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What If All Businesses Were Social Ventures?

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Written by: Michael Luchies

64% of Millennials see making the world a better place a priority in their work and business according to an Intelligence Group study. This desire to change the world has materialized in several ways, one of those being the rise of social ventures and enterprises.

Social enterprise defined by Social Enterprise UK: “Social enterprises are businesses trading for social and environmental purposes. Many commercial businesses would consider themselves to have social objectives, but social enterprises are distinctive because their social and/or environmental purpose is absolutely central to what they do — their profits are reinvested to sustain and further their mission for positive change.”

Starting a business with a philanthropic goal is more than just a trend — it’s almost becoming a standard with startups, but not everyone has jumped on board. Corporate contributions to charities have actually decreased over the past 30 years, as more focus has been placed on profits.  While small businesses contribute an average of 6 percent of their profits to charity, corporations average under 1 percent.

Social Venture Examples

Kevin LavelleMizzen+Main – Mizzen+Main is a high-end clothing company that uses performance fabrics in traditional menswear. From the start of the company, Kevin wanted to serve a purpose greater than himself. Mizzen+Main features stories of military veterans on their blog, gives a percentage of profits to foundations supporting veterans, donates shirts to active military and veterans, and provides job opportunities and internships to veterans.

Alexander MendelukSpiritHoods – The faux fur hood maker SpiritHoods gives back 10% of profits to help protect endangered animals.

Hannah DavisBANGS Shoes – BANGS shoes donates, or as they put it, “invests,” 20% of their net profits to help entrepreneurs, often impoverished, start businesses through nonprofit Kiva.

What if Every Business was a Social Venture?

Note: For the sake of this discussion, we’ll use the assumption that social ventures give 10% of net profits to a designated charity, an internal charity, or a group of charities.

If every business was a social venture, nonprofits would be able to focus more on their mission and operations instead of fundraising. Nonprofit budgets would expand significantly, employment in the nonprofit sector would rise, and poverty in impacted areas would decrease.

Nonprofit advertising and marketing would shift from individual donors to the corporations seeking to find charities to partner with.

Unemployment would decrease and salaries for nonprofit employees, and competition for those jobs would increase.

For corporations, greed would still play a large role. We would see many of these corporations start internal non-profits and focus on “causes” that would impact their bottom line in the present or future. Not all of this would be bad, as investments in the community and even within their own industry would benefit more than just their business, but many worthy charities outside of their interests would be ignored.

Instead of just wanting to support a business because they have a social focus, that focus and the charities they support would become important to consumers. Consumers would actively seek out companies and products that support causes they care about more actively than they do now.

As with any massive change, there’s good and bad. Although there would be a lot of difficult changes to manage and both the corporate and nonprofit sector would need to change and innovate, the positive impact on the world would be incredible. The billions of additional dollars given to social causes would improve the economy and the lives of everyone.

My only question is, what are we waiting for?

The 10% of donated profits would make an impact far beyond what that money would do for the corporations. It may slow innovation and business growth, but the emphasis on profits and lean practices would still be significant.

Now it’s your turn. What’s your take? What would happen if all businesses became social ventures, giving at least 10% of net profits to a social cause?

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