Navigating the Gray Area of Social Entrepreneurship: Profit, Purpose, and Sustainability
This is a blog piece authored by our MENA Regional Manager, Ruba Hijazi, who enjoys rich experience in the space of social entrepreneurship.
In 2015, while working with one of Jordan’s leading NGOs, I discovered a deep passion for social entrepreneurship. This approach emerged as a transformative solution to various organizational challenges we faced. It effectively merges two distinct aims: the drive for financial sustainability through enterprise and the commitment to social well-being. This model balances capitalism with community care, allowing social enterprises to thrive while addressing societal needs. At that time, I viewed it as more than just a strategy; it represented an ideal where business and social good could coexist in harmony. However, after nearly a decade in this field, I have come to realize that the reality is far more complex than I initially thought.
Social enterprises possess significant potential but often require substantial support in their early stages. This dependence on external aid can lead them to deviate from their original models and become overly reliant on grants for funding. While some may justify this reliance during the initial phase, many social entrepreneurs find themselves stuck in this cycle.
This issue was particularly evident during RILx24 discussions, the Response Innovation Lab’s annual event held this year in Kathmandu. It became clear that many social enterprises supported by humanitarian actors struggle to achieve financial independence. Instead, they often find themselves trapped in what we refer to as "grant-preneurship." These enterprises operate in a gray area, relying heavily on grants and subsidies from donors, NGOs, or governments, which undermines the core principle of financial sustainability.
A concerning trend is that many of these enterprises struggle to function as fully operational businesses. Instead of pursuing financial independence, these "grant-preneurs" often shape their operations to align with donor priorities—such as adhering to the Sustainable Development Goals (SDGs), ensuring gender balance, and adopting environmentally friendly practices. Unfortunately, this alignment may stem from a need for funding rather than a genuine commitment to these principles.
I recall during my time at Parachute 16, an impact design house that supports entrepreneurs in Jordan and MENA, we were assessing a group of entrepreneurs to determine their eligibility for funding. The evaluation focused on their financial status, business achievements, and the social impact of their enterprises. One entrepreneur presented a business producing specialized tote bags with printed designs—a popular venture in the country at the time, with many others engaged in similar activities. He marketed his business as eco-friendly, employing only refugee women, and claimed it fulfilled several Sustainable Development Goals (SDGs). However, upon closer inspection, we discovered that the women were being paid minimum wage and working under difficult conditions. Furthermore, the fabric used for the bags was environmentally harmful. Despite these realities, the entrepreneur framed the business to align with donor priorities to secure funding and sustain operations.
Conversely, the pressure to generate income can lead social enterprises too far in the other direction. The need for profitability sometimes forces entrepreneurs to compromise their social missions, turning purpose-driven organizations into conventional profit-seeking businesses. This ongoing tension between remaining true to a social mission and achieving financial viability is where many social enterprises falter, leaving them caught between the non-profit and commercial sectors, lacking a true identity in either.
In my view, social enterprises should not have to fit neatly into either the for-profit or non-profit categories. They should develop a revenue stream that ensures financial health and sustainability while keeping their social mission at the core. Financial sustainability should support, rather than replace, their social impact.
From my recent work with Syrian organizations in Turkey, I have seen remarkable examples of entities succeeding in generating income while maintaining their humanitarian mission. One standout example is the organization Ataa. When I visited their headquarters in Gaziantep, I noticed that their building was located far from the city center and the areas where most organizations were concentrated. When I asked about this, they explained that the building is part of a waqf (endowment) owned by the organization.
For those unfamiliar, a waqf is an Islamic financial and social system where an asset—such as a property, land, or funds—is allocated for charitable or social purposes. The asset itself is preserved and cannot be sold or traded, with its proceeds or benefits directed toward ongoing public or private welfare.
In Ataa’s case, the building is part of their endowment, alongside agricultural land used for cultivating pistachios—a key product of the Gaziantep region. The revenue from selling these pistachios goes entirely to support the organization’s operations. While this was the most memorable example for me, Ataa has other endowments that also contribute to sustaining their work.
This model demonstrates how social enterprises can create innovative revenue streams without compromising their missions, achieving both financial sustainability and social impact.
However, the role of NGOs in this dynamic must also be examined. Many NGOs inadvertently contribute to the rise of "grant-preneurs" by viewing social enterprises solely as recipients of small grants. This perspective often limits the potential of social enterprises to grow as partners or even clients of NGOs.
During my work at the Response Innovation Lab, I encountered many social entrepreneurs eager to partner with NGOs but struggling to form meaningful collaborations. One social entrepreneur incubated at AlHussein Technical University HTU shared her experience of developing an innovation aimed at supporting mental health programs in refugee camps. Despite months of effort to meet an INGO’s collaboration requirements, she was ultimately deemed ineligible, leaving her frustrated after investing significant time, effort, and limited resources. Similarly, another social enterprise, recognized at the global MIT Solve competition for its focus on 'Artificial Intelligence for Health Systems Strengthening,' faced similar barriers in connecting with INGOs.
Social entrepreneurs are not merely seeking handouts; they aspire to work closely with NGOs as genuine partners, contributing to long-term sustainability rather than relying on temporary financial support.
Today, we must rethink how NGOs support social entrepreneurs and collaborate on strategies that benefit both parties. This includes exploring partnerships that prioritize mutual sustainability and growth rather than direct and short-term interests. Ultimately, there is no one-size-fits-all solution for social enterprise sustainability. What works for one enterprise may not be effective for another. Our role is to assist these ventures in discovering what best suits them, ensuring they remain true to their mission while achieving financial health. By supporting social enterprises in this way, we can create a more sustainable ecosystem—one that values both profit and purpose and nurtures the unique role these enterprises play in addressing the world’s most pressing challenges.