What happens when you want to make a change? You either:
- Donate money to a cause
- Volunteer somewhere
- Or, start a Non-profit organization
What if you wanted to make a change but use a standard, for-profit business model? While this has been a very taboo topic in the past, I wanted to discuss some of the pros and cons to this ideology as a whole.
We will be approaching this topic with the question: is for-profit social entrepreneurship a good thing?
For-Profit Social Entrepreneurship Pros
One thing that for-profit businesses generally have going for them is efficiency. This isn’t to say that for-profit businesses are exclusively efficient, and non-profits are exclusively inefficient, but profit can definitely motivate a company to be more efficient with their cash.
In addition, a for-profit company will most likely be lean in personnel which can allow for more agility in decision making. When profit is involved, a company may be more likely to ensure that products and services are delivered on time by established deadlines.
The for-profit model may be attractive to higher levels of talent. Naturally, bringing in extremely talented individuals is a huge advantage to any company, and this is one of the arguments for a for-profit model.
Think of it this way: would a small social company that produces re-usable water filters for families in Africa have a grrater need for an engineering graduate with top honors than a company such as GE?
I’m sure the graduate would make a much larger impact at the social company, but if they can’t provide the income he needs to live and pay his student loans, then he probably wouldn’t take the position. If they had a for-profit model, then they may have had the resources to obtain this talent.
For-Profit Social Entrepreneurship Cons
While money can be a motivator for many people, it may also become a motivator for the wrong kind of people. A for-profit social entrepreneur who has no interest in the “social” side of social entrepreneurship may be more likely to:
- Sacrifice quality to cut costs.
- Be tempted to use planned obsolescence
- Not work on behalf of the people they are “helping.”
- Continue the problem that creates their demand.
- Put their own needs above the needs of others.
Many of those things sound deplorable, but they are quite common in the for-profit world which is why this subject is so taboo. Without question, a person that considers starting a for-profit social venture will need to be motivated first by the right heart, then profit will just be a motivator through the harder times.
One advantage non-profits have in this arena is they are motivated almost entirely by their cause, but this isn’t to say that some of the above corruptions don’t exist in non-profits. Consider many of the charities that have been brought down because of corruption, or the Presidents that receive exorbitant salaries from their non-profits.
Conclusion
We’ve seen non-profit companies do both great things, and awful things. What this tells me is that no matter what your business plan may be, if the social issue is not the top priority, then you’re heart is in the wrong place, and your endeavor will only serve to prey upon those you are setting out to help.
The last thing this world needs is another predator preying upon the needy and less fortunate. Before you choose to start a for-profit social entrepreneurship or a non-profit organization, examine your heart closely and determine what it is that is truly motivating you. If you exclusively care about profit, then there are many lines of business you can get into that will applaud those desires.