In a previous article that I wrote on ET Insights, I had shared how corporations conceived with profit-making as motive, have been making the shift to building purpose into their functioning. It is interesting that while I could perceive early on how this was important, I had not really considered the reverse – traditional ‘not for profit’ organisations able to construct a revenue model, and not just thrive on donations and grants. Though examples of social enterprises had been around since the 1900s , the term itself was not known or devised.
A shift in my thinking happened when I came in contact with the first for-profit social entrepreneur in the world, Andreas Heinecke, in the mid 2000’s. The idea of focussing on bottom line while intending to create social change was a shift in paradigm that I had not considered until then. My experience of working with Andreas and his team at Dialogue Social Enterprise made me realise that Profit and Purpose need not be, and in fact CANNOT be mutually exclusive if the expected change has to be sustainable.
Purpose with profit – for enabling sustainable change
Dialogue Social Enterprise, founded by Andreas Heinecke, aims to achieve social inclusion of disabled, by raising awareness amongst non-disabled and economic empowerment of the disabled, through exhibitions and workshops. These are facilitated by persons with disability. The model used is that of ‘social franchise’, wherein the NGO/government or private sector partner pays a royalty to Dialogue Social Enterprise in lieu of the technical knowhow and support. The enterprise has this ‘purpose with profit’ motive quantified in the form of a goal – “a million people get sensitised”.
The idea of niiti consulting was born out of this shift in paradigm, and inspired by the social enterprise model of this organisation. In the past decade or so, since our inception in 2010, this focus on ensuring an outcome focus has had a strong positive impact on our own bottom line, and helped us stay profitable and sustainable even without investors.
Social enterprises – Success Factors
Grameen and Benetech are familiar names in the social enterprise space. Grameen Bank is a microfinance organisation and community development bank founded in Bangladesh. It makes small loans (known as microcredit) to the financially impoverished without requiring collateral. Benetech focuses on building software that makes skill development and knowledge acquisition inclusive. Closer home, we have unique for-profit social enterprises such as Shram Saarthi that were born out of ‘not for profit’ entities, bringing about change in an area that had remained unaddressed – collateral-free micro loans for marginalised migrant populations.
As the Indian subcontinent continue to lead the world in having the largest (and growing) number of for-profit social enterprises, one cannot help but ponder – what are the success factors that fuel the growth of a social enterprise? What makes them work well? In her book ‘In the business of change – how social entrepreneurs are disrupting business as usual’, Elisa Birnbaum packs in stories about founders and impact analysis of 65 organisations. Innovative models, aligned partnerships and community engagement seem like basics that a social enterprise should get right, but we all know how much thought and execution these demand. Qualitative and quantitative metrics through research help the organisation gauge if it is on track. And there is nothing like powerful storytelling to create impact in the target group, partners and investors.
To sign off, I would like to reiterate that, just as how a corporate entity cannot function with its view on profits alone, a social entity would do well to expand its focus beyond purpose. As Deloitte Human Trends 2018 report highlights, “Social enterprises usher in a whole new paradigm for management: one which considers a business less as a “company” and more as an “institution,” integrated into the social fabric of society”. In the 21st century, we truly seem to be heading towards a healthy relationship between profit and purpose.