When Entrepreneurship Changes Lives: The U.S. as a Model for Serbia

Introduction

Social entrepreneurship is becoming an increasingly recognized global model for addressing social and environmental challenges, especially as the world grapples with the urgent demands of sustainable development. Local entrepreneurial initiatives that combine business and social goals are proving to be valuable allies in achieving the Sustainable Development Goals (SDGs) across the public, private, and civil society sectors. While this phenomenon is rapidly evolving in many countries, it remains in the early stages of development in Serbia—despite the country’s long-standing tradition of socially oriented business. It wasn’t until 2022 that social entrepreneurship gained legal recognition in Serbia, marking both an opportunity and a challenge. Existing practices must now adapt to a new legal framework, while decision-makers are tasked with building a strategic and supportive environment for the sector’s growth.

So far, Serbia has primarily aligned its approach to social entrepreneurship with European Union standards—naturally, due to the EU accession process, as well as shared historical, cultural, social, and economic ties. However, it is equally important to look beyond Europe. The United States offers a fundamentally different—but highly instructive—approach to social entrepreneurship. While EU models emphasize social mission, the U.S. approach focuses on entrepreneurial spirit and market-based innovation in solving social problems. The American experience can serve as a valuable reference point for Serbia by highlighting the importance of sustainability, innovation, and opportunity within the sector—elements that are essential for its evolution.

Understanding Social Entrepreneurship in the U.S. Context

The American model of social entrepreneurship is often described as "business with a social impact"—enterprises that seek to fulfill a social mission while generating profit. Unlike the European model, which often centers around nonprofit organizational forms and reinvestment mechanisms, the U.S. model focuses more on the impact achieved rather than the legal structure through which that impact is delivered. While the EU traditionally distinguishes between for-profit, nonprofit, and not-for-profit organizations within the so-called third sector, the U.S. has moved toward the concept of a "fourth sector"—a hybrid space between public, private, and civil systems.

As early as 2011, Heerad Sabeti, founder and CEO of The Fourth Sector Group (4SG), argued in the Harvard Business Review that formalizing “for-benefit” structures would eventually lead to the rise of a fourth sector in the economy—distinct from government, nonprofits, and traditional businesses. “The emergence of this sector will likely shape the future of capitalism,” he wrote. By 2017, research by the National Institute for Social Impact supported this view, showing that many social enterprises in the U.S. were already being understood as fourth sector entities—blending commercial goals with social purpose. This includes social businesses, impact-driven corporations, and conscious capitalism models. A major factor in the U.S. model is the limited role of the state in regulating markets, including the social entrepreneurship sector. Instead of relying on direct subsidies or institutional incentives (common in the EU), the U.S. encourages private sector collaboration between commercial and social actors to drive innovation and impact.

To illustrate the diversity of social entrepreneurship in the United States, below are the most prominent organizational models found within the hybrid or “fourth” sector:

1. Nonprofit/Charity Organizations These entities are mission-driven and exist solely to fulfill a social purpose. Their primary goal is not to generate profit, but to address specific societal needs through service, advocacy, or community development.

2. Social Enterprises A social enterprise is primarily established to solve a social issue while applying business principles. It blends commercial strategies with a strong commitment to a social mission. A prime example is NESsT, an organization that supports fair labor conditions for workers in global supply chains—especially in artisan industries. NESsT reinvests all of its revenue into communities, providing economic opportunities for marginalized populations. The organization demonstrates that financial and social returns are not mutually exclusive. NESsT recognizes both for-profit and nonprofit legal forms, as long as the core mission remains social. Its “double bottom line” approach focuses on both income generation and direct social impact, such as job creation and improved living conditions. For further reading: “Mission, Inc.: The Practitioner's Guide to Social Enterprise” by Kevin Lynch and Julius Walls Jr.

3. Social Businesses These organizations aim to achieve both social and commercial goals—equally. Every investment is expected to generate measurable social impact. TOMS Shoes is a well-known U.S. example. Founded in 2006, its "One for One" model provides a pair of shoes to a child in need for every pair purchased. While generating over $300 million in annual revenue, TOMS also addresses poverty and lack of resources in underprivileged communities. Though sometimes criticized for being overly profit-driven, TOMS remains a successful example of a business model that embeds social purpose at its core. Recommended reading: “Building Social Business: The New Kind of Capitalism That Serves Humanity's Most Pressing Needs” by Muhammad Yunus.

4. Conscious Capitalism This model assumes that every business has a higher purpose beyond profit. By focusing on that purpose, these companies create value for all stakeholders—not just shareholders. Whole Foods Market exemplifies conscious capitalism. Beyond offering quality products, it fosters community well-being, supports local producers, and promotes sustainability. Its leadership emphasizes trust, collaboration, and a value-driven corporate culture. Recommended reading: “Conscious Capitalism” by John Mackey and Raj Sisodia.

