For-profit companies strive to maximize returns for investors, while non-profit organizations serve the public good. In recent years, a new model of for-profit social enterprise has emerged
Could you define social enterprise as you see it?
CARSON: I see it as a business that, beyond the profit motive, has a social mission built into their business model. Making the world a better place is a significant part of what they do.
GRIFFITH: As follow-on, for Zipcar, our really simple mission statement is to enable simple and responsible urban living. Simple and responsible, to us, have social meaning.
How do we draw a distinction between the nonprofit social efforts and for-profit ones?
CARSON: One might argue that the biggest difference is that the for-profit model has a much easier time attracting capital, whereas the nonprofit model usually requires ongoing fundraising efforts.
Are either of you proposing to investors that having this social element will actually help the business in the long run?
GRIFFITH: Speaking from many years of first-hand experience, you can very quickly cross a line with the professional investor class if you speak too much to the social mission, because the professional investors want you to be very practical about the business. They like the social aspect, but you don't want them thinking, "Oh, jeez, I've got a do-gooder who's running the company and is really not going to be that interested in getting me my 10-to-1 exit."
How are the social returns measured?
CARSON: We look primarily at how much money we have raised for people. BiddingForGood does fundraising auctions which make up a $16 billion corner of the nonprofit fundraising market. We work in three ways: one is making these auctions work for the commercial item donors; two is making it work for the consumers, so they can find and access auctions 24/7 as opposed to having to be at the Weston Hotel on Friday night; and ultimately we make it work for the nonprofits who raise more money because they have more demand and more supply. We have a performance-based pricing structure, so the incentives are aligned. The more they make, the better we do. To date we've raised more than $70 million. There is a “goodometer” on the homepage of BiddingForGood that ticks up with each dollar raised.
[This article has been reproduced with permission from Qn, a publication of the Yale School of Management http://qn.som.yale.edu]