How 25 years of social innovation has transformed millions of lives

The world is facing four major transformations — and they are all occurring at once. They are economic, including the dramatic decarbonisation of industry; technological, due to the merging of the digital and physical worlds and embedding of AI; geopolitical, driven by the shift from a unipolar to multipolar environment; and social, as citizens cope with massive changes and sometimes conflicting values.

In the face of this rapid change, we need radical innovations that form the glue for our societies and ensure that no-one gets left behind. A new breed of social innovators, who put impact, equity and justice over profit in the deployment of resources and creation of value, are an increasingly important source of creative solutions to these challenges.

Groups like Bangladesh-based BRAC are making a real difference by helping seven million of the world’s poorest people to realise their potential, ensuring that women, farmers and workers in the garment sector are not left behind in a rapidly changing world.

Social innovators have demonstrated the ability to tackle deep-seated problems in areas such as environmental sustainability, health, education, and rural development, reaching hundreds of millions of people in the process.

By offering disruptive services in situations where free markets and existing government structures fall short, these social innovators reach left-behind communities across multiple sectors and geographies. They are also transforming entire industries, as companies wake up to new ways of tackling societal issues that chime with the demands of consumers, employees and many young people.

Twenty-five years ago, we founded the Schwab Foundation for Social Entrepreneurship because we recognised this new generation of change leaders was a growing force, with the potential to improve the world by channelling their creativity into non-traditional business models. What they needed was a platform for global visibility, partnership and acceleration.

Back in 1998, social innovators were very much pioneers, working on the margins of economies and international development efforts. Their efforts frequently went unrecognised. They struggled to access decision-makers or find partners who could help them achieve scale. All too often they were misunderstood by governments, private business and the general public.

In the past quarter century, the tide has turned. The sector and the practices and tools of social innovation and models of social entrepreneurs have entered the economic and social mainstream, providing a lifeline for those most at risk — including young people, women and excluded and minority groups.

A major milestone came at the end of April 2023, when the UN General Assembly adopted the first resolution promoting the social and solidarity economy for sustainable development, on the basis that it advances all 17 of the UN’s Sustainable Development Goals.

The resolution, which calls on governments worldwide to implement policies supporting social enterprise, cooperatives and social innovation, is part of a wider wave of recognition for the sector, with international bodies including the EU, the African Union, the International Labour Organization and the OECD having adopted their own social economy action plans and recommendations.

As momentum builds, the benefits are being felt by increasing numbers of people — whether they live in rural villages in Africa, megacities in Asia and Latin America or less privileged areas of Europe and North America. Organizations like Zipline transform blood delivery in Rwanda; Start-ups like AID:Tech use blockchain for digital identity, aid and remittance delivery, demonstrating that the potential exists to combine smart technology with the needs of under-served populations.

The results are remarkable. As more and more individuals with a passion to help their communities devise novel ways of simultaneously doing good and doing business, the social economy has grown to account for an estimated 7% of global gross domestic product – and the world is starting to listen.

The Schwab Foundation has played its part in nurturing this growing sector by providing a global platform to accelerate outstanding models of social innovation. Over 25 years, it has created a community of 450 champions who collectively have impacted the lives of nearly 1 billion people. At the end of 2021, the total was 722 million.

What is more, social innovators have shown themselves to be agile and resilient in times of crisis. For instance, after the 2008 financial crisis, employment in the social economy actually grew in countries such as Italy and Belgium, in contrast to sharp declines in the public and private sectors. Similarly, during the COVID-19 pandemic, social innovators stepped up to provide community-based services, from mobile health to online education, at a time when governments struggled to deliver essential support.

Today, the Schwab Foundation also honours innovators in the corporate and public space, who apply social innovation principles to their environments. Garance Wattez-Richard, for example, drives change at AXA to provide access to insurance for millions of people who are exposed to devastating effects such as extreme weather events or illnesses. Or Bushra Al Mulla, who re-imagined fragmented family care services into establishing the Family Care Authority in Abu Dhabi, an integrated pioneering model of multiple social services with the family at the centre.

It is particularly encouraging to see the emergence of a new ecosystem linking the social economy with the private sector. This ecosystem is represented by the Global Alliance for Social Entrepreneurship, which is applying the principles of social innovation throughout the wider economy and public sector. Its over 100 members, including major corporations, international organizations, impact investors, intermediaries, academia, NGOs and funders, represent 100,000 social entrepreneurs worldwide, who collectively impact the lives of more than 2 billion people. We are excited to see the Global Alliance so well-positioned to take the social innovation revolution to new heights.

The next 25 years will bring even greater demands for innovative solutions to address the economic, technological, geopolitical and social transformations sweeping the world. Without alternative models that empower local communities, there is a real risk of driving further inequality, since many poor countries are over-reliant on polluting industries, where employment is set to decline. At the same time, investment in new technologies tends to be skewed to higher-income economies.

Social innovators represent a beacon of hope in difficult times, complementing the activities of private businesses and governments. By providing scalable solutions to deep-rooted problems, they demonstrate that change is possible — and they offer a blueprint for established institutions to follow.

Twenty-five years ago, it may have seemed audacious, naive even, to hope that the social economy would represent such a large part of our economy. Today it represents an estimated 7% of global GDP. If the rate of adoption is any indication for future growth, the social economy is on a trajectory to create one of these rare, positive tipping points towards a more inclusive and sustainable economy.

And so, we are hopeful that we will soon witness how social innovators not only inspire a stakeholder economy, but how through their work, they are showing the world how to implement it and scale to positively impact billions.