We often talk about the importance of alignment when integrating business approach with social mission, but it's not always the rule. There are organizations that run separate business and philanthropic models at the same time. Fashion label Geoffrey Beene is one that channels 100% profit for philanthropy. I recently came across a design & media business incubator in China, PAE that also adopts the same approach. It's hard to find published information to assess how well such model work and I think the interesting question is what's the potential in replicating it in different areas of business?
The common rationale behind such model is that profit is more sustainable source of funding, but it's not always the case in reality. I know of a consumer company that adopts such model struggles with losses for consecutive years, charitable donation also suffers as a result and misses the original goal of reaching out to more charitable causes. The idea that such philanthropic model attracts buyers doesn't always work, neither does it exclude companies from the usual business competition. So the logical question is why not donate directly to charities instead?
No doubt that the effectiveness of such model still has much to prove, and I wonder if there is any potential to adapt it in investment for social enterprises. It basically means making conventional for-profit investment but directing 100% profit to fund social enterprises or philanthropy. There are probably already some that I don't know of. Is it possible and effective? I'm interested to find out.
Tuesday, September 6, 2011
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