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

Tuesday, August 8, 2017

Three consumer psychologists recently performed a series of studies looking at consumers’ reactions to for-profit social ventures in contrast to nonprofits. They try hard to make a case for the proliferation of for-profit social enterprise, but it is pretty clear that the public is still skeptical.

In one study, we asked people to donate money to an organization supporting literacy and education.… Some people were told the company was a for-profit social venture—it had a social mission and also made a profit. Other participants were told it was a nonprofit. People gave 40 percent less money when they believed the organization was a for-profit social venture.

In another study, we gave people money and asked them to purchase a decorative notepad from one of two organizations. When given a choice to buy it from a nonprofit or a for-profit social venture, nearly two out of three people went with the nonprofit.

It seems people don’t think companies can make a profit and support a social cause at the same time.