A World Where Charities Are no Longer Needed!
Discussing a More Sustainable Business Model: Social Enterprises
Forty-two percent of Americans don’t trust the charity system. And I don’t blame them.
Researches seem to have proven that 40 percent of the actual donations are spent in structural and operational costs instead of going to the actual cause. Why? Marketing and Communications. What for? Fund-raising more money. Somehow understandable… but, does it make sense that almost half of the money donated by people is spent on getting more people to give more money?
Campaigns on fund-raising are literally swallowing the money that should go to the cause. For me, that is unsustainable. There is a more sustainable way, and that’s what I’d like to discuss with you.
To start with I think in their essence, charities, non-profits and NGOs do an amazing job and have a genuine purpose — because they were born with the ultimate goal to give back. And that’s already much more than most of us do — most businesses do!
But charities no longer work because their model is based on the goodwill of the philanthropic and donations of the public. Most often, charities have a volunteering based model, for which the staff is not paid — and forgive me, but I dare to say this is also very unsustainable.
Overall, most charities are not designed to recover their total costs from their operations and are therefore obliged to devote part of their time and energy to raising money. The income depends on third parties, and charities spend loads of time raising the money, a time that could be used to do the actual job to solve that problem.
Simultaneously, charities have a tough time to expand because they are not able to invest as much in brand awareness, so if people don’t know about the charity — hard luck for the charity to raise more funds.
Charities involve uncertainty — because there is no guarantee once you have the money where exactly it will go, and for sure it never comes back. Because you need to generate profits to be able to give.
And then, the other side of the coin: philanthropy.
Not that I am against philanthropy, but with the charity model depending on them as their source of income, we are establishing a relationship of “dependence” which goes exactly against the “empowerment” concept or value we are trying to achieve.
Also, philanthropy is sometimes used by charities and non-profits as a mechanism for their PR and CSR reports to the company shareholders.
Not always those companies have a true, honest and responsible mission behind the purpose of giving back, but use them as a strategy to get data for their yearly reports.
This includes impact data on Corporate Social Responsibility, which it turns out, has become an on-demand “must-do” if, for example, you wish to access tenders and governmental grants.
Giving today, but what happens tomorrow?
I was reading the other day a content piece which said:
“Charity is the act of extending love and kindness to others unconditionally, which is a conscious act but the decision is made by the heart, without expecting a reward. When Charity is carried out selflessly, it is a one-way act where a person gives but asks for nothing in return.”
NOTHING IN RETURN.
This is the whole point. Many will discuss this, as “the return” is just the fact of giving back (which is addictive and it’s good for you; it produces hormones such as dopamine and oxytocin — making the act of giving even better than sex).
Very nice! But then, wasn’t this all about giving today, tomorrow, and the following day?
Are we trying to solve major structural problems, or are we giving bread today for them to be hungry tomorrow? Are we working on the core issue, or are we leaving people in the shadow of poverty unable to access scalable solutions?
How can we solve the gap in the system?
The answer is Social Entrepreneurship. At Ourgoodbrands we feature all examples of ethical businesses that have got a sustainable and profitable business model enabling them to give back with a long term perspective.
There are many ways for Social Enterprises to get their business model right. Most specifically we have found four ways to build your social enterprise ready to make an impact. In the guide, you will find there are what it is called 4’s Social Enterprise business models:
The key is that Social entrepreneurs were born to empower humans, improve the health of our planet with eco-conscious practices, and have their activities interwoven in the cause of a profitable business model so they can give back more to pursue their cause.
On the other hand, Social Entrepreneurs have found a viable way for them to use charities, non-profits and NGOs (we specify in detail about the Sharing business model and the 3 forms it takes to give-back).
Basically, the most common feature is that social enterprises are using non-profits as their driver to give back.
If you ask me: why has this become a trend? Because social entrepreneurs cannot figure it all out!
The reality is that for most social enterprises it is already very difficult to create a profitable and sustainable business, so it becomes an impossible deed building a whole new structure that operates as if it was a charity.
So, the most feasible way for social entrepreneurs to give back in this new economic paradigm is by using charities, non-profits and NGOs as a mechanism to fulfill the purpose of impacting the world in a more positive way.
That’s a good start.
Just imagine for a moment if all businesses had to give back, from the first dollar of profit?
Potential solutions for non-profits
Here are some of the conclusions I came up with for non-profits to thrive and become a bit more sustainable (your ideas are welcome!):
(1) Maybe a good idea is for non-profits to target social entrepreneurs and establish authentic relationships;
(2) I have also seen many non-profit organisations that are already moving to the revenue space, however many are still supported by grants (which also takes an incredible time and effort);
(3) Reinventing their core model.
This is something Charity Water did: reinventing charity using smart branding, transparency through technology and creative partnerships that got the organisation to connect with donors and do business in a new way.
Here is how they do this: They have come up with innovative campaigns and experiences to inspire their audience and truly engage with them.
In a bold way, they have disrupted charity by ensuring that 100 percent of public donations (this means, every-single-penny) go directly to water projects.
In eleven years, the charity has raised a considerable amount of money, about a quarter of a billion dollars, delivering clean water to more than 7 million people.
The Spring – the charity: Water story can be found here
My final thoughts are that there is a lot to discuss around charities and non-profitable organisations.
Whereas I am aware of their meaningful work, I truly believe it’s worth starting a conversation on how we could make charities a bit more sustainable. On how we could get more businesses to establish relationships with them, interweaving the purpose and the profitable piece.
We need to make the whole picture more authentic, so people can trust the system again.
There is a lot to be researched, and a lot to be said when it comes to charities, non-profits, and social entrepreneurship.
We are creating a new road map and it seems to me very positive.
My dream is to see a world where we are fully focused on addressing the Sustainable Development Goals (and incredible framework) and put those wicked problems where they belong: in a museum.
I want to see a “World where charities are no longer needed.”