9 Business Model Examples for Social Enterprises

A business model is a structure, design or framework that a business follows to bring value to its customers and clients. However, there are at least three measures of the success of a business model—its ability to generate profit for its owners, its ability to generate positive change in the world, and its ability to achieve a balance of profit and positive change. The first approach applies to traditional for-profit companies; the second approach applies to traditional charities; and the third approach (a balance between profit and positive change) applies to social enterprises.

Given the definition above, a social business model is a structure, design or framework that a social business follows in order to bring about a positive change while maintaining healthy financial returns. Yet despite sharing this basic framework, social entrepreneurs have a wide spectrum of viable social business models to choose from.

To help shed light on that spectrum, in 2012 Wolfgang Grassi (aka W. Grassi) identified nine types of social business models. He began his analysis with three factors guiding any social business: the mission, the type of integration, and the target population. He then explored the way in which these three factors intersected with the three traditional categories of business (for-profit, not-for-profit and hybrids) to generate the nine specific types of social business models that any social enterprise could adopt.

Let’s have a look at them:

1. The Entrepreneur Support Model

This model of social enterprise (SE) sells business support services directly to the entrepreneurs in its target population. In other words, this type of SE helps entrepreneurs get their businesses off the ground. Support can come in the form of consulting services, training, microfinancing or technical support. Organizations that belong to this category may include economic development organizations, business development service organizations and microfinancers.

Examples to Inspire:

2. The Market Intermediary Model

This type of SE generally helps their clients by marketing or selling their clients’ products or services for them. For example, an organization that helps struggling small farmers by marketing and to sell their crops for them would belong to this category.

Want to dig in right now and figure out your impact model? We love this book: Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers which is a great tool, resource and guide to get you started! 

3. The Employment Model

This type of SE provides their clients with job opportunities and job training. Revenue generated by those jobs pays for the SEs expenses and flows back into the services provided for those in need. Many youth and disabilities organizations adopt this model.

Examples to inspire you:

4. The Fee-for-Service Model

The fee-for-service model is one of the most commonly adopted SE business models. The SE charges the customer directly for the socially beneficial services it provides. Many hospitals, schools, museums and membership organizations use the fee-for-service model to a greater or less degree.

Examples to Inspire You:

5. The Low-income Client Model

SEs in this category generally offer social services directly (as in the fee-for-service model) while focusing on low-income clients. Hospitals and healthcare programs that offer their healthcare services to low-income patients often adopt this model.

6. The Cooperative Model

This is one of the most widely recognized categories of SE. The cooperative is generally a fee-based membership organization that provides member services to a group that shares a common need or goal. The cooperative is owned and operated by its members, who both run the cooperative and receive the benefits of its success. Two of the most well-known types of cooperative include credit unions and employee-owned businesses (“co-ops”).

7. The Market Linkage Model

SEs that serve as brokers for their clients often adopt this model. These SEs focus on building relationships and otherwise connecting their clients with markets for their clients’ products and services. However, unlike SEs adopting the market intermediary model, these SEs generally do not market or sell their clients’ products and services for them. Many trade associations adopt the market linkage model.

8. The Service Subsidization Model

This type of SE funds social programs by selling products or services in the marketplace. Service subsidization is one of the most common SE models, as almost any SE can adopt it. In contrast to organizational support SEs (see below), service subsidization SEs integrate their internal business with external social programs. For example, a law firm may use the revenue generated from the firm’s regular law practice to fund a social program that provides free law services to those in need. The firm may run the program out of their own offices and may provide the free law services themselves.

If you want an easy, scaled-down book to read, why not try Business Models for Dummies? It’s got a lot of info that is easy to digest! You might just want to spend a few afternoons getting into that one.

Examples to Inspire You:

9. The Organizational Support Model

This type of SE, like a service subsidization organization, sells products or services to fund social programs. However, the social programs they fund are part of a separate, parent organization. In other words, an organizational support SE raises funds for a parent non-profit that, in turn, runs the social programs the SE wishes to support.

Although most social enterprises may fall naturally into one of W. Grassi’s nine categories above, there is always room for new and combined models to emerge. If your social enterprise cannot achieve its goals through one of these business models, you may choose to explore entirely new ones.

Examples to Inspire You:

Ready to start planning your business?

Here are some great resources about the Business Model Canvas:

Business Model You: A One-Page Method For Reinventing Your Career

This is a great place to start building out your ideas. Business Model You is just that. Start with you, build a business model that aligns to your personal values. Starting with you, you’ll figure out where you want to go and how to have a lifestyle that lines up with your personal mission.

