How For-profit Solves Problems of a Non-profit Social Enterprise
I recently read an article written by a professor of sociology at BYU, Curtis Child. In it Professor Child casts a dark shadow on social enterprises, painting them as disabled enterprises that depend extensively on other organizations aka “nonprofits” for support. Hogwash!
Professor Child claims that social enterprises “borrow” the money, trust, and information from non-profits. While there is some truth to all of these, this microscopic perspective misses the forest for the trees.
- As a basic rule for-profits aim to make money. If a non-profit creates an opportunity to save money by using the existing framework of a non-profit’s efforts, it’s just an inefficiency in the nonprofit’s execution. It’s also a lot easier to get funding from sources that do much more than simply “donate”. VCs and angel investors are pretty savvy businesspeople. They have a lot of experience to share . . . this mentorship helps the companies they invest in succeed and grow quickly. From an investor’s perspective, they’re trying to protect and improve their investment in a startup. It’s a win-win for a for-profit social enterprise because growth equates to helping.
- We build trust by meeting our customers’ needs in an efficient and painless fashion. We can also identify pain points for customers; alleviating the pain creates trust faster than anything “borrowed” from a nonprofit. In contrast, nonprofits go to great lengths to meet metrics of watchdog groups and philanthropists. Stories of non-profits throwing lavish parties make my generation (Millennials) somewhat distrustful of charitable pursuits.
- Non-profits often create quality information. But suggesting for-profits depend on this information ignores reality. The efficiency of using somebody else’s public information is just an advantage of a for-profit social enterprise. We create data all the time when it doesn’t exist, and it’s often proprietary information that we don’t share. That doesn’t make us evil — many of us have traditional for-profit competitors with profit as the sole motive. We’re simply trying to gain an edge over others in the space. Growing our market share means increasing good.
For-profit social enterprises stand to affect the most change in this country. These businesses are bred out of need and populist support. The people are tired of corporations that cheat on emissions, greedy industries that crash the economy, and the outright purchase of politicians that pass laws against the people’s interests. Go to Google if you want sources; I don’t have time for a history lesson.
So what makes me qualified to speak on this subject?
I am the CEO of a social enterprise. I’ve also worked in non-profits, traditional for-profits, ran a 501(c)(3) charity, am moonlighting as the COO for a 501(c)(3) charity, and have volunteered extensively. We are companies that have a business model that is inherently good. For example, my startup Text A Lawyer creates an easy starting place for clients to ask their questions — think legal first aid. We connect people to the right type of lawyer in their state for under $21 (available now in Oregon, Texas and New Mexico late November ‘19). Lawyers earn small legal fees to triage people’s legal issues. Follow-up questions cost $11. Our pricing is fixed. This is all we do — nearly-instant legal advice at an affordable price. The idea is quickly stop the bleeding and inform the “patient” of their options for “treatment”. We generate revenue when clients receive fast, affordable, and accessible legal advice from a verified attorney.
Our mission is increasing access to justice. For lower income folks, 86% are unable to receive even basic legal assistance when they have a civil legal issues. Sounds like a ripe opportunity for non-profits to sweep in and save the day, right? Nope. Non-profits aren’t new and these problems have been spiraling out of control. The federally-funded Legal Services Corporation has an annual budget of hundreds of millions of dollars. Yet the legal crisis has nonetheless reached epidemic proportions.
What is my point? Social enterprises fill the gaps, inefficiencies, and ignored constituencies nonprofits aren’t able to reach with their efforts. Our focus is on our customers. We spend our time getting to know them and make them happy. The core aspects of our business and revenue model help people, so we get to focus on genuinely meeting the needs of our customers.
What makes for-profit social enterprises special? We don’t spend the majority of our time begging for money or working on ridiculous accreditations. Nonprofits, by their very nature, seek revenue from sources other than their intended target market. Indeed their focus often results in their funding source becoming their target market. It’s only natural.
How do you justify charging people non-profits help for free? Let me provide two examples:
- Taylor is in legal crisis. He knows he needs professional legal advice because the law is complicated and overwhelming. However, Taylor is barely making ends meet and doesn’t consider asking a traditional lawyer to be a accessible option. So he takes off from work to seek free legal aid. He spends a few hours filling out forms, waiting in a line, and eventually is told “You qualify for our help but we don’t have the bandwidth to take on your case.” This is the current state of affairs.
- Now imagine my for-profit social enterprise (Text A Lawyer) had effectively marketed to Taylor when he was Googling “cheap legal advice”. He might have spent $21, $32, or $43 having a conversation with a verified lawyer other users have rated positively. However, Taylor didn’t have to take off work and miss a shift. Instead, he was able to use our app to get fast and affordable legal advice while eating a burrito on his lunch break. Taylor didn’t miss $100 of take-home pay and was able to have a much lower-stress experience without feeling like he’s taking a handout.
Conclusion: Social enterprises rejuvenate public trust in capitalism, pushing back against the excesses giving our system a bad rep. For-profit social enterprises aren’t here to replace nonprofits. We’re here to replace greedy, starvation-wage-paying corporations by competing with a moral aspect to our value proposition.
Looking for specific examples of what makes a for-profit social enterprise different? Here’s a truncated list of our customer promises at Text A Lawyer:
- We won’t ever share your data with anyone.
- Our app won’t GPS track you.
- You have the right to be forgotten. Our server wipes itself daily.
- We won’t ever upsell, charge hidden fees, or automatically sign you up for subscriptions (unlike much of our competition).
- We are imposing a cap on executive salaries AND bonuses. It’s still under discussion, but we will be publicly sharing this policy. As of this point, we’re still not taking a salary of any kind so it’s currently a moot point.
- You rate your lawyer, not us. We use your ratings to ensure you always get the highest-rated available lawyer. Our competition imposes ratings on lawyers based on a number of factors. Websites like UpWork.com allow their consultants to erase negative reviews. That’s crazy!
- We never charge the lawyer for a client lead. This results in lawyers who are more willing to charge reasonable rates since they don’t have to pay a significant fee to the e-lawyer service who got them the lead. We don’t find it ethical to charge lawyers a fee for work they do off our platform in their practice because that fee gets passed along to the client. Lawyers are expensive enough!!!