Working at a for-profit social enterprise

Last week, Fortune magazine published a column providing career advice for people who want to “save the world at work.” The article highlighted new startups that aim to earn a profit while also making the world a better place. This concept is not new – the terms social enterprise, social entrepreneur and social capital refer to organizations which work towards a double or triple bottom line. These organizations may be nonprofit, for-profit, or hybrid models.

Lately, there has been a big movement towards for-profit social enterprises as the “hot” model to pursue social change. I am seeing this particularly with green companies that are for-profit but also have social impact. Some advantages of the for-profit social enterprise model are not having to rely on external funders, accessing capital to support growth, and managing with the business rigor required by investors. Plus for-profit social enterprises can avoid some of the challenges faced by nonprofits, such as public scrutiny around overhead and risk-aversion of nonprofit boards.

However, for-profit social enterprises also face constraints when it comes to maximizing their social impact. For-profits often face tradeoffs when balancing financial returns and social impact. The financial expectations of investors or shareholders may push organizations into new directions based on where there is greatest financial opportunity, not where there is greatest social impact.

While I think it is valuable for jobseekers who want to “do good” to look at for-profit social enterprises, they should not exclude nonprofit social enterprises. Many great social innovations were developed by nonprofits before they became mainstream enough for for-profits. Consider microfinance – pioneers in this space like ACCION International and Grameen Foundation are nonprofits that have been able to test different approaches without pressure from shareholders. Once the microcredit model was proven, they attracted for-profits into the market.

So while you can “do good” working for a for-profit social enterprise, that may not be where you can have the biggest impact on social change.