Here you’ll not only discover how to create your personal business model canvas, but you’ll also do the hard work of reinventing yourself — something we can totally get behind here at Change Creator!

The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses

Eric Ries’ powerhouse book is a must for any entrepreneur that wants to start a business, not just a hobby. After reading this book, you’ll not only look at your business differently, you’ll have the insights and strategies to get there.

Anyone that wants to grow a business must first read The Lean Startup. That’s just a fact. If you haven’t gotten a hold of it yet, what have you been doing with your life? But seriously. You can find the latest edition here!

You might also enjoy:

7 Productivity Myths Busted: Are You Falling For Any Of These?

When you’re starting a social business, there are a gazillion things you can do to get it off the ground, spread the message and bring about the change you want to see in the world. You try your best to do it all – get the newest gadgets, spend more hours at your desk every day and even multitask like your life depended on it.

Continue reading

3 Social Entrepreneurs Blazing New Trails Toward Sustainability

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As industrialized nations struggle to slow the process of environmental degradation and resource depletion, social enterprises are forging innovative new pathways toward sustainability.

Around the world, people are waking up to the fact that many of their current practices are unsustainable – damaging to both natural environments and indigenous cultures around the world.

We’ve seen fires, pollution, deforestation, and oil spills that have disrupted marine life and underwater ecosystems. But in light of these environmental disasters, hope and innovation are flourishing.

Findings from a market intelligence agency, Mintel, show several promising consumer trends taking shape. About half of consumers surveyed reported that they trust small companies to make good decisions, while 56% claimed to have stopped purchasing products from companies they deem unethical.

Despite the many hurdles social entrepreneurs must overcome, like acquiring funding and building community support, research suggests that it pays to be an ethical organization in the long run. Employee retention rates are easier to maintain, along with customer loyalty and vendor partnerships. Everyone, it seems, is more willing to hop on board with a company that sticks to its values. Some estimates even suggest that ethical businesses last longer and earn more over time.

Upon recognizing the dire need for values-driven business in today’s ecological climate, social entrepreneurs are building business models that benefit the environment rather than sacrificing it.

The following three social enterprises have conquered challenges, achieved astounding results, and transformed ineffective environmental practices around the globe.

One Acre Fund

  • Organization: One Acre Fund
  • Social Entrepreneur: Andrew Youn
  • Focus Area: Environmental Sustainability, Poverty, Agriculture
  • Regional Focus: Kenya, Rwanda, Burundi, Tanzania, Uganda, and Malawi
  • Major Awards: Skoll Award, Schwab Foundation Social Entrepreneur Award  
  • Website:www.oneacrefund.org

What they do:

Since 2006, One Acre Fund has worked to empower African farmers to increase their harvests through a variety of educational initiatives. With the ultimate goal of eradicating poverty, One Acre is already supporting nearly a million farming families. Their data shows massive agricultural improvements of up to 99% in sustainability. They educate farmers on new planting methods, replace kerosene with solar lighting, and make tree germination more accessible. African farmers are taught about the importance of crop rotation and introduced to the process of composting. One Acre Fund’s four-step business model involves both financing and material distribution to ensure farmers get the most out of each harvest.

Why it’s important:

Among the poorest populations in the world, farming is the primary occupation. A variety of issues faces African farmers, including inflated fertilizer costs and limited access to desperately needed financing. Landlocked countries like the ones One Acre Fund work with often have a difficult time accessing materials. They travel to distant locations on poorly paved roads, ultimately driving up the costs of production.

Key strength:

Andrew Youn takes a concrete and practical approach to eliminating poverty. He believes it is not “geniuses” we need to solve these widespread problems, but simply more support workers to do the jobs they’re good at. His business model takes a ground-up approach and helps farmers from start (financing) to finish (market facilitation). In this way, One Acre Fund is incredibly unique. It doesn’t specialize in one area, but assists farmers in every way, from direct, hands-on education, to fertilizer distribution and profit maximization. The organization operates on the assumption that the answers already exist – all that is needed is to get your hands dirty and do the work. 2

Forest Trends

  • Organization: Forest Trends
  • Social Entrepreneur: Michael Jenkins
  • Focus Area: Environmental Sustainability, deforestation
  • Regional Focus: Worldwide
  • Major Awards: Skoll Award, MacAurthur Foundation Award
  • Website: www.forest-trends.org 

What they do:

Forest Trends is an organization that has worked to preserve forests through innovative finance since 1998. They release transparent reports on ecosystem markets and collaborate through coalitions and partnerships to implement environmentally conscious practices. Forest Trends fosters a variety of initiatives, like the Katoomba Group, which aims to expand markets like watershed protection and carbon storage, and the Communities Initiative, which partners with Native communities to protect forests in Latin America.

