The following post is part of the course work for “Live Exchange” the foundational course on communication for The MBA Design Strategy Program at California College of the Arts. The rest of the posts are presented here.
By: Sarah Olson
Imagine for a moment a world where involuntary unemployment is non-existent and living standards have improved for everyone. Imagine a place in which families have the opportunity to maintain sustainable incomes and local communities are providing services that not only benefit their immediate families and neighbors, but also have the knowledge and skills to pass along the same know-how to their surrounding community for infinite growth.
Sounds utopian, right? In reality, this kind of world is within reach thanks to current economic and social trends and the actions of many social entrepreneurs who are working with men and women in the developing world to build businesses that create income, opportunity and economic growth for their families, their communities and their countries.
Sustainable development efforts like these are about improving the quality of peoples’ lives and expanding their ability to shape their futures. In fact, there are thousands of small-scale, low-profit ventures around the world that are working to solve pressing issues that affect poverty levels. For example, Chid Liberty co-founded Liberty and Justice, a Liberian organization that develops local African factories and connects them with international retailers and individual consumers. These factories produce fair-trade apparel for American and European retailers, and have become Africa’s first Fair Trade Certified apparel factories.
However, operations like these are not capable of solving problems worldwide. While they fill an important need on a local level, the scale in which they operate cannot reach a wide audience, nor can they obtain the financing that large corporations have access to; corporations consistently return substantial profits on a global scale.
The Good Returns business model and its founder Salah Boukadoum offer one solution to the challenge of scaling social entrepreneurship. Good Returns is a simple and powerful business model where every dollar of profit earned by a Good Returns company (that is, any for-profit company who wishes to invest in a social venture) will first go to funding an institution that is addressing social issues. One year later, those initial funds are then fed back into to the Good Returns company where it is then able to distribute that money to its investors. By delaying their return on investment by one year, they are providing substantial capital for a smaller social venture to grow.
Perhaps you’re asking, why would a for-profit company choose to invest in a non-profit social venture? Let’s take a look:
- Potential for increased loyalty from a customer base. When customers know they are supporting an organization that in return is impacting poverty levels in a positive way, it can be a powerful draw for customers. The idea that they can change the world by purchasing a product of a Good Returns company has a significant advantage over a company that does not invest in social change.
- Potential for higher investment return. A typical marketing budget under a traditional business model would need a much larger budget in order to inspire the levels of loyalty that companies under the Good Returns model are able to reach.
Mr. Boukadoum’s approach addresses important social problems in a sustainable way. While it has yet to be seen whether or not it will be viable for the social venture to return the capital to its investor after one year of operation, the Good Returns model creates a semi-permanent capital pool for social ventures that don’t otherwise have access to such capital. By implementing this “small twist” in the way we approach non-profit business models, we are able to focus the efforts of social entrepreneurs into a force for solving global problems on a global scale.
This model is great for business. It creates business opportunities for anyone who wants to partner with a social venture and maintain the same level of competitive advantages any other company would have.
Social ventures are constantly discovering ways to solve pressing social issues. The biggest underlying obstacle is capital to increase the reach across the world. Not only can Good Returns generate significant capital for these social ventures, but they can be financed by customers who choose companies that are creating positive change throughout the world.
History shows that economic progress has significantly advanced due to pragmatic people who are entrepreneurial and innovative. The idea behind social ventures is not about provoking economic and social upheaval. Rather, it is about the choices we can make and the actions we can carry out that effect economic and social outcomes in a positive way. And it is already occurring.
Socially, entrepreneurship empowers citizens, generates innovation, and changes mindsets. Economically, entrepreneurship invigorates markets and leads to job creation that can have a ripple effect on the community.
And let’s be honest, if solving a global problem were profitable, wouldn’t more people be doing it?