5. Social Impact Legal Entities These are for-profit companies that prioritize positive social and environmental outcomes alongside profit. They often serve as support systems for other social enterprises or impact-driven organizations. Patagonia is a standout example. While it doesn’t own its factories, it holds its suppliers accountable for fair labor and environmental practices. Using a “4-Fold” supplier evaluation system, Patagonia promotes humane working conditions, sustainable production, and ethical responsibility. The company also invests in its employees through benefits like paid time off for volunteering on environmental projects, flexible hours, and comprehensive healthcare. Recommended reading: “The B Corp Handbook: How to Use Business as a Force for Good” by Ryan Honeyman.

6. Traditional For-Profit Companies with Social Value Additions These companies prioritize profit but recognize the strategic value of integrating social responsibility into their operations. CSR often becomes part of their marketing or brand positioning, helping to differentiate them in competitive markets.

Case Studies: U.S. Social Enterprises in Action

Eclectic CO. is a cooperative retail and coworking space supporting local artists and entrepreneurs. It provides a platform for selling handmade products and organizing creative and educational events. Its mission is to promote ethical, local, and sustainable business by connecting artists with their communities. The enterprise generates revenue through product sales, membership fees for workspace access, and income from hosting workshops and events. Through this model, Eclectic CO. helps small businesses grow while reinforcing values such as inclusivity, fairness, and sustainability.

Pikes Peak Makerspace is a shared workspace designed for makers, innovators, and entrepreneurs. It gives its members access to high-tech tools and equipment needed to develop ideas and prototypes. Revenue comes from membership fees, training sessions, and partnerships with companies that use the space or collaborate on product development. This makerspace supports economic growth and job creation by enabling hands-on innovation, skills development, and entrepreneurial community building.

D.C. Central Kitchen uses food as a tool to combat poverty, hunger, and unemployment. It provides culinary training to individuals facing significant barriers to employment while delivering meals to those in need, particularly in low-income communities. Revenue sources include government contracts (e.g., school meal programs), retail food sales under the "Healthy Corners" initiative, catering services, and branded cafés. Donations and sponsorships complement earned income. This model blends mission and business: generating revenue while directly improving food security and job prospects in vulnerable communities.

Shifting Consumer Behavior: Fueling the Growth of Social Enterprise

In the U.S., growing attention is being paid to measuring social impact. Consumers—especially Millennials and Gen Z—are increasingly conscious of how and where they spend their money. • Around 75% of Millennials believe businesses should give back to their communities. • Nearly 90% of Gen Z agree that companies should serve a purpose beyond profit. While donations among younger generations are declining, over 80% report volunteering. They prefer buying from companies that align with their values—offering products and services while actively supporting social causes.

Today’s entrepreneurs face outdated economic systems and business models built for a past industrial age. Social, environmental, and economic challenges—such as inequality and climate change—are growing more urgent and require fundamentally different approaches. Social impact entrepreneurs are well-positioned to respond. They embed long-term goals—not just short-term profit—into their business models. These ventures can help close opportunity gaps, especially for marginalized communities such as BIPOC (Black, Indigenous, People of Color), by creating inclusive business and educational opportunities.

The COVID-19 pandemic further accelerated this shift, exposing deep inequalities and highlighting the need for diversity, equity, and inclusion (DEI) in business. More entrepreneurs are now embracing their roles as agents of social change.

Rising income inequality in the U.S. is also driving the shift toward more equitable business models. Since 1978, CEO compensation has grown by 997%, while average worker wages increased by only 11%. Social enterprises that prioritize fair wages, ethical supply chains, and local investment can help bridge these gaps and improve community well-being. Climate change, too, must now be viewed as a core business risk—not just a CSR issue. Companies that ignore these challenges risk becoming irrelevant. Those that adapt can position themselves as resilient, responsible, and trusted leaders.

Lessons from the U.S. for Serbia’s Social Enterprise Sector

Though Serbia's social enterprise sector is still developing, the U.S. model offers valuable lessons—despite the countries’ different legal, cultural, and economic contexts. Key barriers in Serbia include: • Lack of a detailed legal framework for implementing the 2022 Law on Social Entrepreneurship • Limited access to finance • Underdeveloped mentorship, training, and investor networks The U.S. experience highlights the importance of: • Tracking and categorizing social enterprises by impact, not just legal form • Encouraging cross-sector collaboration and peer exchange • Keeping pace with market and consumer trends • Integrating impact measurement as a core management tool Models like “3BL Impact to Date” (measuring environmental, social, and economic outcomes) could guide Serbia in supporting social enterprises more effectively—both financially and through policy.

