Yes you can...Change your business model!

As someone who has founded a social venture, SponsorChange.org, I spun my wheels on the question of how to structure our business. We consulted with many lawyers, advisors, and business leaders. We ultimately found that everyone we spoke to had very different suggestions.

Our business model consists of sponsoring the skill-based service of college graduates who complete short-term projects at non-profits in exchange for student loan pay. The sponsorship money can be raised from donors, host non-profits, foundations and corporations. From the perspective of the donor it is a benefit to give to a non-profit because of the favorable tax credit. Since service sponsorship is at the core of our mission, forming as a non-profit makes sense.

We are currently working to bring to life an online platform that would allow non-profits to use our system to find, recruit, raise online funds to support the student loan rewards for projects, and make direct student loan payments of their volunteers themselves.

This model certainly sounds like a for-profit play - where users pay a subscription fee to use our platform to add value to their volunteer recruitment and retention efforts. In fact, one lawyer we spoke to said non-profits are use to paying for productivity utilities, they are already subscribing to salesforce, constant contact etc. The challenges with this model is determining the right subscription fee, in a manner that generates revenue, without pricing smaller non-profits out of the market. Setting too low of a price at the onstart, then having to raise prices can be detrimental, on the other hand starting too high, can pose problems too. How do you control for this?

Taken together, we have decided to create a hybrid model. The nonprofit model will accept donations and be used to sponsor service and the for-profit side will generate revenue from offering a subscription fee. Revenue generated will be reinvested back into development of our platform.

Even as a type this, it all sounds daunting for anyone starting up a social venture, but after the reading the HBS article, Creating Successful Business Models by Elkington and Hartigan, we should all relies two things. 1# No matter what your business model is you can create social change and make a difference in the lives of many people, and #2 Businesses can and often change there model over time.

I pose the following questions for you?

How will you initially form your social ventures? What are the benefits and drawbacks of each model?

How do these models hurt or help your stakeholders?

Please post your comments.