For-profit Social Enterprise: A Growing Business Model

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Non-profit organisations are generally in a precarious position. They are heavily reliant on major donors and grants. A huge amount of man-power is used in the act of fundraising, which in terms of public campaigns, depends completely on people feeling generous at the exact second in which they are approached by a representative.

As an elite athlete from a small country with a government that gives little to zero funding to my sport, I have done my fair share of fundraising. No matter how awesome you think your idea is, in my experience you can generally only count on making about 10% of what you think you can, and that’s being generous.

Perhaps I am a terrible fundraiser. Or perhaps there is a better way for socially based organisations to operate.

Cue the for-profit social enterprise. This is a business that aims to make money, but also includes social benefits as a core part of its business model. The concept, at the moment, is huge. I’m clearly biased, but I would also argue that it has played a key role in some of the most significant humanitarian achievements over the last few years.

Let’s take the example of Bestnet, which manufactures the Netprotect for the UN Foundations Nothing But Nets Campaign, as well as solar-powered LED lamps, batteries and modular solutions to mostly undeveloped communities. The company has grown over the last few years to operate in four continents and is third-largest global supplier of WHO recommended Long Lasting Insecticide Incorporated Mosquito Nets (LLINs).

Bestnet, a self proclaimed “network of life” develops inexpensive but high quality products to improve the lives of thousands around the world. Through the Nothing but Nets campaign, it sells LLINs for just $10 each. The company possibly achieves a smaller profit margin, but the social effects are large scale. The latest estimates showed around 220 million cases of malaria in 2010, of which approximately 660,000 were mortal. Organisations like Bestnet are effectively contributing to changing that statistic, as well as giving shareholders an appropriate return on investment.

Another excellent example is Zipcar, a pay-per-use car-sharing alternative to car rental and ownership. In an interview with Yale Insights, CEO Scott Griffith explains that as the company grows in profits, so do the social effects in the company’s mission:

Just by the nature of our business model, the social benefits are accruing as we grow. Most of our members don’t own cars. As a result of that, every car we put on, we know through surveys, takes about 20 personal cars away, because people choose not to buy a car or they sell a car. That 20-for-1 ratio also benefits household discretionary income. Through surveys we know that between $6,000 and $7,000 a year of transportation spending comes back into the household after they’ve spent on Zipcar. A clear social and economic benefit to the community that accrues as that happens.

The most exciting thing about social enterprise is that a huge amount of people want them to succeed. The added benefit of helping a cause is a deal maker for many consumers, highly talented people want to work with such endeavours because they identify with the company’s values, and very often experienced executives come to a point where they want to give back to society so they choose to partner with social enterprise.

Pretty much, everyone likes a nice guy, and being one can pay off.

The world over, there are increasing amounts of social entrepreneurs making changes for the better. They are people who believe that they can offer an improvement to society and live off it as well. It’s a pattern that restores your faith in humanity, and a clear move away from exploitation and towards a kinder world, with the idea that it is possible to create a kind as well as successful business.

 

2 thoughts on “For-profit Social Enterprise: A Growing Business Model

  1. Great article. With these kind of achievements historians will have something to say about the XXIst century apart from economic crisis and wild capitalism.

    • Thanks John, I’m glad you liked it. I really hope the idea spreads more and more – there could be huge markets for it.

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