The experience of the United States offers valuable lessons, highlighting the importance of collecting statistical data on the social entrepreneurship sector and recognizing that each enterprise can operate in very different ways. In the U.S., social enterprises take various forms and contribute to social impact at different levels. Categorizing them helps clarify the distinct roles they play within the social economy ecosystem. Each model of entrepreneurship supports the community in its own way, and support measures are tailored accordingly. This approach – centered around the level of social impact – shifts the focus from legal form to the core values and outcomes a business delivers. By unlocking entrepreneurial potential and enabling greater collaboration within the sector through clear categorization, this model fosters better cooperation and exchange among different players.

In addition to categorization, keeping up with evolving market and social trends is essential and should become an integral part of local decision-making processes. Understanding shifts in the capitalist system, as well as the preferences of new generations of consumers, can strengthen strategies for supporting social enterprises. Younger consumers – especially Gen Z and Millennials – increasingly seek products and services from businesses that don’t just generate profit but also make a meaningful contribution to social and environmental goals. These shifts in consumer behavior open the door for wider visibility of social enterprises and motivate entrepreneurs to integrate social impact as a core element of their business models.

A third key element in developing social entrepreneurship in Serbia is impact measurement, a practice deeply rooted in the American context. Tools like the "3BL Impact To Date" methodology – which tracks impact across environmental, social, and economic dimensions – combined with official data on the development of specific local communities, could provide a clearer picture of enterprise growth. This would enable the creation of more targeted support mechanisms, both financial and non-financial, enhancing the effectiveness of support programs and improving the long-term sustainability of social enterprises.

To ensure effective financial support for social enterprises in Serbia, it is essential to introduce research-based frameworks and proactive strategies that enable decision-makers to design innovative support measures for this sector. The U.S. model shows that the presence of alternative financing systems – such as impact investing and social investment funds – can significantly boost the growth of social entrepreneurship. Funds like Acumen already provide capital to startups and entrepreneurs addressing key societal challenges, including poverty, lack of education, and limited access to healthcare. Additionally, tax incentives, grants, and public funding – especially those available through the EU – could prove beneficial in the Serbian context. However, one of the most relevant takeaways from the U.S. approach is the promotion of stronger collaboration between the commercial sector, for-profit businesses, social entrepreneurs, and nonprofit organizations. A more decentralized model of “social impact ownership,” as practiced in the U.S., could improve governance, enhance economic and social prosperity at the local level, and reduce socio-economic inequalities.

Another valuable insight from the U.S. is the integration of social entrepreneurship into academic institutions – a key driver of long-term growth and sustainability for the sector. Many American universities now include social entrepreneurship in the curricula of economics, public policy, and organizational studies, particularly in departments focused on social policy and social work. Through these programs, students not only gain theoretical knowledge about business and economics but are also encouraged to develop practical solutions with tangible social impact. This kind of education plays a crucial role in fostering social innovation and spreading awareness of social entrepreneurship as a force for positive change. Moreover, training the next generation of entrepreneurs equips them to improve their ideas and design initiatives that go beyond profit, aiming for long-term social benefit.

In the U.S., institutions focused on innovation – such as innovation funds – have recognized the role of social innovation as a critical driver of social change. By applying methodologies that combine technological development with social goals, these institutions can identify and support projects that not only contribute to economic growth but also help address pressing societal issues like poverty, education, and public health. This approach could be highly beneficial for the development of social entrepreneurship in Serbia, as it encourages broader application of innovative solutions in public policy and the economy, while promoting the use of technology for sustained, positive societal impact.

Conclusion

Despite the significant differences in how social entrepreneurship has evolved in the U.S. and Serbia, both contexts share a common thread—the use of entrepreneurial spirit to solve social challenges. The U.S. experience offers valuable insights that could help strengthen the Serbian social enterprise sector. With the right legal frameworks, institutional support, and increased awareness among consumers and investors, social entrepreneurship in Serbia has the potential to become a key engine of positive economic and social transformation.

*This article includes insights, practices, and examples from the social economy and social enterprise sector in the United States, gathered during the author’s study visits to U.S. social enterprises and ecosystem actors as part of the “International Visitor Leadership Program – Social Economy 2023,” supported by the U.S. Department of State and the U.S. Embassy in Belgrade.

 

"This material was published with the financial support of the European Union. The content is the sole responsibility of the Association for Cooperation and Sustainable Development and does not necessarily reflect the views of the European Union. The project is implemented within the project 'EU Resource Centre for Civil Society in Serbia,' led by the Belgrade Open School in partnership with the civil society organisations: Novi Sad School of Journalism, ENECA, Užice Child Rights Centre, Nova Planning Practice, Safe Paths, Young Farmers of Serbia, and the international partner, Friedrich Ebert Stiftung. The project is supported by the European Union and will run from 2023 to 2026."

 

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[13] Official website of “D.C. Central Kitchen,” https://dccentralkitchen.org/ , accessed 04.12.2024.

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