Striking a balance betweenprofit and social impact
Reach even more than 12,000 rural Bangladeshi women? Boost financial return to investors? Or operate with lower capital requirements? These were just some of the choices facing new investors in Jita, in mid 2012.
Jita, launched in December as a Bangladeshi company, is one of many social enterprises demonstrating that commercial return and social impact can go hand-in-hand. But these warm generalisations don’t get investor agreements finished or business plans signed off. In the devilish detail, investors need to know how fast break-even will be reached, how many low income women will earn a living, and how the rate of geographic expansion affects both commercial and social return.
Striking a Balance between Profit and Impact illustrates how these questions were answered by applying a conventional business tool – scenario modelling – to socially-focused and financially-focused scenarios. It was written by two consultants from Accenture Development Partnerships, who were part of a package of support provided by the Business Innovation Facility to the Rural Sales Programme of CARE Bangladesh as it transformed into a company, Jita. In RSP, and now Jita, rural women sell consumer goods door-to-door in rural areas, earning a living from a commercially-structured distribution network that sells to women in their rural homes.
The story of how CARE’s successful rural programme transitioned into a business proposition is well told in a business ‘Case’ from Said Business School, profiled by Catherine Dolan in a BFP blog last week. ‘Striking a Balance’ gives you the story of what happened next. CARE Bangladesh, with its two investors - danone.communities and CARE Enterprises – had to then translate a large NGO operation into a business that would deliver social and commercial goals. The scenario modeling identified drivers of revenue and mapped out returns. It was a technical tool, used in a fluid exciting process. Generating the model and agreeing the ‘recommended scenario’ helped fine-tune the plans, the business way of thinking and the investor partnership. Jita is now launched and thriving as a Bangladeshi social enterprise.
If you are interested in the practicalities of blending and balancing profit and social impact, read how Jita tackled Striking a Balance. For more information on the project supported by the Business Innovation Facility, see the Project Profile, and on the Facility’s wider support to inclusive business see the Practitioner Hub.
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Excellent example of turning development initiatives into commercial venture. We have been seeing these kind of initiatives introduced by many development agencies. With support from development agencies to build commercial venture(s) have two contradictory impact on the busniess environment, one is facilitation of entrepreneurship which is very positive, another is distortion of market mechanism which is very negative. Specially when free-money is poured in common businees areas where many entrepreneurs invest their own money or credit facilities. Hence, we need to really balance out where to invest and how. Fancy and purposive initiatives will only gain some appreciation from the development practitioners but will not sustain in the long run.