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A desire to address the effects of climate change is the driving force for many corporations seeking to meet environmental, social and governance (ESG) or corporate social responsibility (CSR) goals.

Social entrepreneurship has proven to be an effective way for these companies to advance their ESG or CSR engagement and funding goals — especially when these goals are aimed at people living in or near the edge of poverty, who are already disproportionately affected by climate change. Social enterprises consciously address the intersection between poverty and climate change by providing their customers and communities with clean energy, safe water, climate-smart agriculture and other solutions.

Corporations increasingly support social enterprises in a variety of ways. One approach is through social procurement (sometimes referred to as responsible or inclusive procurement). As this approach has grown in popularity, numerous initiatives have emerged to encourage it. For example, Acumen worked with Yunus Social Business and IKEA Social Entrepreneurship to develop practical guidance for social enterprises seeking to become “corporate ready.” And SAP has developed an ambitious social procurement strategy that entails sourcing 5% of their addressable procurement spend from social enterprises and diverse suppliers by 2025.

Whether they’re seeking to fund individual enterprises for ESG or CSR purposes, or identifying corporate-ready social enterprises to enter their supply chains, corporations often find it challenging to identify and engage with these enterprises one at a time. This is because not all social enterprises find long-term success, and it can be difficult to predict which individual enterprises are most likely to succeed – from both an impact and a business performance perspective. As a result, some corporations prefer to work with social enterprise accelerators — to better leverage their own resources by reaching and strengthening multiple enterprises at once.

Quantifying the benefits of supporting social entrepreneurship accelerators

A recent white paper from Santa Clara University’s Miller Center for Social Entrepreneurship, “Amplifying Impact: How Accelerating Social Entrepreneurship Boosts Climate Resilience,” proposes that “business acceleration programs are particularly effective at both identifying which social enterprises are most likely to have an impact, and helping promising social enterprises to optimize their impact and business performance potential.” The paper attempts to move beyond anecdotal data by quantifying the benefits corporate partners can obtain from supporting social enterprise accelerators.

The white paper bases its conclusions on:

• Findings from business acceleration programs conducted by organizations, including the Global Accelerator Learning Initiative (GALI).
• Data and selected examples of social enterprises whose services address climate resilience.
• Information and insights from Energy Access India, a USAID-funded project that Miller Center ran between 2015 and 2018.
• Data generated by the 2021 Climate Resilience Asia Pacific Accelerator program that Miller Center conducted in partnership with Chevron. This program aimed to address the most significant barriers to investment for social entrepreneurs in the Asia-Pacific region aiming to develop reliable, affordable, low-carbon solutions that scale.

The white paper’s assertions have important implications for corporate funders. In short, it explores why focusing support at the accelerator level represents an effective, highly leveraged approach for achieving social impact, including boosting climate resilience.

The effect of acceleration on social enterprises

I acknowledge that this argument may seem self-serving, given that the organization I work for is a social enterprise accelerator. But it’s this first-hand experience that gives me confidence in the assertions. By providing the leaders of early-stage social enterprises with various business tools and know-how to help them become stable, successful companies, acceleration has demonstrated its ability to support entrepreneurs and catalyze social impact.

As reported by GALI, enterprises that are accepted to accelerators and complete their programs increase their revenues, number of employees and outside investment by greater margins (on average) than non-accelerated enterprises — both at the time of selection and one year later. These impacts are due to several factors, including the fact that accelerator programs design their selection processes to accept enterprises that are ready and able to reap the benefits of acceleration, then provide programming that enables further growth.

As an example, of the 8,000+ enterprises that GALI evaluated, the average annual revenues for accepted applicants was $105,855 when they applied — a number that grew to $135,019 one year later, a growth of 28%. This compares with $57,366 average annual revenues at the time of application and $64,920 one year later for rejected applicants, for a growth rate of only 13%. As GALI noted, “These figures indicate that accelerated ventures outpace non-accelerated ventures in revenue and investment growth — a result which persists (and strengthens) in subsequent years after acceleration takes place.”

Because accelerators identify and work with social enterprises that have the highest potential for scale, prospective corporate funding programs can enjoy a greater degree of confidence about the potential viability of accelerated enterprises. As a result, both accelerated social enterprises and the accelerator programs that admit them become more attractive from a corporate funding perspective.

A portfolio approach to funding social enterprises

Funding cohorts of social enterprises through accelerators allows corporations to take a portfolio approach that is more likely to result in greater overall impact over time. It also means that corporate ESG or CSR staff, who are generally not full-time investment experts, don’t have to assume full responsibility for conducting the due diligence work necessary to evaluate the potential of individual social enterprises.

Taking this portfolio approach offers several benefits for corporate funders. For example, we have calculated that each dollar invested in a Miller Center acceleration program by a corporate or philanthropic partner improves 5.6 additional lives and helps unlock approximately $280 of outside investment into a social enterprise. Results like this are why we say that outside investment in running an acceleration program for established social enterprises represents a highly leveraged way to support social enterprise growth and create impact aligned with the funder’s investment objectives.

Corporations are increasingly embracing this path to impact. Chevron, for one, understands that achieving change at scale requires partnership and collaboration throughout the energy system. It funds accelerator programs like Miller Center to help reduce poverty, drive economic and social opportunity, and develop the entrepreneurial ecosystem. As Kurt Glaubitz, Chevron’s General Manager Corporate Affairs, Asia Pacific puts it, “Through the programs Chevron has funded with Miller Center, we have seen that investing in high-quality, proven accelerators is an effective way to increase the impact of our giving.”

The most recent Climate Resilience Asia Pacific Accelerator that wrapped up in January 2022 enabled Chevron to reach 11 entrepreneurs operating across 10 countries. The varied range of solutions offered by these enterprises include:

• Fargreen, which is working to build prosperous and sustainable farming communities in rural Vietnam and around the world.
• GerWeiss Motors Corporation in the Philippines, which aims to lift millions of tricycle drivers and their families from poverty while eliminating the main source of air pollution in the country’s transport sector.
• Gravity Water, which is operating a 100% energy-free model to turn rain into safe drinking water for schools in need across the world, including in Costa Rica, Indonesia, Nepal, the United States (Puerto Rico) and Vietnam.
• ONergy Solar (Punam Energy Private, Ltd.), which is providing high-quality and affordable end-to-end solar solutions that deliver renewable energy to rural India.

A viable pathway to poverty alleviation and climate resilience

Social entrepreneurship offers a viable pathway to help lift people out of poverty and enhance climate resilience. Accelerated social enterprises are more likely to advance the dual aims of corporate investors interested in melding their impact and financial goals, and accelerator programs provide corporations with effective — and cost-effective — pathways for their philanthropic funding and responsible procurement.

Accelerators do the hard work of identifying promising social enterprises, then providing them with valuable training and support. To learn more about how accelerated social enterprises are improving the climate resilience of the world’s most vulnerable populations, visit the Miller Center for Social Entrepreneurship website.

Brigit Helms is Executive Director at Miller Center for Social Entrepreneurship.

Photo courtesy of Fargreen.