Limited understanding of the concept of community prevents its progress toward sustainability. This research aims to revisit the concept of community and provide practical solutions to strengthen it by integrating digital tools and principles of social entrepreneurship. This chapter investigates how local institutions activate and expand community capital and empower social entrepreneurship through digital tools. Drawing on theories of community capital and institutional governance, we propose a three-layer dynamic model in which: (1) local institutions identify, assess, and enable community capital; (2) activated community capital, with transparent social, economic, and environmental assets, provides the base for entrepreneurial entry; (3) social entrepreneurship emerges from this dynamic interaction, reinvesting its gains in the capital base, completing a continuous feedback loop. Using two complementary data-driven tools, Community Capital and EcoCity Footprint, a step toward practically implementing these theories has been taken to address community issues. The former provides a framework to identify and improve community capital, while the latter navigates environmental planning through measuring ecological footprints and urban resource flows. The insights generated by both tools flow back to local institutions, informing policy and resource allocation and thus closing a data-guided feedback loop. We argue that accessing data and digital tools shifts the role of local institutions from passive to empowering. They facilitate and support the activities of social entrepreneurship within the community, thereby enhancing overall capital quality. Local institutions can guide communities toward sustainability by investing in digital infrastructure, strengthening inter-institutional interaction, utilizing data-driven tools, and restoring communication with citizens and stakeholders.