One-third of the excess CO2 in the atmosphere since 1750 has come from deforestation

Why it’s important:

Deforestation has become a deeply concerning problem.

It’s estimated that 150 acres are destroyed every minute of the day, with more than 20% of the Amazon rainforest already lost.

As loggers systematically work their way through forests, animal and plant ecosystems are entirely disrupted, while indigenous tribes are often displaced.

Forest Trends has found that more than 90% of the world’s poorest populations depend on forests for cultural preservation and economic stability.

Key strength:

Founder Michael Jenkins cites his time at the MacArthur Foundation and his experiences around the world as crucial learning opportunities. As many successful entrepreneurs do, Jenkins began to recognize a specific gap in the NGO world – a lack of connectivity. Instead of starting yet another organization with separate and isolated objectives, he founded Forest Trends to initiate connections between various groups – some of whom previously perceived each other as opposing forces. Thus Forest Trends filled a market gap – one that desperately needed filling for the sake of environmental progress.

Triciclos

  • Organization: Triciclos
  • Social Entrepreneur: Gonzalo Munoz
  • Focus Area: Environmental Sustainability, eliminating waste
  • Regional Focus: Chile (but is expanding to other countries)
  • Major Awards: BMW Foundation Responsible Leaders Awards, B Corp Best of the World
  • Website: www.triciclos.net/es/

What they do:

Based on a strong belief in circular economies, Triciclos seeks to revolutionize recycling and eliminate waste entirely. They educate communities visually through beautiful recycling stations in South America. These large and colorful displays are hard to miss – they function as small waste-sorting facilities while simultaneously teaching citizens how to recycle different kinds of materials like paper and glass. Their software features a recyclability index and inventory system. Triciclos strives to transform consumer habits through education and direct community action.

Why it’s important:

Most people are still not educated on the rules and regulations that surround the recycling industry. We have single vs. dual stream recycling, yet many people are unaware which kind of service manages their neighborhood. In addition, there are numbers printed on materials that designate which kind of receptacle they should be placed in. We’ve seen cases of recycling fraud where materials don’t make it to the facility. And unfortunately, recycling bins are often contaminated with waste materials, causing everyone’s contributions to ending up in a landfill.

Key strength:

As the first B Corp certified in South America, Triciclos is paving the way for other social enterprises to follow suit. Founder, Gonzalo Muñoz has created a business model that sets the business apart from most other recycling initiatives in that it directly invests in people. Sanitation workers can operate a Triciclos recycling station as an entrepreneurial project. The organization also shares a third of its profits with all of its employees, who earn well over minimum wage. By investing in the community, Triciclos gives people a sense of ownership and a willingness to help the organization flourish.

2 of the Top Markets with Big Opportunity for Social Entrepreneurs

Modern society faces numerous issues. From extreme poverty to worldwide hunger to planetary concerns that include pollution, climate change, diminishing natural resources and an ever-increasing list of endangered animal and plant species—there is no shortage in the challenges that face our world.

Nonprofit and government agencies have been the go-to in previous and present times of crisis. While social entrepreneur organizations can be nonprofit, they can also be for-profit and a hybrid between the two, and they are bringing government and businesses together to create change.

Social entrepreneurs are making their mark in addressing key issues and solving these in unique and individual ways by applying business practices to social problems. A prime example of this is Scott Harrison, founder of charity:water, a nonprofit that has raised more than $230 million and provides safe and potable drinking water in 24 countries.

In order to truly succeed as a social entrepreneur, it must be a cause that drives you forward through difficult and often overly-regulated, triple-copied bureaucracies that can make change daunting. The following represent two of the opportunities ripe with need. Find the one that stirs your soul and lead the way.

The Sun

The International Energy Agency (IEA) believes that “Without decisive action, energy-related greenhouse-gas emissions will lead to considerable climate degradation with an average 6C degrees global warming.”

Renewable energy is one of the answers to this worldwide concern and solar energy is leading the way. According to the IEA, “The U.S. could install 305 gigawatts of solar by 2030 and 737 gigawatts by 2050.” Those numbers represent an increase of approximately 1000 percent from today’s current capacity. Just 16 years ago, 1,000 solar power installations could be found on America’s rooftops.

