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Is a for-profit social venture impossible?
Submitted by Erik Sundelof on Mon, 03/06/2006 - 4:42pm. :: Business and Markets
First discussions:For-Profit Social VenturesIs a for-profit social venture impossible?Creating a Hybrid For-Profit / Non-Profit Social Enterprise StructureEvaluating Social Venture IdeasWhat is a social entrepreneur?
I am collaborating with the Graduate School of Business here at Stanford, and usual working with students is always an intriguing and fruitful experience, which I usually cherish a lot. We did touch a quite interesting matter of what a social venture really is during a discussion on the project. Do all social ventures include a non-profit approach or can you have social ventures based on a ‘purely’ for-profit model? Can a commercialised approach ever do any good?
I am fully confident that you can and in some sense we really should pursue it, especially to obtain financial sustainability and decrease the dependence of external funding. Funnily that would mean that you have a wider manoeuvre space, and thus you have better control over your social venture.
What is really a social venture? Much simplified and according to me, a social venture is any venture in which you also value a (good) social outcome of the same. The very abstract word ‘social outcome’ could be discussed in length (which I will not), but refer to literature on measuring success in social venture. It is very much an interesting matter in itself. Personally and of course much simplified, I think we could consider a good social outcome as anything that makes the life or the earth itself to become a better place to live. Let’s keep this simple and leave it as that.
What amazes me is that so many people think that a (good) social outcome never can be married to the thought of a commercial activity. This puzzles me. Why? I see no reason why a good social outcome is inconsistent with a for-profit approach. I especially remember speaking to one of the last year fellows on this matter. He told me that an outcome of a project might even be better when people have to pay for the project. This is a very interesting thought, which has stayed with me since that date.
What is it in us that make us feel that it is better to pay something, even though extremely small? I think it is quite simple. The sense of ownership is still quite strong in us, but also the need to give back to someone that helps us. When someone offers you a hand you normally want to give back something. Probably it is as simple as keeping your self-respect. The more you feel like you are dependent on another person, the less self-esteem you usually have. I think you get it.
However, I think it is important to remember that there is a narrow path to walk on here. Having an approach that is for-profit can quite easily be turned in to an exploiting approach, where any good social outcome will be shadowed. Here the management of and leadership in these projects become increasingly important. The need for good managers and leaders become ever so high in those ventures, but we have all those people out there.
Hybrid business models, corporate social responsibility and industrial anthropology are some examples why I believe the trend is really towards such business models instead of the traditional highly fund-dependent ones. There will of course exist ventures where this approach is impossible, but for all other cases I think it is really a good idea to look at such business models.
Thus, I think it is important to keep an open mind about this and realise that for-profit is not by definition evil or bad.
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