The Entrepreneurial Mind

Many of those who manage non-profits will tell you that it seems that they spend more time raising money than actually working toward their cause of choice. The competition for donations and gifts seems to get tighter every year. And so-called donor fatigue seems to be becoming almost epidemic.

That is why more social ventures are moving toward business models that are self-sustainable without reliance on the generosity of benefactors. Many don't even bother to set up non-profits due to their complexity and legal limitations. They are known as social ventures, social for-profits, or social businesses.

More evidence of this can be found in an article published at the Christian Science Monitor:

Traditional philanthropy and nonprofits generate a social gain, but they do not design their programs as self-sustaining business models. A charitable dollar can be used only once. A dollar invested in a self-sustaining social business is recycled endlessly.

A social business is designed to be both self-sustaining and to maximize social returns like patients treated, houses built, or health insurance extended to people who never had this coverage. An investor in a social business retains an ownership interest to hold management accountable and to get the investment back over time, but no dividends are expected, and any profits should be reinvested in the business or used to start new similar businesses.

With the rapid growth of niche social ventures we can expect to see more social advocates pursuing the self-sustainable social business model approach.

(Thanks to Sam Davidson for passing this along).