What is the relationship of social enterprise and poverty? Or charity?
Within the IMN we have been chatting about business models. Rightly so, business concerns itself with the “bottom line”. If there is no profit, there is no business. Profit is good and so are the businesses that make a profit with offerings that maintain or enhance human life. Without profit-making business, goods, services, jobs all go away.
In recent years there has been a lot of attention given to “social” enterprise and social entrepreneurship. The result has been the creation of a “double bottom line” consciousness. A decade or so ago when I first heard about this concept, it was referred to as a “triple bottom line” referring to revenues (gross profit), net profit, and social benefit.
The emerging “double bottom line” consciousness concerns itself with both profit and social benefit. Research suggests that, all things being equal, consumers would prefer to do business with a company that contributes to the social good.
Of course, there’s a huge difference between what people say they would do and what they actually do. The greed of the average consumer would drive a socially conscious business bankrupt. Times of change are always tempestuous times. The goal is for all business to be conscious of the social impact of their business and for consumers to stop passing the blame for the world’s ills to the corporations.
Tom’s shoes, which employs a one-for-one business model, is a popular example of a social enterprise. For every shoe they sell, they give a pair away to a poor person somewhere in the developing world. They make a profit and help better the world. That’s the theory and intention.
Our hesitation about this model is that, while it is good-hearted, it may actually hurt the poor. For one, giving shoes to the poor may undercut local shoe makers. What indigenous shoemaker could compete in a marketplace flooded with free shoes imported from the United States?
Another hesitation is that, while this model “gives a man a fish to eat”, it doesn’t teach him “how to fish for himself”. Charity of this sort can create a dependency which hinders the potential economic and entrepreneurial development of nations and families. To it’s credit, TOMS Shoes is also rethinking it’s own strategy. Give TOMS Shoes credit — and continue to buy their shoes– because credit is due.
At present we’re tweaking TOMS one-for-one business model. What if, rather than giving product away for every product sold, we were to give a grant or a “micro-loan” to an entrepreneur in the developing world? Soon, through the creativity network called VOXTROPOLIS, we’re going to release what we call the “MissionT” or the “EnterpriseT”. For every “EnterpriseT” we sell, buyers will be investing in an indigenous entrepreneur and a locally run business that benefits that local economy.
In time we’ll add more products and we’ll tweak the business model when it doesn’t produce both bottom lines — profit and real social benefit.
Coming soon: Social Enterprise and Sustainability
What do you think?