Tuesday, March 9, 2010

Non-Profit Social Enterprises: An Oxymoron

Today, in Twitter, my attention was grabbed by a 140 characters little headline and my immediate thought was: if ever there was an implied oxymoron, this was it: It simply hints that one should differentiate between 'for-profit' and 'non-profit' social entrepreneurship:

The link posted leads to the respected change.org website on the topic of "Social Entrepreneurship" and an article by Nathaniel Whittemore with the redundant reference to 'for-profit' in the title that deserves attention: "The State of the For-Profit Social Entrepreneurship Field". It is a good article and thought-provoking.

It is indeed unneccessary to so feel compelled to include 'for-profit'  in the title (as if the other kind exists) and after reflection, I can only say that entrepreneurship has at its heart ENTERPRISE and PROFIT (thus, an oxymoron to speak about 'nonprofit' social enterprises or social entrepreneurship). Much more valuable is the comment that entrepreneurs or companies are becoming more socially orientated in their thinking and ideas as they explore emerging markets.  They may very well move into the space of nonprofit delivery, and (I have to say) some times in a more sustainable way due to better business practices and acumen.

In the same way,  and at the other end of the spectrum, traditional 'nonprofits' (a term I have never liked as I prefer 'public profit') find their way into other forms of generating income. This does not make these 'charities' or 'civil society organisations' now suddenly for-profit at their core - but it makes them clever and enterprising in the way they raise funds for charitable work through entrepreneurial ventures.  Afterall, Uthango itself just kick-started  another venture, called vuvuzela unPluggedTM, for the purpose of generating an income for operational expenses. Many 'non-profits' are led by very enterprising people with very strong desires to be independent from "grant-taking".  And many leaders of non-profits are opening their eyes to the social value of economic activity, because they are forced by the global economic crisis and socially-savvy corporates to reconsider options. I totally agree that entrepreneurship could be expected to be social as much as it is profitable:
"I think that recognizing the social value of economic activity at the root of entrepreneurship helps us re-calibrate not only what we think social entrepreneurship looks like, but what we expect all entrepreneurship to mean".
So what are we looking at then? Companies and entrepreneurs (with a focus on profit and viability) moving towards a social agenda and Civil Society organisations (with a focus on social gain and sustainability) shifting in the direction of an economic agenda. And in the middle we find the meeting point of social entrepreneurship - by its very definition FOR PROFIT and FOR SOCIAL GAIN.  I maintain that nonprofit social entrepreneurship does not exist, in the same way as for-(personal)-profit charity work has no place. 

As our own organisation debate our existing projects vigorously to position it as social enterprises OR funded socio-economic projects, we find ourselves reflecting on the basic principles of good business. 

I am thinking, it is unfair to compete with a 'non-profit' status in an entrepreneurial market place and use grants and donations to generate profit as it distorts the market.  However, in a competing world, where those companies and entrepreneurs with financial assets could enter the arena where civil society organisations thrived in the past, it is equally unfair that the social deliverables of these organisations are now engulved by corporate agendas. Surely, the middle way lies in recognising the best in both worlds and collaborating in partnerships (and building capacity) rather than reinvent the wheel either way??


Poetic Executioner March 29, 2010 at 2:41 AM  

I'm not entirely sure if I fully agree with you yet... I worked as part of an organization that builds social enterprises on 'for-profit' and 'non-profit' bases. It comes down to defining the term 'non-profit'. Does it refer to how generated income is redistributed or that there is actually profitability and thus sustainability...

Running a 'hybrid' social enterprise I can safely say that the project's goal was never to be set up as a profit-centre for a singular or collective group of individuals. In actuallity it was set up to deal with a specific goal (we were doing marketing for various grassroots NGO's), and the means by which we generated income was through commercial work to big-boys like Puma, etc (thus our Hybrid classification)... This 'profit' was then used to run campaigns for other NGO's and such. The point is, it depends on your initial definition of the term. In my mind if you have an enterprise that generates market-based income it is obvious that you will have profit, but the question is whether the intent of that business fits the capitalist profit model, thus making it 'for-profit'; it's intent being to generate profit primarily (as with some fundraising organisations for instance). Should said project be primarily instituted to deal with a specific social or environmental issue; having profit generation secondary atand usually born of necessity) I would say you could safely categorise it 'not-for-profit'. Again, I think it's project intention that matters, and in the end it's only really terminology...

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