Social Fundraising – Not for Profits change business models, for good

Certainly, a ‘hybrid structure’ (the merger of For-profit/not-for-profit),  is not a new concept; but in the event you are leaning in this direction, you may need answers to a few key questions:

Questions of this nature and many more, were on the table at Global Engagement Summit (GES). “The Best of Both Worlds: Merging For-Profit and Non-Profit Models,”  In the endeavor to wrap up the discussions, Jamie Jones, associate director of the Social Enterprise at Kellogg (SEEK) Program, is reported as saying, “we’ll see success when social responsibility is not just a program but an integrated part of any company. Only when CEOs start to see social responsibility as a financial opportunity – as PepsiCo. recently demonstrated in its large-scale, historic investment in Mexican sunflower farmers – will we finally see true scale and social impact throughout the business world.”  (see full article)

“Social entrepreneurship is really taking off around the world,” says David Bornstein (@dnbornstein), author of How to Change the World: Social Entrepreneurs and the Power of New Ideas. Bornstein hails the work of Ashoka, an organization that helps fund entrepreneurs with innovative solutions to social problems.

According to Bornstein, the relentless won’t-take-no-for-an-answer quality of entrepreneurs is what gives them their edge in business. “They absorb the failure, they learn, they surround themselves with a good team and then they redirect.” These same attributes, when applied in the social realm, can result in community-changing solutions.

In addition to the abovementioned,  Social Entrepreneur – Blake Mycoskie (@blakemycoskie) offers some great insight to set the gears in motion as he writes, “Social Entrepreneurship is, first and foremost, a business. That means it is an organization engaged in the trade of goods, services, or both to consumers, but it trades primarily to support a social purpose (not profits for shareholders!). Like any business, it aims to generate profit, but it reinvests those profits in the business or in a social cause. It is, therefore, not simply a business driven by the need to create profit for shareholders or owners. Social Entrepreneurship is committed to commercial viability but the prime motivation is building a better society and finding a solution to social problems.”

As social funding has indeed become a critical strategy, take a look at CRM in Not for Profit, wherein a critical question is posed, “Is CRM as effective within organizations that operate on a not for profit basis?”  I really appreciated the response by Graham Hill, “Despite the emphasis on profitability in much of commercial CRM today, there is no reason why CRM as a business capability cannot be used to equally good effect in a not-for-profit ….  The heart of commercial CRM is managing contacts with customers such that sales are generated, customers are satisfied and relationships are developed. All of this at a profit.”

In the comment section, I was ‘all ears’ when reading a note by Barnabas Tiburtius .  “It is heartening to know that this model is in operation elsewhere in the world. The background of starting the hybrid model in the state of Tamilnadu, India was the lack of accountability in an NGO run organization. This is in the business of Microfinance. We are serving 10,000 members in nearly 600 Self Help Groups. The NGO model was in operation for 8 years and sustainability became critical and the Hybrid model For-profit Non-profit was put in place in 2004 and today we have turned around the organization. We have gone one step further by launching an initiative for technology evolution in the market place for improving the impact of the microfinance program.”

An interesting observation is made in consideration of Microfinance in an excerpt from ‘Social Entrepreneurship: What Everyone Needs to Know, “There was once a time when the future of microfinance was contingent on the fortunes of the Grameen Bank. Today, microfinance is no longer dependent on any one institution. No one is “too big to fail.”   If the Grameen Bank collapsed, its borrowers and staff would certainly suffer. But in time, other microlenders would absorb them. (There are hundreds in Bangladesh alone.) Seeds have spread and a forest has grown. The vitality of an idea, widely understood and accepted, keeps it alive. Significant credit for this change must go to Sam Daley-Harris (@samdaleyharris), the social entrepreneur behind the Microcredit Summit Campaign, which helped thousands of independent organizations coalesce into a global movement that achieved audacious goals in less than a decade.  People will continue to create newer and better microfinance organizations into the future because they know they can do it, they know how to do it, and they know why it is worth their effort. 

No doubt, it will  be interesting to follow this golden thread and see how value and impact is maximized through these hybrid evolutions.