Social Enterprise—how much money is going to find the way to you?(For the fifth class meeting)

Traditionally we think that Not-profits organizations don’t make money at all, because financial revenue is not the reason why they exist, instead social mission shapes all their operations and implementations including the very motivation why they are founded.   At the same time, for there are investment organizations, foundations, government funds, philanthropies and other social mission-oridented investment camp willing to donate money to traditional non-profits, they do actually don’t need to concern about financial issue.

However, both investers and nonprifts are looking for more efficient and effective way to fulfill their social mission—to do good for people and community. When they “spy”into business world, they are inspired by a basic principle that guides and motivates the entire economy empire to move forward. It is the model of supply demand and exchange, from where the value is generated and evaluated, that creates a sustainable value-generating model.

It’s a huge breakthrough to combine business philosophy with social mission-driven methodology. We can fortell the enormous potentials this integrated path, we call it social enterprise, has. Neverthe less, any pyramid has to have a base, a solid one, otherwise, the approach to the top will only move towards failure and collapse. Besides the governmental policy and regulations, without doubt, the financial sufficiency is the foundamental factor that a social enterprise can survive, thrive, better off people’s life within the community it serves. When it comes fundraising of social enterprise domain, like The Fund Gap has talked about, it comes to be troublesome, because social enterprise combine both charastics from business and social aspects. This causes the concern from both traditional social investment and traditional business investors. As a business investor inputing money to a social enterprise, I may shoulder the possibility the benefits will be compromised by social output. Vice versa, as a social-driven investor, I may worry the outcome beneficial to the society as a whole can be discounted under the business enbeding within social enterprise. So the enterprise may end up getting money from both sides or getting none (getting discounted amount of money for both sides).

To minimize the problem social enterprises may encounter, to increase the effectiveness of fundraising, there is one value should be clearly addressed in a society, which is the understanding and census of social value. Even though it’s widely believed that any party of an entire exchange chain has to be satisfied so that this kind of exchange can be sustainable, there is not be a one-fits-all senario being able to making every party satisfied at the same level. So a willing compromise has to be made, which is heavily dependent on the understanding of social value. For instance, Nestle is a big water- consumer company, it pumps water that belongs to every one in this world to make it its own to bottle it and to sell it in the market at a price that some extremely poor people in certain area couldn’t afford. If now a business-driven investor is going to invest some money for Nestle’s Water for All Action—a social enterprise like indepent organization also led by Nestle(I made this up.), instead of hoping for Nestle can generate more revenue in a short term, the expectation of the investment should be assisting Nestle to be more environmentally friendly so that this company can still be accept by people in a long run when water issue is becoming more and more vexing.  Vise versa, instead of denying this action based on the doubtness to Nestle, a social foundation should evaluate how this action can efficiently implement the good deeds and how well it can bring change to the society and then decide whether donate money to it or not. As a outsider of the flip side of our own, we don’t scrutinize the motivation for investors on the other side to reach a promising outcome to the society, they are allowed to have their own concern and diplomacy, but as long as they are aware of social influence and social value of any money decision they make, they will bring goodness to this world and be satisfied at the time. It’s a bonus from the society that has been testified thousdands of millions of times: The more you cherish the social value, the more likely you will be valued by social improvements, the more you will actually get in the end.

Besides dealing with traditional social and business investors, social enterprise also need to utilize the public resources, including government funds and private resources from the common people, like social impact bond mentioned in the reading materials. Under the fierce as well as promising situation, social enterprise should really stratigically balance different aspects in this economy that is becoming more and more social-driven.