Social entrepreneurship blends business innovation with a commitment to tackling social and environmental challenges. Unlike traditional nonprofits, it adopts a for-profit model, focusing on sustainable solutions that drive meaningful impact. At the heart of social entrepreneurship is a deep connection to causes, fostering relationships with peers, beneficiaries and mentors that strengthen community bonds and amplify impact. Social enterprises are characterized by five core traits: addressing social or environmental challenges, prioritizing purpose over profit, sustaining operations through revenue, reinvesting surplus for greater impact and adopting legal frameworks to protect their mission.

While both social entrepreneurship and Corporate Social Responsibility (CSR) aim to create a positive societal impact, the key difference lies in their intent: social entrepreneurship aims to solve societal issues through sustainable, impact-driven business models, while CSR focuses on integrating community and environmental accountability into a company's existing model.

Social enterprises are gaining global attention due to the increasing interest of entrepreneurs in this model. These enterprises generate around $2 trillion in annual revenue, create 200 million jobs across sectors such as agriculture and financial services and actively seek $1.1 trillion in external financing to support their growth beyond personal savings. Globally, one in two social enterprises is led by women, compared to just one in five conventional businesses.

The social enterprise sector is larger than the $1.6 trillion apparel industry and double the size of the $875 billion advertising industry. Its growth is showing no signs of slowing, with projections estimating $5.5 billion in turnover by 2030. The British Council's report, More in Common: The Global State of Social Enterprise 2022, estimates up to 11 million social enterprises worldwide, based on research from 27 countries and global extrapolations.

In the United Kingdom, 100,000 social enterprises contribute £60 billion ($74.5 billion) to the economy annually, benefiting from tax incentives and various funding options that empower individuals to create social impact through business. Similarly, Australia is home to over 500 certified social enterprises, with a broader community of more than 12,000 adopting the model. Moreover, Asia leads in the number of social enterprises, Europe boasts the highest rate of women-led enterprises and North America stands out with the highest average turnover.

In the same way, social enterprises in Nepal are flourishing across various sectors, including cooperatives, micro-finance institutions, civil society organizations, social businesses and community interest companies. Their primary focus lies in empowering youth, generating employment opportunities, fostering sustainability, and addressing economic, social and environmental challenges.

This thriving ecosystem of social entrepreneurship in Nepal is fueled by several key drivers that continue to shape its growth and impact. Increased awareness about social and environmental issues at local and global levels has sparked a shift toward impactful businesses. The widespread availability of technology has empowered entrepreneurs to reach broader audiences and develop innovative solutions. Additionally, the government has introduced supportive policies that foster the growth of social enterprises. Furthermore, global networks and international organizations have played a crucial role by offering resources, funding and mentorship to social entrepreneurs in Nepal.

The Federation of Handicraft Associations of Nepal (FHAN) has been dedicated to promoting handicraft products globally. FHAN emphasizes the use of local resources, cruelty-free production, sustainable practices, women-led businesses, eco-friendly materials and child labor-free production—core values of social entrepreneurship.

Likewise, Shah Hemp Inno-Ventures (SHIV) transforms wild-grown hemp and bamboo into eco-friendly products, driving fair employment, economic growth and climate change mitigation while fostering positive community impact.

Another Nepali firm, Build up Nepal, is transforming sustainable construction by offering low-carbon, cost-effective alternatives to traditional clay-fired bricks. By empowering entrepreneurs and communities, it is enabling the creation of affordable, resilient homes while promoting eco-friendly building practices.

Similarly, Anthropose combats cataract-induced blindness in Nepal by funding one cataract surgery for every 10 eyewear sold, in partnership with Tilganga Institute of Ophthalmology. Anthropose’s co-founder Amun Thapa also co-founded Khaalisisi alongside Aayushi KC, a digital platform linking waste sellers and collectors, improving waste management and sustainability. It dignifies waste collectors with uniforms, ID cards and a better pay while educating communities on waste management and environmental responsibility.

Other examples of social entrepreneurship in Nepal include Miteri Recycle Nepal which provides affordable clothes to remote communities; Kalpavriksha Greater Goods that empowers women entrepreneurs to promote sustainable clean energy; Danfe which trains economically challenged girls in earthquake-affected areas to start tailoring businesses; Bikas Udhyami that fosters youth-led development through innovative solutions and social innovation; and many more.

