If You're Not Making Money, You're Not Doing it Right

There are two distinct ends to the socio-enterprise system. On one end you have the purely humanitarian organizations whose sole interest is bettering communities by providing goods and services at little to no cost. These organizations may create impact, but could ultimately leave a community dependent and lacking the knowledge to sustain a solution. On the other end of the spectrum, you have pure businesses whose sole interest is making as much profit as possible. More often than not, these businesses lack any true social impact.  So this begs the question – how do you find the right balance to create a successful social venture – one that creates a positive impact, but is also financially sustainable? After reading about many social entrepreneurs, both successful and not, there is one common theme: mutually beneficial relationships.

Mutual benefit is not a novel concept, and is in fact the underpinning of any successful economic system. In essence, the world is one big integrated system, and in order for a social venture to be successful, it needs to be able to create economic opportunities within a community. Think about this in terms of the old saying “give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.” Say an organization provides food for a community, or even teaches the community to produce their own food. This may be beneficial for a community in the short-run (or could even potentially be sustainable), but where does this leave the organization? While they may provide aid to a community, they see very little, if any, return on their investment. To have a better chance of succeeding, they need to also benefit from the relationship, ideally in the form of profit.

To make a profit, a social entrepreneur has two main options, create an individual venture, or partner with another company or organization. As an individual venture, you have the power to drive change and influence the product, while partnering with another company can provide a significant amount of capital and resources. One Degree Solar is a great example of a social venture who was able to partner with Coca-Cola to better a community while still creating profits. In this case, business owners purchase the solar power kits (money for the social venture), which allows them to stay open later and sell more products (money for the community), and as an added benefit they also sell more Coke (money for Coca-Cola). To provide the biggest impact, it’s obvious that members of the community have to be actively involved in the implementation of any solution, and financially invested. Otherwise, there is no real buy-in, and the venture is less likely to succeed. So, what’s the best way to do this? Should non-profits/humanitarian organizations partner with corporations, or would an independent social venture be more successful?