What the social economy needs now – and it’s not just funding

It’s no secret that I am an advocate for social entrepreneurship, not only because it provides opportunities to grow the social economy, create jobs, deliver critical services but also because I believe that the philanthropic development model has changed fundamentally.

In recent months several funders have asked me to identify social enterprises that are doing credible work, with the potential to fund and scale their work to achieve even greater impact. Simultaneously, quite a few nonprofit organisations approached me to assist them with feasibility and viability studies to transition to social enterprises, with the view to become more financially sustainable by diversifying their income and identify new opportunities for income streams.

Actioning these requests, I identified social entrepreneurs, social enterprises and social franchises and came to understand that specific aspects are critical:

• when you want to transition from a nonprofit to a commercial development model
• when you want to scale your organisation to operate in more sectors and/or geographic locations or grow your service offering
• when you want your organisation to become more financially sustainable by diversifying revenue streams

It became clear to me that what is required now is not only a new breed of organisation, new development and financial models, but also a new generation of changemakers – leaders with a long-term vision who are prepared to innovate, take risks and compete with other businesses to raise capital in a highly competitive market. The sector needs new skills, particularly financial acumen, but also business developers who can create new development and growth models that deliver multiple layers of benefits for a range of stakeholders. One of the aspects that are completely underestimated is what it takes to build business models in markets that are prepared to pay for products and services.

In the process I also learnt the following:

• While many actors claim to be social entrepreneurs, finding credible social entrepreneurship models is incredibly hard.
• While many organisations claim to be social enterprises, there is no evidence of credible business models.
• While it’s true that many state they are hybrid organisations, they mostly rely on donor funding instead of generating their own income.
• Raising capital for social enterprises takes time and effort, as many are simply not investment-ready, do not have a track record of delivering at scale and are not ready to guarantee a return on investment.

In my research I also found visionary social entrepreneurs who are already scaling their business models to a social franchise level. I’ll share some of these case studies and highlight what the social sector needs to achieve development outcomes that really address South Africa’s social challenges. The list is by no means exhaustive and I welcome any contributions so that we can showcase the best social entrepreneurs, enterprises and franchises, and in that way grow the social economy.

1. Required: Founders with vision

Social entrepreneurs are driven by the vision to create a positive societal impact and believe in the power of communities to create change. They are creative and think outside the boundaries of accepted and standard practice. They collaborate with others to develop unique solutions and are not shy to use technology to achieve lasting change. Not only do they prioritise the sustainability of their ventures, considering environmental and social implications, they also set high standards, constantly evaluating their performance. They also view challenges as opportunities to improve their solutions.

• Luvuyo Rani founded Silulo Ulutho Technologies in 2004; it is an award-winning IT services company with more than 50 outlets in townships and rural areas in the Western and Eastern Cape and KwaZulu-Natal, 250 full-time staff and 18 franchisees. It also has 200 centres where people can access online government services and receive computer training. In addition, Rani founded the Silulo Foundation Business and Career Centre, a one-stop community business and career centre that upskills communities by offering economic opportunities for career seekers and aspirational entrepreneurs as well as education, by bridging the gap of unequal education opportunities and digital connectedness.
• Leana de Beer is the CEO of the Feenix group and founder and executive director of WaFunda. Feenix is an impactful student funding platform that enables access to higher education. Recognising that innovation is required to do this, Feenix provides sustainable education opportunities by creating an income share agreement. This financing tool offers an opportunity for students to borrow money to pay for their studies upfront. The students then commit to paying a percentage of their future income to the income share agreement. The focus is on the future of work with strong employment pathways, such as the STEM field, the care economy, artisans and ECD training. The aim is to provide a sustainable solution to address the lack of tertiary funding, as well as tackle youth unemployment.
• Lindiwe Matlali is the founder of Africa Teen Geeks, focused on bringing science into classrooms, especially underprivileged children and girls in particular. Africa Teen Geeks teaches children and unemployed youth how to code, exposes them to computer science and inspires a future generation of technology entrepreneurs and innovators. As a member of the Global Future Council on the Future of Cybersecurity at the World Economic Forum, the Defence and Security Cluster Industry Advisory Panel at the CSIR and the Presidential Fourth Industrial Revolution Commission, Matlali she shapes critical discussions and policies in cybersecurity and technological advancement.
• Claire Reid Blanckenberg is the founder and CEO of Reel Gardening and executive director of Reel Life (NPC). Reel Gardening services the development sector through its school growing programme, the corporate sector through its custom branded marketing offerings and the retail sector through its local and international retail sales. Reel Life enables the activation of a larger ecosystem, with an ultimate goal of leapfrogging townships and rural towns from the pressure of a declining economy to an era of entrepreneurship and agripreneurship. Their seed tape kits enable anyone to start a growing journey, taking someone from seed to harvest in a step-by-step process that enables a greater chance of success with limited resources.

2. Required: Social enterprises with innovative products and services models

Social enterprises apply commercial strategies to maximise improvements in financial, social and environmental wellbeing. They can provide income generation opportunities that meet the basic needs of people who live in poverty. They are sustainable, do not depend on philanthropy and income from sales is reinvested in their mission.

