NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, July 15, 2013

Last week, we published a case study about a social entrepreneur, Saul Garlick, discussing what kind of legal structure would be best for his enterprise, ThinkImpact, which encourages entrepreneurship in third-world communities. He fundamentally had three options: continue as a nonprofit, go commercial, or find some sort of hybrid route.

We asked three experts which option would be best. Pamela Hartigan, director of the Skoll Center for Social Entrepreneurship at Oxford, who is constantly advising aspiring social entrepreneurs, suggested that Mr. Garlick hop off the “treadmill of donor dependency.” Jonathan Lewis, a lecturer at the University of California, Berkeley, and a social entrepreneur himself, also suggested going commercial. Lastly, Shivani Siroya, an entrepreneur who runsInVenture, a hybrid organization, noted that it was possible to raise revenue even as a nonprofit and thus suggested that ThinkImpact should not dismiss a nonprofit model too quickly.

Many commenters agreed with Ms. Siroya, suggesting that Mr. Garlick use revenue streams as a nonprofit to raise money rather than going purely commercial. Others, however, noted that the nonprofit field is evolving and a profit-making enterprise can be driven by social impact and not the bottom line. Several readers pointed to new legal structures like a benefit corporationor L3C, which incorporate social impact into the core mission of a company.

We contacted Mr. Garlick for a follow-up conversation, which has been condensed and edited, to see which option he chose.