Too Small to Fail: Debt Relief for Social Entrepreneurs

In the business world, it’s par for the course to move on when a project has proven financially unviable. Those of us who identify as social entrepreneurs can be more stubborn, at our own expense. We don’t necessarily move on when our projects have proven financially unviable.

We keep going, at first turning to philanthropic capital (where available, and it seldom is) and then, too often, to our credit cards. Some of us move on only when the money’s gone, our passion muted, and our monthly minimum payment so high that we have no choice but to abandon the work we love.

I fear that cash-strapped social entrepreneurs are becoming too dependent on the only reliable source of funding for social innovation, Mastercard and Visa. We have few alternatives. Large-scale funds created to advance the sector are bureaucratic and risk-averse by design. One-off funding sources for socially innovative organizations are too few in number and rarely come with deep enough pockets to stabilize a social venture.

A perfect storm has formed around the failure of philanthropic capital to address the needs of social entrepreneurs, the ease with which personal debt can be accessed, and the stubborn enthusiasm that social innovators often bring to their projects.

The damage this storm can cause is tremendous. The cost is nothing short of social entrepreneurship losing its brightest and most passionate to more stable if less socially-minded careers.

We would all be well-served to think of cash-strapped social entrepreneurs as too small to fail. Despite their small size today, many carry the blueprint for a program that could significantly advance a social issue or improve society in 5, 10, or 20 years. The field of social entrepreneurship shouldn’t be putting social innovators in situations where they need to choose between selling equity in themselves, paying the credit card companies’ exuberant fees, or leaving the work they love.

How do we build debt relief into the social entrepreneurship eco-system to ensure the growth and development of world-changing innovations, and the innovators behind them?

Here are some related questions to kick-off the discussion:

• Are social entrepreneurs assuming too much personal debt? What’s your experience?
• Who’s to blame for mounting personal debt, the field or the social entrepreneur?
• Is funding for social innovation in fact broken? And if so, how do we fix it?

This article served as the introduction to a discussion on Social Edge, hosted in January 2010. Please refer to the original version for a record of the discussion and to add your comments.