Most social enterprises in Nepal are classified as small and medium enterprises (SMEs), making it essential to examine SME-related policies to identify gaps in social entrepreneurship development. The government has planned reforms in policy, legal structures and investments in competitive industries to support industrial sector growth. However, despite efforts from small entrepreneurs, investment in SMEs remains limited.

Challenges Galore

Despite significant contributions worldwide, social enterprises face challenges such as balancing passion with mental health, managing limited resources and building consumer trust. They also struggle to align social and commercial goals, compete with cheaper, unethical alternatives and navigate societal attitudes that undervalue purpose-driven work.

Nepal's social entrepreneurs encounter a unique mix of challenges shaped by global and local dynamics. While efforts like the 2024 Nepal Investment Summit emphasized economic growth, balancing sustainability with profit-driven priorities remains a significant hurdle. Social enterprises still struggle with limited funding, high startup costs and restrictive policies that lack clear definitions and support.

Additionally, shifting mindsets and navigating outdated regulations create operational bottlenecks. The shortage of skilled workers, worsened by an education system and cultural norms that limit innovation and leadership, further hampers growth. Efforts to localize the core values of social entrepreneurship in Nepal’s context have also proven short. By addressing these challenges, the social enterprise sector is poised to continue its transformative impact on economies and communities in Nepal and worldwide at large.

Way Forward

Collaboration is key to maximizing impact in social enterprise, as leaders can achieve more together by leveraging collective strengths and building connected communities for support, problem-solving and shared success. Balancing passion with approachability and fostering community connections can amplify their mission and bring others along on the journey.

Nepal requires strategies like connecting local and global markets through branding and networking, and facilitating loans via cooperatives and merging public-private financing can be effective. Government grants in the early stages, followed by capital investment, offer low-risk returns. Developing an inclusive SME policy focusing on women, the environment and the economy, along with resource mapping to connect local resources with investors, will drive growth. Additionally, localizing social entrepreneurial practices is crucial for success.

Clear definitions and supportive policies, including tax rebates and subsidies, are essential for attracting investment. Strong collaboration between the private sector, universities and the government is key to fostering entrepreneurial mindsets and breaking down barriers. Introducing programs to support local social enterprises through mentorship and funding will help accelerate their growth. By promoting Nepali social enterprises on the global stage, they can increase their recognition and impact. Prioritizing capacity building and strategic thinking is key to overcoming current challenges and driving long-term success.

For instance, Amma Cafe, a project under the Buddhist Circuit Development Initiative in South Asia (BCDISA), is backed by the South Asia Regional Trade Facilitation Program (SARTFP) funded by the World Bank and the Australian government. This initiative aims to leverage the region's rich cross-border Buddhist heritage to foster prosperity and inclusivity. Women trained as baristas and entrepreneurs at Amma Cafe undergo intensive literacy, life skills and hospitality training, including menu creation using local ingredients and cooking classes. Gender-based violence workshops actively involved families, fostering understanding and support. As a result, many husbands who were initially hesitant are now actively supporting their wives.

In February 2024, SHIV, which makes eco-friendly products through hemp and bamboo, achieved Certified B Corporation status, enhancing global retailer partnerships, credibility in anti-human trafficking efforts and collaborative campaigns while fostering community-focused stakeholder engagement through advisory boards. SHIV fosters impactful partnerships with local leaders and global organizations, advocating for eco-friendly practices and hemp education while empowering communities through training in hempcrete building, organic gardening, and skills development. With Certified B Corporation status, SHIV enhances its credibility, explores blockchain for transparency and aims to expand collaborations with initiatives like Bluenumber and Million Makers.

These initiatives highlight the immense potential of social entrepreneurship to thrive amid challenges. In Nepal and across the globe, this sector holds great promise to drive meaningful change and create lasting impact. It will be interesting to see how this sector paves the way for itself.

(Gadtaula and Ranjit are analysts at Business Brainz, a global business research and insight firm operating from Nepal.)

(This opinion article was originally published in  February 2025  issue of New Business Age Magazine.)