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Survival of Social Enterprises

The concept of social entrepreneurs making profit along with improving the society does not make sense to all. Many companies believe that they can either benefit the society or make profit. There is no doubt that sometimes effectiveness and efficiency can’t be achieved together. If social enterprises start focusing on making money, their ability to serve social and environmental causes might get affected.

But one also can’t deny the fact that such enterprises need a strong financial backing so that they don’t have to compromise on their objectives of sustainable development. Since banks are mostly risk-averse and foundations don’t offer grants on easy terms, lack of finance has become the biggest hurdle for such enterprises to grow. Therefore, social entrepreneurs should try operating and thinking like commercial businessmen to some extent so that their services don’t get affected due to irregular cash flow.

Experts believe that non-profit organizations can run efficiently as a sustainable business if the services they provide to the community, provides something back to the business that can help the enterprise grow further. This concept has been coined as creative capitalism within which a company can make profit as well as serve the society. TOMS Shoes can be considered a good example of creative capitalism. When a consumer purchases one pair of TOMS shoes, the company gives a pair of new shoes to a needy child. With a simple yet innovative One for One concept, the company has managed to make a difference along with making profit.

Private companies are profit based and this in turn attracts investors from all sectors. More social entrepreneurship funds are required to make the social investment community as strong as the mainstream investment community. Partnering with private companies will also help social entrepreneurs learn more about running business the smarter way.