Three Social Enterprise Strategies That Are Making a Difference

May 3, 2016

Are you looking for a way to expand your customer base and make a profound social impact?  Leaders cannot simply apply strategic models from the corporate sector to the social sector. In this first article of a three-part series, Liana Downey describes three effective strategies organizations can use to identify their customers and client beneficiaries.

Identify Your Customers & Client Beneficiaries

In the corporate sector, clients and customers are typically one and the same. They are the people who pay for, receive, and benefit from goods and services. This differs from most social enterprise models where customers (who will pay) and client beneficiaries (who will receive) are distinct. Here are examples from three of the biggest categories of social enterprise:

Give Back for a Cause

In one model, channeling a donation to a good cause, a for-profit enterprise creates a product or service which customers pay for and receive, and a portion of the revenues or profits are donated to nonprofits who then use those funds to support their client beneficiaries. The Silver Effect is one example of an enterprise that puts this practice to work. The founders, with their background in nonprofits and silver-smithing, saw an opportunity to change how and why consumers buy jewelry. Co-founder Jaime Harmon says their mission is “to re-invent the way silver-smithed goods are created, distributed, and worn in order to make a greater impact.” Individual jewelry designs are inspired by the cause they benefit, and 30% of each sale is donated to their nonprofit partners. So, for them, their dream customers are discerning customers with a social conscience.

Provide Meaningful Employment Opportunities

Organizations that seek to benefit society through their employment and supply-chain practices include organizations like Gifts Fulfilled, an enterprise that employs differently-abled staff to manufacture their customized and hand-packed gift baskets. Founder Kim Shanahan said she was drawn to this work, after a later-in-life pregnancy had her thinking about what her child’s future might hold, should he or she be born with special needs. Already a successful founder and CEO, and determined to make sure all parents have the chance to see their children employed and fulfilled, she launched Gifts Fulfilled in partnership with the Worcester County Development Center in Newark, MD, which acts as an incubator for enterprises that want to provide meaningful employment for people with intellectual disabilities.

Donate with Every Customer Purchase

Finally, there are the buy-one-give-one models of social enterprise, where customers pay for their products, like glasses, shoes, or meals, and the client beneficiaries receive a free pair of glasses, shoes, or meals. For example, 2 Degrees makes all-natural snack bars, and they donate meals and medically formulated nutrient packs to Haiti, India, Kenya, Malawi, and Somalia through nonprofit partners. Their client beneficiaries are children in need of nutritious foods. Their customers are folks looking for a healthy snack. They also care about their supply chain: “Whenever possible, 2 Degrees donates meals that are produced locally, using local labor and sourcing local ingredients in the region where meals are distributed.”

No matter which model you pursue, it’s critical you invest plenty of time in determining who you are serving—both paying customers and the clients who will receive services through your efforts. Once you’ve got that image really clear, the next step is getting to really understand their unmet needs—a topic I’ll explore in more detail in the next of this three-part series.

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About The Author

Liana Downey, Stanford MBA, is a global strategic advisor, speaker and author of Mission Control: How Nonprofits and Governments Can Focus, Achieve More and Change the World (Bibliomotion, May 2016). Liana is a former leader of McKinsey’s social sector practice, and lectures at NYU’s Wagner Graduate School of Public Service. You can connect with her @ldandassociates.

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