Charity’s Dead – What Next?

Charity, as we know it, is dead, but there’s a new alternative to solve the world’s problems, writes The Difference Incubator co-founder and CEO Bessi Graham.

This is going to be a difficult pill to swallow for many, but it is time to accept that the charity and philanthropy models as we know them are unfortunately not going to solve the world’s problems.

If they were, then the range of complex social and environmental challenges we face would be solved by now.

The same goes for traditional aid and development approaches. Despite our very best efforts and intentions, the current approaches fail to deliver either the social outcomes we desire, or a sustainable method of funding that ensures the ongoing provision of products and services.

It’s time for a new model. It’s time to shift our mindset to one that is built on a premise that might upset your worldview. Here it is:

You can do good and make money in the same business model. It’s called blended value – the delivery of both a social or environmental return and a financial return, without compromising on either.

For people operating in a world of black and white, where it’s either profit or Not for Profit, or doing good versus making money, this alternative worldview is a difficult one to accept. But accepting it is the critical first step we need to take to enable the design and delivery of business models that will change the world.

Once we’ve accepted this new worldview, it’s time for another (also hard) critical step – to stop thinking of social enterprise as a silver bullet.

Despite social enterprise being the latest buzzword, which can get as annoying as “innovation” and “disruption”, more often than not people simultaneously misunderstand and limit social enterprise.

Not for Profits and others in the social sector are excitedly discussing social enterprise, and how it will magically fill their funding gaps and save them from certain doom in a changing funding landscape. However, when you scratch beneath the surface many are using the term social enterprise to refer to a grant reliant Not for Profit that has “some kind of trading”. There’s nothing new, innovative or agile about that, and it’s certainly not sustainable.

At the same time as seeing social enterprise as the potential saviour of the Not for Profit sector you’ll hear comments like, “There’s no business model for doing good,” or, “We’re dealing with a segment of society that could never pay a commercial rate for our services so we will always need philanthropy.” However, instead of continuing to drain grant dollars out of a limited pool, social enterprises should focus on building a commercial model that will make them less grant reliant, thereby freeing up grants for fledgling enterprises who are in the grant reliant stage.

So why do we continue to believe that doing good and making money are mutually exclusive? Why are we so uncomfortable with integrated models that blur the lines and get us closer to cracking into new territory; on both our ability to make a dint on the social and environmental challenges we’re trying to address and on opening up new pools of capital that were previously unavailable to the social sector?

About the author: Bessi Graham is the co-founder and CEO of The Difference Incubator (TDi).  She is a leading practitioner in social enterprise and impact investment. Graham is internationally recognised for her work in designing the NAB Impact Investment Readiness Fund and her tireless advocacy for the role of Investable Social Enterprises (ISEs) in bringing about solutions to society’s most pressing challenges. She co-authored the report Impact Measurement: Exploring its role in impact investment with NAB’s Elliot Anderson. She tweets as @BessiGraham