businesses, these micro-enterprises exemplify the fusion of social impact and financial sustainability.

Gillman sheds light on the nurturing ground for such enterprises in the developed world, citing initiatives like Social Venture Partners Rhode Island’s eight-week incubator program. This program supports budding entrepreneurs seeking to make a difference in their communities while creating viable businesses. Micro social enterprises, although reliant on some donations, stand apart from traditional charities by fostering a cycle of earned income that amplifies the impact of every donor dollar, simultaneously contributing to economic growth.

In a world seeking innovative solutions to complex social problems, social enterprise emerges not just as a concept but as a dynamic force propelling communities towards self-sufficiency, resilience, and inclusive economic development. Gillman’s perspective invites us to reimagine the stages of economic progress, with social enterprise as the catalyst for a more equitable and sustainable future.

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