Do you have to choose between your passions and your desire to earn a profit? Can you really “do good” and “live well”?
I’ve been struggling with this issue for a while now. I have a deep desire to do something to help kids in high-poverty communities to improve their educational experience and their career and life options. But, I also have a deep desire to own a second home and a boat.
There is a lot of talk, and dozens of “social entrepreneurship” and “social enterprise” initiatives and associations cropping up every day. They’ve got websites, magazines, competitions, spokespersons and foundations and VCs with lots of money.  I’m encouraged by that, but still a little scared of wading in and letting go of my day job.
I’m entering a couple of competitions at the end of the month, and pitching my ideas to private corporations for sponsorship dollars. I have high hopes (not based on any bits of encouragement I’ve received) that I’ll get some startup dollars. This would help loosen my grip on my steady paycheck.
One of the biggest challenges I’m encountering, beyond my fears, is the issue of incorporation. Most of the foundations and competitions require that my organization be incorporated and classified as a 501(c)3, a tax-exempt nonprofit organization. The problem with this is that I’m not sure I want to agree to that all of the assets that accrue to my company cannot accrue to me, and that I must limit my business to only charitable work. Of course, I want to create a business that provides a social good–in this case, improving education and chances for success for poor kids–but I also want to earn a good living (merely getting by won’t do).
In writing my business plan, I believe I’ve found a way to run a business that creates a consumer product that I can sell, and affords me the opportunity to engage schools, students, parents and the community.
I just wish that the big players who have lined up to fund this “social enterprise” space would consider for-profit organizations like mine. Unfortunately, the Bill and Melinda Gates Foundation, Craigslist Foundation, Google Foundation and so on are awarding their dollars to non-profits and educational institutions only (Google announced that they may consider organizations other than non-profits, but thus far nada).
Another big challenge is that VCs, angels and private lenders don’t want to lend money to non-profits or even hybrid organizations like the one I’m proposing. These funders want to earn a return on their money. I get that, but it limits opportunities to fully fund important social improvement efforts that also bring in healthy revenue and profit dollars.
The final big challenge is the perception that for-profit businesses cannot be trusted to perform social improvement work ethically. No one doubts that private, for-profit businesses can make money and operate efficiently, but potential funders for social enterprises seem to be holding back due to the fact that they don’t trust for-profits to do good. I know that this is sort of a two-sided challenge since foundations and other funders primarily make big donations because they are tax-deductible.
I guess I’ll conclude by saying that I am going to press on and try to figure out an innovative way to fund my innovative hybrid organization.
If you are out there dealing with the same conundrum, drop me a line. I’d love to know how you are faring.
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