THE DIRTY WORD ALL SOCIAL ENTREPRENEURS SHOULD USE
Your grandparents may have taught you that it's impolite to openly discuss money. Sorry, grandma.
Nobel Laureate and Bangladeshi economist Professor Muhammad Yunus developed the term “social business” to describe a business that is created and designed to address a social problem, that is financially self-sustainable, and that aims to make profits that will be reinvested into the enterprise to further its impact, rather than to be distributed to shareholders.
Social enterprise, in brief, is a business that measures its success in impact rather than profit. But that doesn't mean that it shouldn't make a profit. Though the mission is the core of the entity, the business model is critically important to its viability because, in social enterprise, business and mission have a symbiotic relationship. But, we don’t always see it that way because of one little word with a universe of judgment attached to it: money.
It’s easy to get behind a social mission, at least philosophically. So you want to make the world a better place? Great! Who could argue with that? But say you’re making the world a better place and making money doing it? You may experience a different reaction. A social entrepreneur not only must walk the complex line between profit and impact, but she also has to face an often skeptical society that believes making money and serving a social mission is, ultimately, mutually exclusive. It’s time to change that perspective.
When you envision a cause-driven organization, what type of entity do you imagine? Most people think, “nonprofit.” But many nonprofits struggle or fail because they don’t adopt a business mindset. Just like a business, a nonprofit has a value proposition, a product or service, customers (beneficiaries) and a cost structure. A nonprofit needs to develop relationships with partners, customers, and investors (funders), to identify the proper channels for distributing its services, and to communicate its messages effectively. But it often lacks a business model or strategy to guide its efforts. Nonprofits also commonly rely on grants and donations, which makes long-term planning and investment in overhead a challenge.
Our reluctance to focus on money in the social impact world will only inhibit social entrepreneurs' ability to successfully address our society's most intractable problems. Instead of avoiding it, we must bring it into the light. But how?
The business part of social business is a great place to start. Every project, startup, and organization moved to address a social problem should begin by developing a series of business models that they can test and discard or validate. Tools like the business model canvas are helpful exercises that can be customized for social enterprises. And remember, a valid business model has a reliable revenue stream.
Money is a tricky thing. It wields enormous influence, it's often exploited, and it just makes us uncomfortable. But if you're still feeling squeamish about the subject, remember its potential. Professor Greg Dees, the pioneer of social entrepreneurship, says:
"Social entrepreneurship describes a set of behaviors that are exceptional. These behaviors should be encouraged and rewarded in those who have the capabilities and temperament for this kind of work. We could use many more of them. Social entrepreneurs are one special breed of leader, and they should be recognized as such."
Instead of perpetuating the money stigma in social impact, let's support these rare leaders by encouraging them to focus on financial sustainability. I believe my grandma would approve.