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“Small acts, when multiplied by millions of people, can transform the world.”
Howard Zinn’s musing is a creed that social entrepreneurs can live by.
Thankfully, people are realizing now, more than ever, that our lives are deeply interdependent. That’s why social enterprises and their leaders are taking up the charge to create a better world.
That responsibility, referred to in the business world as corporate social responsibility (CSR), has become the floor rather than the ceiling for companies looking to thrive.
Whether an organization focuses on improving the lives of cancer patients, like the healthcare tech company Flatiron Health, or leveraging their brand to stand up for historically marginalized groups, like Playmaker — a media, merchandise and music company, the measure of success is no longer just its ability to generate a profit, but also its overall social impact.
78% is a huge slice of the market.
A study conducted by Cone Communications showed that 78% of Americans want to spend their money at businesses that use their platform to take on social justice issues.
Furthermore, if a company supports an issue that consumers connect with, 87% of them will be inclined to purchase a product or service from that company.
Considering what consumers value gives social entrepreneurs direction in terms of building a thriving social venture.
In fact, Cone Communications also found that 76% of consumers will avoid purchasing products and services from companies who have opposing views from their own.
The “market” for social impact models is hot and doesn’t show signs of cooling any time soon.
Finding a social impact model that’s right for your mission can be challenging.
A social impact business model is a detailed framework that shares your vision for addressing a social issue. It explains your idea, your plan for implementation and sustainability, and explains how you will create real change in the communities you serve.
Believe it or not, you can even gamify your search for the right social impact model.
Check out this role-playing game developed by Reginald Publishing called Models of Impact. The game was created to help entrepreneurs figure out what they really want to create and what they need to do to make it happen.
Narrowing down the right social impact requires a framework for thinking about the various social impact models.
You’ll want to carefully consider the various pros and cons of different social impact models. From administrative burdens and cost to impact and speed, there are a number of considerations that social entrepreneurs should take into account when deciding.
Let’s face it. Your social venture needs to make a profit.
If not, there’s little chance at sustainability, growth and value.
Relying solely on charitable giving is not reliable and can cause unnecessary strain on your operations. Constantly hustling for each marginal dollar gets old, quick.
Also, as more and more businesses are following a social business model, the competition may become a point of contention. Consumers are becoming more socially aware, and they want to feel as if their contribution is supporting the business in tackling bigger societal woes.
Your social enterprise is going to compete with others in the same market or industry. Therefore, it is up to you to provide exceptional goods or services, build lasting relationships with clients, and motivate employees, which ultimately places your brand above everyone else’s.
Make an impact- Social entrepreneurs must be compassionate, dedicated and determined in order to be so moved by an injustice that they work to create a solution and are relentless in providing that solution to those who need it.
Receive financial support- Those who seek to find solutions that will enable a better life for all have many options for funding their social venture. Impact investors want to be a part of a community of leaders that make philanthropy a priority.
Attract loyal consumers- People want to be part of change. If your organization has a solution, customers want to support you. However, according to the Cone Communication study on CSRs, 65% of Americans say they will check out the authenticity of your impact endeavor. Once they feel confident that real effort is being put forth to find a solution to a social issue, they will champion behind you and tell their friends.
Encourage employee buy-in- No business can survive without its employees. It is advantageous to all if a company empowers the people who represent them by recognizing and encouraging their contribution and acknowledging their value.
Generate employment opportunities- Creating jobs inevitably advances the economy. While sharing in civic responsibility, employees will take personal pride in the work, increase productivity, and ultimately, be happy to be a part of your social venture.
Support creativity and innovation- When was the last time you got to really create something? Not just for you, but for others to enjoy? Social entrepreneurs are inventive and have an eye for innovative solutions. Not many jobs encourage you to think outside the box and make ideas come to life.
Compete in a commercial market- Although the purpose of your organization is to be a part of a solution to a social issue, you still need to profit. Competition in the business world is a reality for social enterprises, and it’s not always friendly.
Follow restrictions and regulations- Watch out for that red tape. You’ll want to ensure the legitimacy of your business and that requires avoiding running afoul of specific laws (e.g. many nonprofits are obligated to be non-partisan).
