When imagining a career devoted to serving the greater good, most envision charities or nonprofits. But over the last few decades, a new model has emerged—for-profit social enterprises.

At first, it might sound counterintuitive. Many think that focusing on profitability could distract or pull funds from the organization’s primary mission. But as social entrepreneurs launch ventures that make money and drastically improve the lives of millions, people are seeing surprising benefits.

Anant Kumar is one of these successful social entrepreneurs with accolades that include the UN World Business and Development Award, the Frost & Sullivan award as the Mother and Child Health Care Provider of the Year, and the Entrepreneur of the Year by the Economic Times NOW TV just to name a few. In 2010, he even participated in a round table with Barack Obama to share his innovative business ideas with the then-President.

Social Enterprise vs. Charity or Non-Profit

The concepts may sound similar, but there are significant differences between social enterprises and charities or non-profit organizations.

According to Anant, in a social enterprise, “the primary objective isn’t a return on capital,” he says. “Social equity and social benefits do take precedent.” But in contrast to charities, social enterprises are built on traditional business principles and profitability is always a vital goal. Everyone served by the organization is a paying customer.

By paying even a nominal fee, social entrepreneurs say that customers receive more equal footing in the eyes of the company—something often missing within a traditional charity model. “Think about a charity,” Anant says. “For the recipient, you’re really doing them a favor. You are the donor. They are the recipient. So, you’re not on the same level. When you’re not on the same level, there’s an accountability gap.”

When the service or product is free, recipients are expected to accept whether it offers genuine assistance. This can make recipients feel lesser than—like their real needs aren’t heard or valued. As non-paying customers, they have little, if any, leverage to ask for a change.

If they’re charged a fee, however, there are standards and expectations. Even for relatively affordable items, like a cup of coffee, it’s bad for the business if it’s undrinkable. Potential patrons will just go elsewhere. Therefore, private organizations must provide quality products. “If you don’t provide good care or service, the client will reject you,” Anant says.

This transition from charity recipients to paying clients makes all of the difference. Empowered to ask for what they need, they’ll finally get the social services—and the dignity—that they’ve been seeking.

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Written by: Rob Dube
Images: CC
Publication date: November 2, 2020

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