Today that number is close to one million. In addition, the cost of installation is half of what it was just six years ago. The technological advances that have lowered installation costs have also increased availability worldwide. According to Think Progress, “Over the past four decades, for every doubling in scale of the solar industry, the price of solar modules worldwide has dropped roughly 26 percent.” Nationally and globally, installation of clean energy is exploding.

Solution

Approximately 1.3 billion people live without access to a power grid around the world. Enter the social entrepreneur who can often overcome potential government hold-ups. Bringing affordable renewable energy to rural communities provides light and power for schools, homes, businesses and farms. Consider SunCulture—an innovative sustainable energy company that created an “AgroSolar Irrigation Kit.” This solar-powered drip irrigation system waters crops by pulling water from available sources. SunFunder finds investors for individual solar projects. Their goal is to finance $1 billion for solar loans by 2020.

Food

If you live in the United States, you probably see food waste every day. The statistics, in a world where more than 700 million people suffer from hunger, are truly daunting. According to The Guardian, our need for perfect, unblemished fruits and vegetables is the root cause of the current trend of throwing out anything less than perfect and this occurs at the level of farmers, packers and distributors. Approximately 60 million metric tons of produce worth about $160 billion is thrown out every year by retailers and consumers.  When you add the food left in the fields or in the warehouses due to their imperfections, it is estimated that almost half of all produce grown goes to waste. And that’s just in America. Globally, approximately 1.6 billion metric tons of produce at a value of $1 trillion is wasted every year.

Food waste in developing countries is largely due to poor equipment or lack of transportation. In wealthy countries it is largely due to the high aesthetic standards.  If the hunger crisis facing the world calls to your inner social entrepreneur, consider how the countries below have made a difference.

Solutions

The Danish city of Horsens calls the food waste outlets pop-up shops. They collect food from supermarkets that may be nearing its best-before-date or has damaged packaging and then sells it at discounted prices to those in need. Denmark is making a concerted effort in the battle against waste and has cut it by a quarter since 2010. The UK calls these same types of shops social supermarket chains. Company Shop was founded more than 40 years ago and is UK’s largest redistributor of surplus products. They stop 30,000 metric tons of food from going to waste by redistributing it to communities in need and offering the food at discounted prices.

Power and food—two of our most vital needs as a people and yet many around the world are without. If social entrepreneurs have their way, there will come a day when everyone will have ample food and a light to lead the way.

At Change Creator, we inspire and empower people to earn a meaningful living that positively impacts the world.

Approximately 60 million metric tons of produce worth about $160 billion is thrown out every year by retailers and consumers.

How H2GO is Reducing The Cost of Renewable Energy for Millions of People

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Exclusive interview with social entrepreneur, Dr. Enass Abo-Hamed, founder of H2GO.

Subscribe to this show on  iTunes  |  Stitcher  |  Soundcloud

Enass Abo-Hamed is a PhD in chemistry who was working on a project storing hydrogen gas, developed an invention, and was unsure what she should do with it.
But what was it? In the lab she created a smart sponge material that absorbs hydrogen gas and only releases the gas when you turn it on. It can be turned on and off. The only byproduct is water vapor with zero carbon emissions.

At Cambridge she was able to test the commercial potential of her invention through their programs.

H2GO Power is an award winning spin-out company from the University of Cambridge developing safe and low-cost hydrogen production and storage technologies.

Their mission is to bring affordable reliable energy to millions of people around the world in a sustainable way for large social and environmental impact.

Enass loves to solve technical problems and work on solving big challenges. Energy was a passion for her because it’s such a big global problem that impacts everyone. It’s number 7 on the list of sustainable development goals. She believes it should be number one.

“We have about 1.2 billion people around the world that don’t have access to electricity”

Topics of discussion in this interview

  • How Enass validated her idea, what was that process?
  • How will they get water in the local areas where energy is required?
  • Will this be cheaper for people in local areas and how will it work?
  • How did Enass prove there was a market opportunity to earn money?
  • What was her biggest challenge moving from the chemist mindset to the business mindset?
  • How did she get funding?
  • Where will this technology first be tested and why?
  • Why the term “hydrogen” became a challenge in the minds of people who would benefit from this product?
  • What are the needs of the people who need cleaner safe energy and what are they doing now for energy?
  • What was one of the most shocking learnings Enass had about people who need this type of solution?
  • The vision of H2Go and what we should expect.
  • What are some of the possible applications for this type of technology?