Keep up with market trends- Consumer needs are always changing. You must not only keep up with the changing market, but you have to be the trendsetter.
Tackle doubt- Where there’s opportunity to generate revenue, there’s someone plotting a scam to get it. As a business, you need to have a vetting process to weed out those who come to take advantage and misrepresent your brand. If consumers get a sense of dishonesty from your social venture, they will steer clear.
Take a look at the details of the 10 most popular social impact models.
Ask yourself a few key questions:
- What type of impact do I want to have?
- Who do I want to benefit?
- How big is this issue? How does this issue affect others?
- Which model best supports my commitment to creating solutions?
Pouring through this list with those questions in mind should help you narrow down the best social impact model for your new venture:
Social Impact Model: Non-profit
Distinction: Focuses on purpose, not profit. Relies on donations for support
Key feature: Income is recycled back into the business
Changemakers: With the goal “to help right things that are wrong by both helping people out of the hole and working with them to fill that hole in so they and others will not fall back in,” how could you not be thankful there are people like the founder of With Love, Andrew McDowell, in the world?
Social Impact Model: For-Profit Social Enterprise
Distinction: Prioritizes profit and impact equally
Key feature: Employees are happy to be a part of a team that helps others
Changemakers: With 390 million members, Change.org creator Ben Rettray empowers people to make a difference.
Social Impact Model: Cooperatives
Distinction: Owned by its members who use its services
Key feature: All stakeholders share interests
Changemakers: Equal Exchange wanted to recognize the work done by farmers by bringing the consumers directly to them.
Social Impact Model: Entrepreneur support
Distinction: Sells business support to help beneficiaries
Key feature: Offers training and education
Changemakers: KickStart’s founders, Dr. Martin Fisher and Nick Moon, wanted to be part of the solution to poverty, and they are.
Social Impact Model: Market intermediary
Distinction: Provides opportunities that allow beneficiaries to distribute products and services to international markets
Key feature: Low start-up costs + Beneficiaries develop their own community
Changemakers: Preda Fair Trade Dignity. Respect. Responsibility. This model wanted to give back power to the impoverished in the Philippines. Trading goods for farm labor helped so many.
Social Impact Model: Employment
Distinction: Provides jobs and job training to empower its clients then sells its products and services on the open market
Key feature: Provides job training to the beneficiaries who are also the employees
Changemakers: About Edgar and Joe’s was financed through a partnership with Good Will Careers Centre. They work to improve the lives of the community they work in.
Social Impact Model: Fee for Service
Distinction: Sell social services directly to beneficiaries
Key feature: Establishing the appropriate fee structure
Changemakers: To provide clean water to the underprivileged in communities across the world. That’s the impact WaterHealth always wanted to have.
Social Impact Model: Low Income client
Distinction: Provides goods and services to clients that match their socioeconomic status.
Key feature: Creative distribution systems, lower production and marketing costs, high operating efficiencies
Changemakers: Aravind Eye Care Systems brings affordable eye care to those who need it
Social Impact Model: Market linkage
Distinction: Organizes trade relationships between beneficiaries and the external market
Key feature: Does not sell clients’ products, but rather connects clients to markets
Changemakers: Phyto Trade Africa made a promise to biodiversity conservation and economic prosperity.
Social Impact Model: Service subsidization
Distinction: Uses revenue from the sales of products or services to fund additional programs
Key feature: Can leverage tangible and intangible assets
Changemakers: Upaya Social Ventures uses its profits to multiply additional social enterprises.
COVID-19 has businesses rearranging and reimagining how they are going to impact change.
The effects of this pandemic are yet to be revealed, but for social entrepreneurs, this is an opportunity to think critically about the social change they seek to achieve and to be creative about how to get it done.
Social entrepreneurs must always be ready to pivot in our ever-changing world. When it is time to increase your revenue, efficiency, and impact, knowing the ins and outs of various social impact models will help you determine precisely how you need to pivot.
Ultimately, you must decide what’s the best path to take for your social venture. Focus on what type of impact you want to have, what mindset helps to achieve that goal, and then start creating products and services that will have a positive effect on people’s lives.
That’s where you will find your true value.
