A Changing Model
In the past, Not-for-Profit organizations were referred to primarily as charities or service organizations. They generated funds by requesting large donations. They presented their cause as a great need within a community and relied on benefactors, foundations, and donations to survive. This model proved unsustainable over time as funding was unreliable.
The advent of Social Innovation has created a wealth of knowledge and new understanding, shifting the non-profit model paradigm from one of charity to purposefulness. Social Innovation and Social Enterprise strive to create sustainable business models and best practices to improve the world.
A major shift in perception involves how non-profit models present themselves today as self-sustaining entities; coupling a good mission with good business. The transformation into this new model can be seen in the execution of a Dual Mission Business, or business models that execute on a multitude of levels.
From Vogue to Vietnam
Tom’s Shoes, which has been featured in Vogue, is a classic case study of Dual Mission Business modeling. They explain that their business “transforms [their] customers into benefactors, which allows [them] to grow a truly sustainable business rather than depending on fundraising for support”. Tom’s has a “one to one” purchasing strategy that provides a new pair of shoes for a child in need for every pair purchased. Tom’s business model establishes a service that creates community resources in developing countries and provides commercial goods for purchase in existing markets.
Recently Peep analyst Wesley Robinson visited social entrepreneur Jimmy Pham’s Know One Teach One Café, while conducting research in Vietnam. KOTO Café provides a training program for local street youth to learn, English, computer skills and international caliber hospitality skills through the upkeep and management of the local cafe. Boasting a 100% job placement program, graduates are sought by Hilton, Sheraton and many other international hospitality groups. KOTO Café showcases the Dual Mission approach by creating a successful revenue source while also providing a local training tool.
Social Innovation remains a dynamic category that many enterprises and businesses are exploring further. Traditional businesses focus on Corporate Social Responsibility (CSR) and hone in on The Triple Bottom Line and Purpose Driven Marketing as referenced during Earth Day in The Hunt For Purpose Driven Marketing. Currently on our reading list is Stanford’s Social Innovation Review. We recommend their article “Ten Nonprofit Funding Models” which explains the new lexicon of terms to describe non-profit funding models.
Written by Amy Johannigman & Contributed by Wesley Robinson