Abridged excerpt from book “51 Questions on Social Entrepreneurship“.
Business Models for Social Enterprise
In order to bake social impact into a new startup or business, social entrepreneurs have become more creative in thinking about business models. Here are a few business models for social enterprise that mission-driven founders are considering.
- Buy one, give one. TOMS is an example of an impact company using this model. It has been a business model and in all of their marketing from the start. The nice thing about a business model like this is that it’s as easy to explain to your investors as it is to your customers and to your team. The simplicity can be a big plus when telling your story and mapping out impact goals.
- Sliding scale / pay what you can. This model has been employed by a number of social enterprises. One notable one is the Aravind Eye Care System in India. It is a nonprofit social enterprise that performs sight-saving eye surgeries. Founded in 1976, Aravind has treated well over 32 million patients and performed more than 4 million surgeries. In fact, according to it’s 2014-2015 annual report, Aravind medical teams at the 67 affiliated locations see over 15,000 patients and perform 1,500 surgeries on a daily basis. It utilizes a low-cost, high-volume business model for eye surgery services. About 70% of eye surgeries are performed for free or below cost, while 30% are performed for above cost without compromising quality of care on either side of the price range.
- Percentage models. Salesforce popularized the 1-1-1 model. As a company that was not founded on impact, it is notable that this giving model has been implemented from its start. It means that the company gives away 1% of its product, employee time, and revenue to charitable causes and to the community. A social enterprise could use a percentage model such as Salesforce’s to effectuate a commitment to impact. Another firm, very nice design, based in Los Angeles, uses a “Give Half” model in which 50% of design projects are completed pro bono for nonprofit or community clients—the team at very nice designs has also created modelsofimpact.co featuring over a hundred social impact business models.
This is an abridged excerpt from the book, “51 Questions on Social Entrepreneurship” by Neetal Parekh. You can learn more and buy the entire book—which is told as a story of three aspiring social entrepreneurs and which dives into key aspects of social entrepreneurship including defining the space, legal structures, securing funding, and measuring impact at 51questions.com