Non-Profit or For-Profit?

For Profit or Non Profit, this is probably one the toughest decisions for a startup social innovation or venture. Like any field, there is always that one tough difficult starting question like Coke or Pepsi, Mac or PC, Addias or Nike, or IPhone or Android? After reading the “How Misinformed Ideas about Profit Are Holding Back the World’s Poor, ” questioned my beliefs about the notable debate between for-profit or non-profit.

Non-profits have a stigma attached to them, that it for “needy” or low income or Humanitarian efforts. When someone says, “non-profit” the first thought is charity. Inversely, when someone says, “for-profit” the common first thought is businesses getting over. Throughout the course of the semester, my definition of what was right has been challenged. I realized that I probably would have been the person to make the naïve statement about For-profit ventures in low income or impoverish areas.

Often time’s people are caught up in the shock factor or human nature of a situation that we forget that low income and impoverished communities have economies too. They are subject to the same market structures just as everyone else except sometimes they are taken advantage of more. For Example, some the for-profit institutions have been taking advantage of low performing students because of their unfortunate circumstance to be accepted in other universities. President Obama just signed a law forgiving some of the loans taken out for these institutions that charged some students almost double of what other students pay at regular 4-year universities. This question arises, if there would have been an larger market of competition for schools which would include reputable institutions; could it have made an impact?

As I learned throughout the course so far, not all for-profit ventures are bad. Everything has its placed, there is a time when non-profit must step to the plate in dire needs situations. Just as there is a time when For-profit ventures must enter into the market and compete with others to perform the market duties of the invisible hand. “If Coke can sell sugary drinks to villagers who don’t need it, there is plenty of room for companies selling meaningful products.”

 The morality of selling goods to poor rather than given goods is rooted in economic theory, which has proven to work in some cases. People buy goods that they are willing and able to pay for. The answer to the problem is geared around who is selling and how they are selling. We need more people willing to supply to the market in impoverished areas rather than in the big economic zones. Non-profits bring happiness, but happiness does not keep the lights on. In conclusion, How can we as a society change the stigma and/or status quo of what is morally right between the non-profit and for-profit approach of social innovation?