You can help people and drive your Ferrari too

Most people who are not familiar with social entrepreneurship think organizations who do development work are non-profit. Furthermore, they have this notion that companies that earn profit while helping people are exploiting them (e.g. for-profit microfinance organizations). I disagree.

My main issue with the non-profit route is the availability of and lack of freedom with funding. Working for a non-profit, it’s frustrating when the progress of our work relies heavily on funding and those grants get rejected. In general, for non-profits, if donors do give money, they often want their donation to make the most impact. As a result, they place restrictions, which they may not realize actually limits the staff, who are the ones trying to realize that impact.

On the other hand, for-profits appeal to me because to succeed, they need:

1.      A sustainable business model. This keeps the unrestricted cash coming so that they can use the money where it’s needed for the business.

2.      To compete. To become/remain a market leader, they need to constantly innovate their offerings to meet the needs of their consumers. The ultimate beneficiary is (and always was) the customer. While at first, it may seem that the customers are paying a lot, over time, companies inevitably have to figure out ways to offer affordable products and services to this market if they want to stay in business.

3.      To be transparent. As a for-profit, they need to be transparent with their financial performance measures. This promotes accountability and use of standards.

Of course, there is the challenge of mission drift and the community’s perception of the for-profit company. However, if the company relies on human-centered design and invests the time and energy in gaining the buy-in and trust of the community, then the mission could “drift” in ways that ultimately benefit the customers.

Profits also mean that employees can get paid competitive wages, which is important, because while we want to help others, we also have needs :). But maybe not a Ferrari.