Do you believe that a venture needs to be non-for-profit in order to make a high positive impact in the world? Or it is this irrelevant?

If on FACEBOOK, feel free to join a recently opened forum discussion by a good friend. The following was my answer to his question: "Do you believe that a venture needs to be non-for-profit in order to make a high positive impact in the world? Or it is this irrelevant?"

Follow the debate here: http://www.facebook.com/topic.php?uid=173967849295484&topic=307




An abstract out of my "mantra" book HOW TO CHANGE THE WORLD by David Bornstein (a must read for all who are passionate about THIS topic, it`s delicious to read and based on the ASHOKA case):

"As the role of social entrepreneurs has become better understood, so have the similarities between citizen and business sectors. For example, it has become clear that both sectors "market" products and services. Both are operational sectors that become wonderfully inventive when the political and cultural environments are supportive. THE DISTINCTION that business does its work through a "FOR PROFIT" legal format and citizen groups "usually" do it though a "NON PROFIT" format OBSCURES THE FACT THAT BOTH SECTORS JUST EXIST - AND ARE SANCTIONED AND REGULATED BY THE STATE - TO CREATE VALUE FOR SOCIETY. By contrast, the government`s primary responsibility is not ITS OPERATIONAL ABILITY, BUT ITS ABILITY TO REPRESENT THE WHOLE POPULATION AND FOSTER THE CONDITIONS TO PROMOTE FAIRNESS AND PRODUCTIVE ACTIVITY IN THE SECTORS. Governments are not the ideal vehicles to carry out the social I&D, just as they are not the ideal vehicles to create new businesses. As in business, advancing new ideas and creating new models to attack problems require AN ENTREPRENEUR`S SINGLE MINDED VISION AND FIERCE DETERMINATION AND LOTS OF ENERGY AND TIME. The citizen sector is in fact beginning to resemble a "new market economy of social products and ideas".

Coming back to your question, here is my take:

1. We should stop this useless dilemma if "I go for profit or non for profit". This is a "legal technicality", what matters is the caliber of the entrepreneur and its ideas (which make sure are turned into scalable products!!! and not just good looking verbiage) and how they are changing the whole pattern in a field.  Imagine, let`s say, ASHOKA: I care about Drayton and the model he created. For me, it wouldn`t make really any difference if Ashoka would be today a FOR PROFIT consultancy firm, which supports and discovers HIGH IMPACT SOCIAL ENTREPRENEURS. The difference in a for profit is that shareholders have the right to cash out the profit they do out of the business each year ... and what would be wrong with that? I care that the "model" (for profit or not) makes sense for society.

2. Now, what makes us go for one "legal" format over another? I think the answer is in the market reality and customer profile. SOCIAL ENTREPRENEURS (coming back to the ASHOKA example) given the profile of their "consumers" just can´t pay for the services of service provider, so if this is my market reality, I rather constitute myself as a non for profit because under this format I can ask others to subsidize the services I provide to my own customers. I could not do that through a for profit legal format. But believe me, if I have an amazing social ideal, and if from moment zero, given the reality of my stakeholders and created business model I see that it can be for profit, I`ll automatically go for it. There is the paradigm that "to look good for society, it needs to be a charity". WRONG.

3. Contemporary theory is focusing more on how both sectors are similar and not anymore how they differ. And moreover, how they both take leadership understanding that we have delegated too much to the government. We do not talk anymore of "profit" and "for profit", but of CITIZEN and BUSINESS SECTORS - you can be company in the CITIZEN SECTOR which is a for PROFIT and a VENTURE in the BUSINESS SECTOR which is non for profit. Examples in the second scenario are rare, but not impossible.

4. Here are some examples out of my close circle of Endeavor Entrepreneurs. ALL OF THEM FOR PROFIT, CHANGING THE WORLD:

- LUMNI - http://endeavor.org/entrepreneurs/felipe-vergara/451
- ECOLFLORA - http://endeavor.org/entrepreneurs/nicol%C3%A1s-cock-duque/390
- LAPDESK - http://endeavor.org/entrepreneurs/shane-immelman/190

And so we can find more examples ...
THIS IS THE SWEET SPOT WE NEED TO BECOME, for profit or not, WE NEED TO BE HIGH IMPACT ENTREPRENEURS in the market of social or not-social ideas.



Love the topic ...