5 Expert Strategies on Overcoming Your Fears

If you’ve ever thought about changing careers, or asking your boss for a promotion, or maybe starting your own business, but you thought, “Why take a risk? I might not be completely satisfied with what I have now, but at least it’s safe, and I get a steady paycheck,” maybe it’s time to think again. It might be true that you’re choosing caution over risk, but you have to consider that what’s really holding you back is fear.

Everyone Contends with Fear

The first thing you should know is that you’re not alone.  Most people experience fear at one point or another in their careers.  They fear failure, or losing money, or perhaps looking foolish.  Those are not unreasonable concerns, but letting them prevent you from following your dreams isn’t without its own risks.  You might, for example, be nagged for years by the feeling that you lost a golden opportunity.  The truth is, what most people regret as their near the end of their careers is not their failures, but their inaction.

It’s OK to Be Afraid

Fear is normal—it’s part of our genetic makeup, a survival instinct that prevents us from unwittingly entering potentially hazardous situations.  What’s not OK is being so overwhelmed with fear that you shy away from a potentially better life.

Patricia DiVecchio is a business and work coach who helps her clients overcome their fears and realize their ambitions.   The author of Evolutionary Work: Unleashing Your Potential in Extraordinary Times (Pearhouse Press), and president of International Purpose, DiVecchio has been helping people for more than 25 years manage fear and uncover their work potential and purpose.

Her advice to her clients?  Instead of running from your fears, embrace them and treat them as an ally.  As she told Forbes recently:

“(Fear) can be a great motivator, a great teacher. We don’t see it like that. We tend to run away from fear, back, or shy away from it, instead of stepping into it. You need to recognize it as something you can learn from. You need to shake hands with your fear and enlist it as a friend- a force to encourage forward movement, rather than something to hide from.”

Here are 5 primary strategies she recommends to embrace your fear and use it to motivate positive action:

1.  Make It Concrete

One of the ways fear paralyzes us is through its lack of form.  Fear is nebulous, and for this reason difficult to get a hold of and overcome.  DiVecchio puts her clients through an exercise in which they draw a picture of what their fear looks like.  One of her clients, for example, drew himself afraid as a rickety old car on a road filled with potholes.  In making his fear tangible, he was able to grasp its power over him and conquer it.

2.  Give Your Fear a Voice

DiVecchio recommends keeping a journal in which you articulate your fear, and monitor how it changes over time.  You can’t change what you don’t acknowledge—a journal forces you to confess your fears to yourself, and, in so doing, learn from them.

For example, if you have the desire to begin investing in the stock market, but are afraid you’ll lose the money you invest, writing about that fear might help you make more reasoned investments, or seek the advice of a competent broker.  You’ll also be able to examine “the worst that could happen,” and realize that even that worst-case scenario would not be the end of the world.

3.  Take Small Steps

Fear often has the power to paralyze us and lead us to complete inaction.  To pull yourself out of this trap, do one small thing each day that you’re afraid to do.  For example, if you are considering leaving your 9-to-5 job to start your own business, you could begin by doing a little research each day, or calling a trusted mentor for advice.  Each small step you take will give you a sense of accomplishment and convince you that you can take another step, and another after that.

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4.  Practice “the Three E’s”

When we’re afraid, we become convinced that we’re not especially good at anything.  This, of course, is not true—everyone has innate skills and capabilities—those things which are not the result of education or experience, but inherent—and everyone needs to remind himself of what those talents are.  DiVecchio tells her clients to write about the three E’s:  the things that come to you easily, effortlessly, and are exciting, and then to act upon them confidently, perhaps to launch a new career that otherwise might not have occurred to you.

5.  Reach out to Trusted Friends and Family

Many people have no clue about where their talents lie.  Take the time to interview several people who know you and whose opinions you value.  Ask them what they think you’re better at than just about anyone else.

You’ll be surprised to see patterns emerge, similarities in their responses which will help you identify your strengths and act with confidence upon them.  It’s sometimes said, “if 5 people tell you you’re sick, see a doctor.”  By the same token, if 5 people you trust tell you you’re an outstanding writer, or the first person they come to for advice, believe them.

Final Words

Success can be as scary as failure—it often brings added responsibilities, and the need to maintain that success over time.  It means the kind of change and transformation that you might be afraid to embrace.  The good news is that there are competent professionals who are skilled at inspiring and empowering their clients to earn a meaningful living that positively impacts the world.

What have been your greatest challenges with fear and how did you overcome them? Share in the comments because we’d love to hear from you.

Related:

23 Self Improvement Tips for Social Entrepreneurs