Social Business Model
Below we have compiled the common social business models as retrieved from ChangeCreator (2017) and Wolfgang Grassi (2012)
The Entrepreneur Support Model
This model of social enterprise (SE) sells business support services directly to the entrepreneurs in its target population. Organizations that belong to this category may include economic development organizations, business development service organizations and microfinancers.
The Market Intermediary Model
This type of SE generally helps their clients by marketing or selling their clients’ products or services for them. For example, an organization that helps struggling small farmers by marketing and to sell their crops for them would belong to this category.
The Employment Model
This type of SE provides their clients with job opportunities and job training. For example, organizations that cater to the youth and the disabled adopt this model.
The Fee-for-Service Model
The fee-for-service model charges the customer directly for the socially beneficial services it provides. For example, many hospitals, schools, museums and membership organizations use the fee-for-service model.
The Low-income Client Model
SEs in this category generally offer social services directly (similar to the fee-for-service model) while focusing on low-income clients. For example, hospitals and healthcare programs that offer their healthcare services to low-income patients often adopt this model.
The Cooperative Model
The cooperative is generally a fee-based membership organization that provides member services to a group that shares a common need or goal. The cooperative is owned and operated by its members, who both run the cooperative and receive the benefits of its success. Examples include credit unions.
The Market Linkage Model
This model focuses on building relationships and otherwise connecting their clients with markets for their clients’ products and services. For example, many trade associations adopt the market linkage model.
The Service Subsidization Model
This type of SE funds social programs by selling products or services in the marketplace. For example, a law firm may use the revenue generated from the firm’s regular law practice to fund a social program that provides free law services to those in need.
The Organizational Support Model
This type of SE, like a service subsidization organization, sells products or services to fund social programs. However, the social programs they fund are part of a separate, parent organization. In other words, an organizational support SE raises funds for a parent non-profit that, in turn, runs the social programs the SE wishes to support.
Follow your gut
If your social business is not among the above, don’t worry because it may be a hybrid of one of these models! As we’ve discussed, if you’re all about achieving a defined social purpose while generating financial returns, you’re already on the right track.