• Chad Robertson and Nkazimlo Miti are the founders of React (previously Regenize), an accessible and ethical recycling solution. They operate a freemium recycling collection service that incentivises residents with Remali, a virtual currency that can be redeemed for various rewards, such as airtime, data and grocery vouchers online (via the Remali app) or offline (in a local Remali shop). The free model ensures that React reaches low/low-middle income groups and that their decentralised recycling hubs recover materials locally, ensuring initial processing close to source.
• Shona McDonald’s Shonaquip Social Enterprise (SSE) is a hybrid social enterprise consisting of Shonaquip (Pty) Ltd, Uhambo Foundation (NPC) and the Champions of Change Trust. They have a joint objective of creating inclusive, barrier-free communities for children with disabilities and their families. As a hybrid social enterprise, SSE’s board ensures that all profits and surplus funds are reinvested into achieving its purpose of social impact. Shonaquip provides assistive devices and delivery systems designed for use in rural and resource-poor settings. They improve each individual’s opportunity to function, prevent and delay secondary health complications and are distributed as part of a collaborative and sustainable community-based support services structure.
• Murendeni Mafumo is the founder of Kusini Water, a social enterprise committed to ensuring equitable access to clean drinking water and sanitation for African communities. Kusini Water builds water treatment systems from nanotechnology and macadamia nut shells. Its water champion programme aims to create more kiosks and water business opportunities in communities that lack access to safe drinking water.
• Johan Olivier and William Bila are the cofounders of Ranyaka Community Transformation, a hybrid nonprofit agency that combines its strengths with SHARE, a for-profit company, to implement a strategy that is place-based, people-centred and citizen-led. The vision is to cocreate and activate 40 thriving rural and urban communities and towns by 2026, impacting 500 000 engaged citizens, local businesses and community partners across South Africa. Using an integrated development model, Ranyaka activates the inherent strength in towns and townships, guiding communities to self-organise around shared goals. From DNA-mapping workshops to supporting local action groups, Ranyaka facilitates projects that align with a holistic development plan for each area. Community-led programmes include community safety, fixing spaces and land and property development, building businesses, early childhood, youth, sport and cultural development. Its cocreation hub is the next step, offering a gathering space that nurtures communities’ entrepreneurial spirit with opportunities to buy, eat and connect locally.

3.  Required: Social entrepreneurs with a long-term vision and social enterprises that can evolve to create deeper impact through evidence-based approaches

A social enterprise approach is only a means to an end ─ the profitmaking strategies are not in place for profit maximisation but are an essential component to bring about social or environmental change in a meaningful and long-term way.

• Mitch Besser, Gene Falk and Robin Allinson Smalley are the cofounders of mothers to mothers (m2m), which consists of three affiliated nonprofit organisations. While each entity has its own board, they are managed by a shared set of senior management leaders. mothers2mothers employs women living with HIV as community health workers called mentor mothers who work at health facilities as well as door-to-door to improve the health of communities across ten African nations. They deliver integrated primary healthcare services to women, children, adolescents and entire families. This model improves community health while delivering meaningful employment for women with HIV. Since m2m was founded in 2001, they have continued to innovate their model, expanded their scope (including e-services) and integrated primary healthcare services.
• Alef Meulengerg’s Rhiza Ventures focuses on sustainability in communities through various social entrepreneurial ventures. This innovative investment firm empowers startup growth and scales ventures through strategic financial backing and expert guidance. Dedicated to fostering disruptive innovations across sectors, Rhiza Ventures operates with a keen interest in sustainability and technological advancements. The company provides capital as well as a robust support network, featuring expert mentorship and access to a broad industry network. Rhiza Ventures positions itself as a catalyst for visionary entrepreneurs, aiming to transform their industries and drive significant societal impact. Their focus areas are:
  • Organic agriculture: They link their own Rhiza Farms with their social enterprise Munching Mongoose, where they sell locally sourced products to primarily suburban households.
  • Skills development: Through Tabula Rasa, they offer IT learnerships on NQF levels 4 and 5. They link linking graduates to IT-based business process outsourcing opportunities, currently focused on cybersecurity and search engine optimisation.
  • Enterprise development and clothing manufacturing: Their enterprise and supplier development programme includes business hub management, incubation and acceleration programmes, where entrepreneurs receive essential resources such as professional spaces, business coaching, mentorship and access to funding.
  • Edufinance: They provide innovative financing solutions to early childhood development centres. They provide ECDs with loans from R1 000 to R150 000. The interest is repayable to the ECDs based on various developmental improvements measured with the learners.
  • Private healthcare: Their nursepreneur network model gives nurses the opportunity to own their own private health clinic, focused on primary healthcare services. The nursepreneur is trained in entrepreneurship and receives the clinic as part of a loan that is repayable through revenue over a period of five to seven years.

