Why Business Models and Market Mechanisms Alone Are Not the Answer for Social Entrepreneurs: Lessons

Wednesday, March 5, 2008

In the field of social entrepreneurship there is a tendency for some to view profits or earned income models as the pivotal element in the sustainability and scaling up of social mission organizations.? The Global Social Benefit Incubator has worked with more than seventy organizations around the world. Twenty-five percent of its alumni organizations have scaled up significantly and an additional fifty-five percent are sustaining their valuable social mission impacts with what appear to be viable revenue streams. While these data are reviewed for accuracy annually, they do not suggest that business models can be extracted out of the context of geography, culture, and local leadership to account for the success of social enterprises.? The case of Gram Vikas illustrates why this is so.

On February 13, Joe Madiath returned to Santa Clara University to share the story of his work as Executive Director of Gram Vikas since graduating from the GSBI in 2004. He left the GSBI Class of 2004 with a business plan that would enable him to tap a variety of income streams to provide access to water and sanitation for 50,000 homes in rural Orissa.? Today that goal has been surpassed and supplanted by a new goal of 100,000 homes with the added support of a million dollar award from Skoll Foundation to accelerate growth. In 2007 I was fortunate enough to be at the Oxford Skoll meetings to congratulate Joe at the reception following his award recognition.? At the time he commented that his GSBI business plan had provided a coherent roadmap for scaling his organization and that it played a central role in his successful application to the Skoll Foundation. While this is enormously gratifying to hear, I came away from our inspirational reunion at Santa Clara University on February 13 truly humbled by the critical roles of geography, culture, and local leadership relative to our contributions to the success of Gram Vikas.

In our globalizing world geography still matters-especially for those bypassed by current and past waves of network infrastructures that span transportation, electrification, water and sewer systems, telecommunications and, more recently, the internet. It’s hard to imagine, for example, but only forty percent of the world’s population has a toilet and a fifth of the world’s population lacks access to safe drinking water. Gram Vikas is a “rural development organization working with poor and marginalized communities in Orissa since 1979.”

This is not an overnight success story. It is a thirty year journey of daily on-the-ground work across 21 districts with families who exist on an average income of less than one dollar per day for the entire family.? Prior to the community-based water solution developed by Gram Vikas, less than one percent of district populations had access to piped water.? Storing, filtering, and distributing water is an energy intensive process that consumes 19 percent of all the electric energy in the US.? Similar energy intensive technology solutions would not work in rural India.? Geography and infrastructure deficits intervene to limit design options. They make gravity fed water supplies stored in overhead water tanks and an inclusive community-wide focus on sanitation critical design elements to breaking the cycle of groundwater contamination from pubic defecation.

Geography shapes culture in rural India.? Rural women, for example, spend a major portion of the day fetching water, and social exclusion of the dalitis (untouchables), adivasis (indigenous people) is deeply entrenched in village life.? Social exclusion posed a dilemma that Gram Vikas. Essentially, continued marginalization meant continued ground water contamination which assured that no one would have safe water. This became what Joe described as an entry point to forming a more inclusive community-unless everyone had access to a household toilet, shower, and safe water the sanitation problem in a village could not be solved.? (Note: This required a business model with tiered pricing based on ability to pay.)

Rural populations in India are disempowered by urban-based governments and top down solutions with inferior technologies and no support for maintenance.? The social construct of efficacy and, in particular, collective self-efficacy has played a major role in overcoming the feeling of helplessness for the rural poor in Gram Vikas.? Community organizing, consensus building, and deliberate process for empowering women in village governance have all been key to creating local mechanisms for decision making across the districts in which Gram Vikas has worked. Community building efforts are spread out over three to five years, with deliberate intervention strategies to empower women and marginalized populations.? The maintenance and monitoring of water supply and toilets tends to be taken over by women who are the primary beneficiaries of village systems that previously relegated them to spend major portions of their day fetching water for household use and the humiliation of public bathing and public defecation.

Through community organizing Gram Vikas has succeeded in developing a shared ownership business model that calls for people to contribute at least 60 percent of the cost of toilets and bathing rooms and 30 percent of the cost of developing a water supply system.? In addition to its role in building social cohesion within villages, it has also served as an effective bridge to government funding mechanisms for overhead water tanks as well as to externally sourced materials such as steel, cement, and toilet pans. It has built up local design-build-maintain-operate skills by training masons and other technical personnel who, with these new skills, can earn two to five times what they could earn in non-agricultural seasons.? Similarly, the sustainability of water sources from sanitary dug wells is maintained by local villagers who test water quality and self-organize to clean wells at regular intervals. There is one hundred percent use of toilets and the spotless cleaning of toilets is maintained through inspection brigades by school children and community-enforced payments to support local schools for cleaning where unsanitary conditions are discovered. For ongoing maintenance communities dedicate .25 percent to .50 percent of gross product from agricultural sales to support locally trained plumbing and electrical maintenance services.

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Source: CSTS (Santa Clara University) (link opens in a new window)