The title of this blog, borrowed from famous Hollywood movie
[1] whose story line focused on pursuit of wealth through questionable
practices on Wall Street may seem a bit out of place for a blog on social enterprises.
However, I feel that such conspicuous statements are needed to register
importance of income generation for social enterprises. I would argue that, focus
on income generation should be one of the major considerations of social
enterprise because it is re-investment of income generated by social enterprise
that will fuel future expansion of the enterprise.
In the article “How to take a Social Venture to Scale” [2], author
lists down, 7 organizational capabilities that are required to scale operations
for social enterprises. Not surprisingly, the enterprise’s ability to generate
income is listed as one of the key organizational attributes needed for this. I
feel that income generation is actually the core organizational capability that
in turn supports development of other 6 organizational capabilities listed in
article. A Social enterprise will need money for hiring and retaining staff, for
communication advertising, for alliance building and for lobbying. But where
would this money come from? It could come from venture funding, donations and
social investors. However, these funding sources are likely to support an
enterprise for a limited period only. Furthermore, in developing world where
market for social enterprise funding is virtually non-existent, these short-term
funding opportunities may not be available. Viewed in this context, it becomes
apparent that best bet for social enterprises to attract funds is to generate
income of their own and use that to fuel future growth.
Shaukat Khanum Cancer Hospital in Pakistan was set up in
1994 by a not-for-profit trust with an aim to provide cancer treatment to
masses at exceptionally subsidized rates. By 2014, the hospital was able to
scale its operations to the extent that it [3] handled 185,018 outpatients and
performed around 100,000 radiation / chemotherapy treatments in 2014. This
expansion was achieved primarily because the hospital was able to shift to a workable
business model soon after commencement of operations. This business model
centered on charging full fee from patients who could afford the treatment but
continuing to offer heavily subsidized treatment to lower income patients. Hence
by focusing on revenue generation opportunities, and by re-investing this revenue
in the project, hospital was able to expand its operations and multiply its
impact.
Unlike their business counterparts, decision makers within social
enterprises often are reluctant to maximize revenue generation opportunities. A
social enterprise should look into possibility of charging customers provided
that enterprise is able to offer better service at affordable rates to the
customers. Paying for the service is actually a confirmation from customer regarding
his belief in effectiveness of the new service. Similarly social enterprises
have the potential to attract significant advertising investment by partnering
with conventional business entities. Like in the case of Coke [4], Businesses
entities will be eager to leverage services and capabilities of social
enterprises to gain access to potentially new untapped markets.
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