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

Wednesday, March 14, 2018

By Kevin Xu

Ideally, a social enterprise wouldn’t just turn a profit; it’d be a business that practices corporate social responsibility, helping the outside world without having to rely on donations or adhere to the same guidelines as traditional nonprofits.

Take, for instance, Husk Power Systems, a social enterprise that was just awarded some hefty funding. Husk develops affordable, environmentally efficient minigrids that supply on-demand power to rural parts of Asia and Africa. The utility distributor recently garnered $20 million in a funding round led by Shell Technology Ventures with an eye toward expanding into India and Tanzania and potentially serving an additional 100,000 customers with affordable renewable power.

Husk’s funding round validates both the demand and benefit sides of pursuing a social enterprise. Ultimately, these ventures can give business leaders the chance to look good, do good, turn profits and inspire others.

As nice as entrepreneurial altruism might sound on paper, the numbers still have to line up if a founder wants to properly make a go of it. A study by the University of Notre Dame’s Mendoza College of Business found that for CEOs, implementing corporate social responsibility practices can be a double-edged sword: If a company isn’t performing well financially, the CEO gets the blame, of course. But CEOs at companies practicing CSR to a substantial degree are 84 percent likelier to be shown the door than leaders of firms with low social responsibility.

Photo courtesy of Martin Fisch.