Earned income, social impact and the ultimate bottom line

Interesting post I found by David Galipeau, entitled social entrepreneur 2.0. In it, he says the following:

“Despite efforts to spread an innovation-based definition, far too many
people still think of social entrepreneurship in terms of nonprofits
generating earned income. Too bad. This shifts attention away from the
ultimate goal of any self-respecting social entrepreneur, namely social
impact and focuses it on one particular method of generating resources.”

Also, he goes on to say:

“But now the focus has shifted from social impact – a hard indicator to measure – to earned income.ThisĀ is only a means to a social end and it is not always the best means. It
can even be detrimental – taking valuable talent and energy away from
activities more central to delivering on an organization’s social
mission.Though it is very popular right now, it is just one
funding strategy among many and must be assessed on a case-by-case
basis. The key is finding a resource strategy that works.”

Which is pretty hard to argue with, really. When we’re helping students develop their projects here, we encourage them to decide what streams of income (or funding strategy) is most viable, what kind of governance they think would suit them (and the organisation), and what their thoughts are into the future. Does the organisation need to scale up, or is it fit to a specific local problem? Does the organisation need to exist beyond a certain time, or will it have served its purpose? All of these questions go into deciding which structure and strategy to take.

As David Galipeau’s post elucidates, the ultimate bottom line should be the social one: earning income and making a profit/surplus (or being sustainable) is only useful if the project is still having the social impact intended, otherwise earning income could potentially be a distraction, and even divert (all types of) resources away from where they are needed most.

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