Making Money; Social Venture’s Ultimate Sin

March 25, 2013 — 1 Comment

Spending a couple of days with Dina Sherif and Ziad Haddara is very enlightening, especially if the conversation goes in the direction of the core of what we do. The dilemma of non-profits vs. generating revenues and overhead, and how the majority of people from different backgrounds consider it a sin, was one of those interesting conversations we had.

In my case, I have founded Nakhweh and registered it as a non-profit a few years ago. In general, I’m a very bad fundraiser and always look within my very closed circle of people to sustain my work; this definitely leads to limiting my scope of work, however, I’m better when it comes to closing business deals. I have asked a few friends around about the impact of turning my non-profit into a profit making company to avoid this conflict, the majority disagreed with that option and thought that it will leave a negative impact on most of the stakeholders.

Ziad Haddara said in one of his presentations at the #Business4Change conference in Dubai: “If you have a social impact, it doesn’t mean you don’t have to spend money, spending money to spread the word is important”, Ziad with this statement is clearly saying that overhead expenditures are very important for any social venture working on a cause, whether it’s a for-profit social entreprises or non-profit organizations; if you don’t spend 90% of your money on the cause itself, it doesn’t mean that people should start questioning your intentions. Marketing your cause became very essential for many reasons, and spending money on that marketing mission is the only way to do it effectively.

From my own perspective, I would say marketing is very important for social ventures and causes; it influences individuals, modifies behaviors that improve their well being, and bring about change in society; it’s very essential to sustain and scale the impact of the venture.

When I further discussed this matter with Dina Sherif, she added that overhead expenditures are also important to maintain a good team; if you’re not paying your employees salaries that compete with the commercial market you will eventually lose them and your turnover rate will be very high, which leads to the instability of your organization; you will also lose focus on the main cause in order to overcome internal managerial issues.

Dina’s argument reminds me of the content of a very interesting TED video, which was shared by Valentina Qussisiya on Twitter last week and raises the same issue; I’m quoting the speaker Dan Pallotta: “You know, you want to make 50 million dollars selling violent video games to kids, go for it. We’ll put you on the cover of Wired magazine. But you want to make half a million dollars trying to cure kids of malaria, and you’re considered a parasite yourself.”

Those conversations, the TED Talk, and the sustainability dilemma of social ventures and how everyone in the industry trying to tackle it, they all make me go back to think about how non-profit organizations are accused for generating revenues if they ever thought about monetizing on any of their services, which are provided to people/organizations that would be able to pay. I know that a lot of people within my circle will disagree with that, but that’s how people generally look at non-profits, and it causes a state of confusion for their management.

This confusion revolves around two main options; do we get donations and minimize our overhead and keep doing what we’re doing again and again without any sort of scalability or improvement? or do we sell what we can sell to generate more revenues, yet, our overhead will remain questioned and under radar regardless of the source of our income, because we’re a non-profit?

It takes a lot of time to change mentalities, especially when it comes to how people perceive social ventures, certainly here in the Arab World after the Arab Awakening (aka Arab Spring) and the amount of corruption cases that showed out of the bloom, which contributed to building this negative perception about making money, nowadays not only for social ventures, but also for the private sector. However, I’m optimistic by nature, thus, I think it takes a bit of courage to act against the status quo and get ready to handle all possible attacks in order to change mentalities.

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  1. Beware Of Where The Funds You Raise Go | Kermit The Blog - May 14, 2013

    [...] social ventures and how it’s considered a sin from the perspective of many people, in one of my blog posts. During the last couple of years, I have made a lot of observations that triggered me to write [...]

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