Social Business Models – Businesses with a Social Purpose

You might be wondering what are businesses or organizations which are considered social businesses. Basically, a business or an organization is considered as a social business if its purpose is to solve social problems in a financially sustainable way. Yes, it may function just like any business which generates profit, however, the difference is that its main purpose is the social impact. This means, even though it is a for-profit business, all profit will have to be reinvested into the business or used to start new social business to increase even more the impact of the organization. 

A social business model is known as a structure that a social business follows in order to bring about a positive change while maintaining healthy financial returns. There are countless famous social business models quite known nowadays such as:

• Entrepreneur Support – sells business support services to the entrepreneurs in its target market. Basically, the goal for this business model is to help entrepreneurs get a kickstart by either providing consulting services, training, microfinancing, or even technical support.

• Market Intermediary– helps clients by marketing or selling the products or services for them. A great example are organizations helping farmers sell their produce by marketing and selling their crops for them.

• Employment – provides clients with job opportunities and job training. The organization generates income once the clients earn enough from their jobs/training to pay for the organizations’ expenses. This model is often adopted by youth and disabilities organizations.

• Fee-for-Service –commonly used social business model where the social business charges the client directly for the socially beneficial services it provides i.e. hospitals, schools, museums, etc.

• Low-income Client – offers social services towards low-income clients. For example are hospitals and healthcare programs that helps low-income patients.

• Cooperative – widely used social business model which is generally a fee-based membership organization that provides member services to a group that shares a common need or goal.

• Market Linkage – serving as brokers, specifically focuses on building relationships and connecting clients with markets for their client’s products/services.

• Service Subsidization – funds social programs by selling products or services to marketplaces. Basically, this kind of social business integrates their internal business with external social programs. A great example are law firms that offers ‘pro bono’ services to those in need.

The above are just several of the many variations of social business models which provide ideas on how to create sustainable benefit to society while balancing the financial situation. If you need an example financial model templates for social business models, download them here: Social Purpose Models. Feel free to download other industry-specific in Excel at eFinancialModels too. You can use them as a reference or as a base to start with as you build a financial model on your own.