4. Required: Serial social enterprises that can innovate continuously

With goals to achieve both social impact and financial sustainability, social enterprises look to a unique set of business models to achieve their goals. Some of the frameworks are:

• Cross-compensation: One group of customers pays for a service and profits are used to subsidise the service for another, underserved group.
• Fee for service: Beneficiaries pay directly for the goods or services the social enterprise provides.
• Employment and skills training: The core purpose is to provide living wages, skills development and job training to the beneficiaries (the employees).
• Market intermediary: The social enterprise acts as an intermediary or distributor to an expanded market. The beneficiaries are the suppliers of the products or services that are distributed to an international market.
• Market connector: The social enterprise facilitates trade relationships between beneficiaries and new markets.
• Independent support: The social enterprise delivers a product or service to an external market that is separate from the beneficiary and social impact generated. Funds are used to support social programmes to beneficiaries.
• Cooperative: A for-profit or nonprofit business that is owned by its members who also use its services, providing virtually all types of goods or services.
• Rene and Marlon Parker cofounded RLabs, a nonprofit that creates environments and systems where people are empowered through innovation, technology, training and economic opportunities. RLabs has expanded to 23 countries across five continents, impacting more than 50 million people. The RLabs model is to equip people with educational resources and skills training, build new ideas and technologies through innovation, incubate and accelerate these innovations and scale solutions to drive sustained impact. They use four methods to generate revenue:

• an innovation service for government, the private sector as well as large development agencies
• investing in products and services, incubated out of RLabs
• own ventures
• digital and technology as well as outsourced services

• Tracey Chambers and Tracey Gilmore are the cofounders of the nonprofit social enterprises Taking Care of Business (TCB) and Grow ECD. TCB empowers unemployed South Africans to escape the cycle of poverty through small business opportunities, mostly in the circular economy. Its flagship programmes ensure that unwanted fashion and other products are responsibly eliminated from the main market and distributed to secondary ones while protecting the contributing brands, reducing waste and creating self-employment opportunities. TCB developed the education-in-a-box and business-in-a-box components for a quality, professional preschool. They also started developing the technology to equip their ECD centres to manage their preschools from the palm of their hand while helping to drive data-driven decision-making. In 2021 they started their next journey towards scaling by launching free apps to all ECD centres and partners in South Africa. They have now moved away from social franchising and make their services and products more accessible to more centres by launching their quality education programme and business support tools. They also launched a low-cost ECD finance product to allow preschools to afford investment in their small businesses.
• Rejoice Shumba-Mtisi’s Siyakholwa Foundation is a public benefit organisation dedicated to establishing sustainable enterprises and projects. The primary focus is on shifting the paradigm from dependency on donors and sponsors to fostering self-reliance through job creation and income generation. Its Qobo Qobo Essential Oils Incubator is a social enterprise that creates an enabling environment for farming communities to enter the lucrative essential oils agriculture and production markets. The project incorporates agricultural specialists to provide mentorship and coaching support in the areas of land clearing, installations, planting, maintenance and harvesting techniques to the local farmers to ensure that they can farm sustainably.

5.   Required: Social franchises with scalable business models

Social enterprises and franchises prove that solving South Africa’s most pressing challenges is not only possible but scalable. With a combination of innovative thinking, partnerships and investment, these initiatives can transform lives.

• Lynda Toussaint leads Unjani Clinic and aims to bring quality affordable healthcare services to communities across South Africa. By building a network of clinics owned and run by professional nurses, Unjani Clinic empowers black women, improves healthcare quality and access, and creates employment in communities. Founded on an owner-operator model, the clinics focus on underserved markets, ensuring affordable, quality primary healthcare. Unjani Clinics (NPC) is reliant on funding from donors or funders (through loans) to fund the expansion of the network, which currently has 193 clinics. The monthly network fee charged to each facility in the network covers some of the operational expenses.
• SmartStart, a social franchise designed to address the implementation gap in early learning and promote employment opportunities for a women-led care economy. The social franchise model seeks to develop a population-based approach in which quality early learning is not just delivered through registered ECD centres but is also offered in homes and other community-based settings. Through its network, SmartStart recruits and trains early-learning practitioners to run their own programmes. This enables the delivery of a quality daily routine for children and empowers franchisees to support themselves as micro-entrepreneurs while developing a large cohort of ECD practitioners who can be upskilled for a national ECD system.

 Towards hope, inclusivity and sustainability

Social entrepreneurs, enterprises and franchises represent more than just solutions ─ they symbolise hope and resilience. By aligning purpose with profit, these models are rewriting the story of South Africa, one community at a time. They prove that solving South Africa’s most pressing challenges is not only possible but scalable. With a combination of innovative thinking, partnerships, and investment, these initiatives can transform lives at a national scale.

The time to support social entrepreneurs, enterprises and franchises is now. Whether you’re an investor, policymaker, or citizen, consider how you can contribute to this movement. Together we can transform challenges into opportunities and drive an inclusive, sustainable future.

Reana Rossouw – Next Generation Consultants Next Generation Consultants is a management consultancy that works at the intersection of the impact, social and solidarity economies. Next Generation’s services include research and development, strategic advisory as well as impact management and measurement.