The Bottomline of Social Businesses: Profits With a Purpose
Do social enterprises and companies with a focus on social development need to stay away from profits? Will profits distract a socially conscious enterprise from its founding goals?
The rise of the bottom of the pyramid markets and the increasingly visible roles played by not-for-profits in the social development sector today have made the debate on profit- orientation of social businesses highly relevant.
Some experts in the sector argue that profits intrinsically do not affect the efficiency of an enterprise. In turn, what is key for an enterprise is to ‘add value.’ Dr. Anand Lakshman, Founder and CEO, AddressHealth points out that being profit-oriented or otherwise plays no role in delivery. He goes on to say that ‘’nonprofit’’ is a negative word for social organizations. “There’s only ‘for value’. ‘Non-profit’ is a negative word. ‘Not-for-profit,’ or ‘For-profit,’ or NGO doesn’t matter. All organizations, be it governmental, for-profits and NGOs should rather be called ‘For Value Organizations,’’’ Dr. Anand said at the Development Dialogue held in Hubballi in February 2016.
However, Roshan Miranda, Director, Urban Waste Management and Recycling – Waste Ventures India, shared a different perspective. Enterprises, whether social or otherwise had to ensure that they made profits to sustain. “Will your venture be profitable in three months or in three years? An entrepreneur has to ask himself this question,” he emphasized, speaking at the same panel during the event.
It is widely agreed that market-orientation is key to sustainability for organizations across the spectrum, whether in the social sector or others. Within the Sandbox for instance, the prime agenda of the Grantmaking and Partnership Program is to enable nonprofits and social enterprises to develop a vital market orientation. The program, which works primarily among companies in the social development sector, has validated that companies can become sustainable through market-orientation and revenue optimization.