The traditional way to help the poor is through charity. Families set up and run thriving businesses, amass wealth and then give it away. The proportion of wealth given away differs (Warren Buffett’s gift to the Bill and Melinda Gates Foundation is reported to be about 80% of his net-worth. A decision that is dramatically generous and low on the ego), but the storyline is often the same.
Why don’t more businesses incorporate service to the poor as part of their business plan? Not as added on programs like corporate social responsibility or employee donation schemes, but as a core part of their business model?
It is often said that the Aravind Eye Care System model is difficult to replicate. Setting aside Aravind’s business elements, how about replicating the essential principle – – the entire model is structured on service to the poor. The poor make up more than 60% of their customers. And, as is often cited, Aravind is quite profitable.
Similar examples are hard to find, especially at a certain scale. Micro-finance is one such example. Experts may argue over whether microfinance brings people out of poverty or merely smoothens their consumption flow, whether it empowers women or merely makes them a front for their husbands, and whether it leaves behind the poorest-of-the-poor. Yet there is no denying that microfinance provides a much needed credit (and in some cases, savings) function and is able to do so to millions of humans in a profitable manner.
Financial sustainability gives an organization freedom. The freedom to pursue one’s mission and not be swayed by donor pressure. The freedom for leaders to spend their time mentoring, growing the organization and not be engulfed in fund-raising.
Perhaps to create such models requires not just fierce entrepreneurial spirit (both Aravind and Grameen were seen as fairly outrageous attempts in their early days), but a clear sense of not seeing the poor as dependents. As individuals, they make choices, they need services.
None of this is new. The world of philanthropy is not black and white. There is a spectrum between giving (personal time, effort, money) and being financially viable. Social entrepreneurs are trying to bridge this gap that I describe. It is early days, yet. While working on a book on Aravind, I often wonder: why aren’t there more businesses and organizations that Do Good and Do Well?