Why social enterprises shouldn't consider profit a dirty word

Doing good and making a bundle aren't incompatible, writes Rhea Silva.

by Rhea Silva
Last Updated: 21 Jul 2016

In every corner of the world right now, and across every culture, there are countless social enterprises doing phenomenal things, and making a real difference to people’s lives. It’s fantastic to see.

But for me there’s one area where too many social enterprises — and I’m talking about for-profit ones, not their not-for-profit equivalents — get things wrong: it’s their deep-seated belief that actively pursuing big profits and ‘doing good’ are fundamentally incompatible. In my opinion, this couldn’t be further from the truth.

In the conversations I’ve had with people running social enterprises, and I’ve had a lot of them over the years, I’ve noticed a genuine distrust of social entrepreneurs who openly seek to make money for themselves and others.

The same distrust also tends to emerge when those same entrepreneurs seek to actively expand their businesses, especially when that expansion is global. It’s almost like there’s something insidious about the word ‘scale’. There seems to be a philosophy that social enterprises should really place an emphasis on solving local problems and do so without generating material returns for themselves and others. There’s an in-built sense, if you like, that scale and profit (getting rich and doing well for yourself as well as others) are fundamentally out of sync with the ‘essence’ of the social enterprise – that it’s better to keep it modest and local.

There’s also a belief among certain social enterprises, if only a tacit one, that they should have an element of amateurism about them. That being ruthlessly commercial and professional doesn’t sit comfortably with their values.

Again, I couldn’t disagree more. For me, running a social enterprise with a single-minded focus on growth, investor returns and scale is essential. It enables a social enterprise to have a far bigger impact in the sector it operates, and to make a far greater difference to the lives of many more people. Not just locally, but globally.

It’s my firm belief that, social enterprises, like many for-profit businesses, need to have a strand of the Machiavelli and opportunist embedded in their DNA. I’m by no means saying that ‘greed is good’, in the manner of Wall Street’s Gordon Gekko, just that seeking strong returns for yourself and others can help take your social business to an altogether higher level.

My own business, Chototel, provides housing solutions for urban contract workers who are priced out of major cities by high house prices and soaring private rents. Our pilot project opens its doors in India next month, but since day one we’ve developed a method of design and construction that can be rolled out to any country with a housing crisis, albeit with some market-specific tweaks. For example, given the state of the UK housing market, which is battling with an entrenched imbalance between supply and demand, we aim to launch in this country very soon. Thinking globally has been our vision from the outset.

We have never shied away from the fact that we are not just in it to improve people’s lives, in which we are as emotionally invested as any other social enterprise, but also to reward ourselves and our investors. We are open about this because rewarding our investors means they will invest in us more which means we can grow more and will be able to put many more people in affordable and secure long-term accommodation in India, the UK and other countries around the world.

For us, generating strong profits, targeting scale and having a social impact are not mutually exclusive but irresistibly intertwined. I accept that it can be hard for social enterprises to leave their comfort zone, but when the results come in I promise it will have been more than worth it.

Rhea Silva is the founder of Chototel


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