When talking about current social enterprise models (generally defined as self-sustaining or revenue generating entities with a social or environmental product or service) – which often involve selling a product or service to people who are living in poverty or are disadvantaged in some other way – one of the questions we often get is: is it ethical to charge people who have very little money to access these things that they need? Isn’t it far better to just donate these items instead, especially if we have the means?
This is a complex question. At first glance, it may indeed seem unethical. However, looking at the history of development of the social enterprise model around the world we often see that development has been done in a top-down sort of way – a way that has often imposed views, products, services and culture upon those “less fortunate” (the definition of which is also set by those seeking to help this very same group). The funds to do this come from a group of people from outside of the beneficiary group who then also determine what the community needs.
This is problematic. It leads to a power relationship where those trying to help, however well-intentioned, are the ones with all the power, and the beneficiaries are passively receiving this help. This has in the past lead to lack of ownership, lack of buy-in, and dependency – in other words generally a lack of sustainability in many development projects. This is not to say that all development efforts are bad or that some donor driven NGOs aren’t needed – especially in crisis situations or in humanitarian aid. Additionally, newer paradigms of development (such as those using asset-based or community led and participatory approaches) can help mitigate such challenges to a degree and are generally better ways to approach development as a whole.
However, what is beneficial about a social enterprise that charges some amount (and this amount can be subsidised) for its offerings, and relies less on external funding, is the fact that the power now shifts back to the “beneficiaries” who turn into customers instead. If they don’t like what you have on offer, they won’t buy it. And if they don’t buy it you will not succeed, since you are no longer relying on donor funding from far away, but on a customer centric model instead. You have to now learn about your customers and what they really want and need, and not just what you think they want and need.
Of course, this is a gross oversimplification – since it can still be hard to reach a successful social enterprise model even if the customers love it, for a host of other reasons, and since there are times, as mentioned before, that non-profit models are positive and necessary (think public goods such as health or some types of education). If government is failing to provide for basic needs, sometimes other institutions need to step in and perhaps those with more means can ensure those with less have a fairer chance.
Why social enterprise isn’t contradictory within the system? The fact is that the nature of society continues to change and so too the nature of how we structure business, government and the non-profit sector. With the massive technology developments we are seeing, the convergences between these areas are growing; right along with dissatisfaction with the current paradigms in these systems. Our connectivity is truly making us a global village again, and with that connectivity comes the potential for a return back to an integrated and more equal way to live and thrive; a return to the origins of all business as innovative ways to solve challenges or make our community a better place. If we can only get there in one piece.