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Introduction: Go Big or Go Home

At Room to Read, our first major identity crisis came when we were eight years into our work. Over the years, we’d achieved rapid growth in revenue and staff. We’d also expanded the number of elementary schools with our literacy program and the scale of our girls’ education program every year. Yet we had serious concerns about the quality of our programs. Were we really improving children’s learning? Was our model sustainable? Were we doing our absolute best to ensure children had better educational outcomes—or were we just pursuing growth for growth’s sake?

While we were asking ourselves these questions, we were getting more requests to extend our services. Our country teams were asking us to help teachers do a better job of teaching children to read. However, this would have pushed us deeply into the unknown, way past our comfort zone. We would be striking at the heart of schools’ core responsibilities. Would schools even allow us to help? In our Girls’ Education Program, country teams wanted to hire more full-time staff. They suggested creating “social mobilizers” to help girls to develop more consistent life skills.

These were huge new opportunities. They were exciting to consider, but did we have the talent and money to pull it off?

Investors were beginning to ask more specific questions about our impact. What difference were we really making? Were children reading better? Were governments adopting our programs? How do we define success, and what is our end game?

We excelled at establishing well-functioning libraries at government primary schools in lower-income countries and filling them with exciting local language books. But we didn’t know whether these resulted in better reading skills for the children we were targeting. Was it time to be more ambitious?

Although some investors and board members cautioned against it, our senior management team argued persuasively that Room to Read needed to move fast to stay relevant. It was imperative that we deepen our impact. The benefits far outweighed the risks.

The result: We outlined an ambitious 2010–2014 global strategic plan that would transform our organization’s mission and operations. Our bet was to invest heavily in Room to Read’s operational support systems, thought leadership, and monitoring and evaluation processes. We would investigate our impact and adjust our programs accordingly. This approach would help us through our identity crisis—our “sophomore slump”—and position us for success in the next major phase of our development.

It was a bet that paid off.

The Rise (and Often Fall) of the Entrepreneurial Social Enterprise

The world faces no shortage of challenges. Climate change, infectious diseases, terrorist attacks, ethnic and gender discrimination, failing public healthcare and education systems, underemployed and alienated youth, food security, and water security—the list goes on. These large crises threaten the ability for all of us to enjoy peaceful, productive, and sustainable lives. The world requires daring, innovative solutions. And when we find those solutions, we need to scale them quickly and effectively to make a difference globally.

One way to do this is through entrepreneurial social enterprises (ESEs) such as Room to Read. ESEs take an entrepreneurial approach to addressing social issues. They combine for-profit and nonprofit business practices and approaches to find scalable, replicable, and sustainable solutions to social and environmental problems. Disruptive in solving problems, ESEs fall somewhere between traditional nonprofit and for-profit organizations in their management styles.

“ESE” is not a formal business term. There are no specific criteria, minimum financial thresholds, levels of proficiency, or annual ESE rankings in business magazines. The Bureau of Labor Statistics does not track the number of ESEs in the United States. The IRS does not grant special tax breaks. An ESE is more of a mindset, an approach to organizational leadership and development. Foundations such as Ashoka, Draper Richards Kaplan, and Skoll identify ESEs and build networks among social entrepreneurs. Business schools teach courses in social entrepreneurship and write case studies about ESEs. One can even earn a PhD in the subject. We think of ESEs as a smart way to structure socially oriented work for maximum impact.

We live in an inherently unfair and unjust world. If you have traveled widely like we have, you have experienced this yourselves. You have seen firsthand the difficult circumstances in which many people struggle to survive daily and how lucky you are in life that you do not live in that situation. That you have this book in your hands and can read it means that you are among an elite and privileged group. You are literate and can afford to buy a book, check out a book from the library, or have the means and skill to download it. Your life experience is far different from the people served by ESEs.

People approach this kind of inequity in one of two ways. Some people recognize that the world is unfair but shrug their shoulders. “What can I do about it?” they ask. They believe that their job is to look out for themselves and their families, make the best of their own situations, and work hard to end up on the better side of the household income statistics.

The other approach does not accept the status quo and is determined to change it. These people lie awake at night thinking of ways to create a better world—a more free, sustainable, and just world. They are passionate about their ideas for changing the system.

For those of you who fall into this second category, you may be a social entrepreneur—a person driven to establish an organization to solve big global problems or effect social change. Even if you don’t have the entrepreneurial bug to start an organization, you may be a social change champion who wants to support and rally around innovative, disruptive ideas and help turn them into reality. In either case, we firmly believe that “To whom much is given, much is expected.”

If we are to improve the circumstances of our planet, we must grow and harness the power of social enterprises. Like most business start-ups, nonprofits find it difficult to break through the initial rush of enthusiasm and early successes and develop a stable path toward longer-term growth, stability, and impact. The start-up years are invigorating, but building a strong organizational foundation to get to scale takes grit and perseverance.

Helping uncover why some entrepreneurial social enterprises make it—and how you can take steps to put your organization on the path to success—is the purpose of this book. This book is written by social entrepreneurs for current and aspiring social entrepreneurs and the social change champions who support them. We feel that you are our “tribe”—our peer group—and we hope our experiences can help you.

What’s in a Name?

What is the difference between organizations described, alternatively, as nonprofit, charity, social impact, and entrepreneurial social enterprise? It is a valid question and one that has confused many of us. As practitioners, our answer to the question is “Not much.” These are all terms that refer to an organization working to improve the lives of people who are underserved—often poor or otherwise disenfranchised. They all aspire to address social issues and create positive change in our communities. One can argue more specific definitions based on accounting and legal differences, but for the sake of this book we will generally use the layperson definition of “nonprofit” to refer to nongovernmental or nonbusiness organizations whose purpose is to further a social cause. As a subset of the nonprofit sector, we will often employ the terms “entrepreneurial social enterprise” and “social entrepreneurs.” ESEs tend to be more innovative, disruptive, and risk-taking in the approaches they employ to achieve social change and make an impact on a large scale.

Who We Are

Room to Read is frequently cited as an early example of a successful social enterprise. It is among the organizations that received the first Fast Company/Monitor Social Capitalist Award for innovation and social impact. It was also among the early grantees of foundations investing in social entrepreneurs such as the Skoll and Draper Richards Kaplan Foundations.

Room to Read is an international nonprofit organization that helps improve educational opportunities for children in lower-income countries. Our goal is twofold: to develop reading skills and the lifelong habit of reading among younger children, and to help adolescent girls complete high school and make smooth transitions to the next phases of their lives. We won’t be going deeply into the details of our founding and early successes. These have been well documented in John Wood’s award-winning memoir, Leaving Microsoft to Change the World. But we will be discussing our challenges, experiences, and lessons learned later in the journey.

As is typical of many social enterprises, many of our first staff members had business backgrounds. We chose to leave successful careers to establish and grow Room to Read. We were committed to developing innovative solutions. We sought change at a global...