1. The One-for-One Model

One of the most recognized social enterprise models is the one-for-one model, popularized by brands like TOMS Shoes. The basic principle is straightforward: for each product sold, another product is given to someone in need. This model not only attracts socially conscious consumers but also builds brand loyalty.

• For instance, TOMS has donated millions of shoes to children around the world.
• Another example is Warby Parker, which donates a pair of glasses for each one sold.

2. The Pay-What-You-Can Model

The pay-what-you-can (PWYC) model is an innovative approach where consumers choose how much to pay for a product or service. This model is particularly effective in local communities and with services that can easily scale down or up in response to consumer payments.

• Restaurants such as Panera Cares have utilized this model, where diners pay what they can afford.
• The model builds community trust and allows everyone to access the service irrespective of their financial capacity.

3. The Subscription Box Model

The subscription box model has grown in popularity and provides a continuous stream of revenue, which is crucial for sustainability. This model is often focused on niche markets and can include a social purpose component whereby a portion of the proceeds is dedicated to a social cause.

• For example, Love Goodly offers non-toxic beauty products and donates a portion of its revenue to various causes.
• Constant revenue stream is key for long-term sustainability.

4. Employment-Focused Enterprises

Employment-focused enterprises aim to create job opportunities for marginalized communities. This connection between employment and mission helps to achieve both social and financial objectives.

• An example is Greyston Bakery, which operates on an open-hiring model, providing jobs without background checks.
• Martha’s Table focuses on creating employment opportunities for underserved communities, especially in low-income areas.

5. Cross-Compensating Model

In the cross-compensating model, higher prices are charged to wealthier customers, allowing the enterprise to subsidize products or services for low-income customers. This approach is often adopted in the healthcare and education sectors.

• Aravind Eye Care is a pioneer in this model, offering free or low-cost eye surgeries funded by wealthier patients paying market rates.
• This model ensures inclusivity while maintaining profitability.

How to Balance Profit and Purpose: 5 Social Enterprise Business Models That Work

Practical Steps:

1. Assess the feasibility and alignment of each model with your core mission.
2. Consider implementing a one-for-one model to attract socially conscious consumers and build brand loyalty.
3. Explore the pay-what-you-can model to foster community trust and inclusive service access.
4. Utilize a subscription box model to establish a steady revenue stream, ensuring long-term sustainability.
5. Implement employment-focused initiatives to create job opportunities in marginalized communities.
6. Adopt the cross-compensating model to balance affordability for low-income customers while maintaining profitability.