If you could give to the poor, and at the same time remediate the causes of their poverty, would you do it? How might you go about this? What would it take to change their daily lives so that they move from poverty to a sustainable livelihood?
Social businesses, a hybrid of charities and commercial businesses, are a growing trend that may hold the key to reshaping developing communities around the world. Social businesses focus on creating opportunity—opportunity for socially-minded people all over the globe to make a difference in the lives of needful communities, and opportunity for economically-challenged communities to make a difference in their own lives.
Traditional charities do noble and necessary work, fundraising and then distributing aid to those most in need. This is crucial—especially in response to natural disasters such as floods, earthquakes, and tsunamis. But what about situations in which poverty is pervasive?
Social businesses can go beyond stopgap measures. They look at long-term solutions for alleviating existing poverty, and stopping future poverty before it begins.
Social entrepreneurship often uses business methods to solve a social problem. For instance, the Water ATMs and Water Kiosks implemented by Sarvajal provide fresh, purified drinking water to people in remote areas. They make this clean water available twenty-four hours a day, eliminating the need for Indian women to spend upward of two hours a day collecting water of questionable quality. Sarvajal’s Water ATMs are franchised. The franchise fees subsidise the affordable, available water.
WaterHealth International also offers purified water to citizens of rural India, as well as other developing nations. WaterHealth uses such modern techniques as UV light disinfection to purify water from any local source. Their work in India changes lives. They provide water that is free of disease and contaminants. They also educate the public about water safety, and the importance of clean water to health. For those that cannot reach their WaterHealth Centers, the company offers water delivery services. Their investment in the community goes beyond its physical health to its financial health: Communities share in the net profits of WaterHealth Centers, and are gradually vested in ownership of their local Center.
Contaminated water is not the only source of widespread disease in India. Inadequate menstrual hygiene causes significant health issues. In India, 88% of the 355 million menstruating women don’t use sanitary napkins, largely due to dire poverty. And almost a quarter of young girls drop out of school at the onset of menstruation, due to a lack of practical menstruation management.
Aakar Innovations addresses these issues by offering affordable sanitary napkins. Costing about 40% less than most branded sanitary napkins, Aakar’s products are also environmentally friendly. Agricultural waste, such as banana fibre and bamboo, serves as the absorbent core of the napkin. Some of Aakar’s Anandi pads are completely compostable, reducing the burden on landfills.
Aakar’s products afford Indian women better hygiene, decreasing their chances of disease. These inexpensive sanitary napkins make menstruation a clean, inconspicuous process. When their personal business is private, young women are much more likely to stay in school.
Aakar Innovations’ Freedom from Shame Initiative educates women throughout India about menstrual hygiene. Aakar distributes their sanitary napkins through door-to-door saleswomen, and in beauty parlours and grocery stores run by women. This eliminates the social stigma of women buying their menstrual hygiene products from drugstores run by men.
Aakar gives back to the community in several important ways. In addition to health education, Aakar trains and employs local women. Their women-supervised mini-factories are franchises where the sanitary napkins are produced. Women working for Aakar can learn manufacturing and entrepreneurial skills.
Developing communities are partners in social businesses like Aakar. Members of the community are not only workers and suppliers of goods, but shareholders and managers of manufacturing. Rather than being used for cheap labor, they are well-paid for skilled labor. They gain business acumen and pride.
The Business of Healing
Aravind Eye Care is considered a classic model of a social business in India. In fact, Aravind has been the subject of many international business-school case studies (including at least three from the prestigious Harvard Business School).
Aravind was founded by Dr. Govindappa Venkataswamy (“Dr. V.”), shortly after his retirement in the mid-1970s. It was meant to supplement government eye care efforts. Aravind’s mission is to prevent blindness.
Dr. V. recognised that blindness steals much from individuals, and also from society. When describing the vision he had for Aravind’s delivery method, Dr. V. often referenced the efficiency of McDonald’s fast food restaurants. Dr. V. felt that eye care could be proficiently practised using an assembly-line model. Keenly aware of how many people in India suffer needlessly from blindness, Dr. V. was highly motivated to make Aravind work. He was committed to streamlining quality eye care, to make it available and affordable for everyone—even the poorest of the poor, in the most remote rural areas.
“[Blindness]…deprives the person of their livelihood, their dignity, their independence, and their status in the family.”
– Thulasiraj Ravilla of Aravind Eye Care (TED Talk: How Low-Cost Eye Care Can Be World-Class)
Dr. V. was born in Tamil Nadu, where LEAF Society is headquartered. The first Aravind Eye Hospital that Dr. V. opened is in Madurai, Tamil Nadu.
Several more Aravind Eye Hospitals have been opened since then, all of them in the Tamil Nadu region. In addition, forty vision centres and seven community eye clinics have been established in rural communities—within Tamil Nadu proper, and in the neighbouring states of Kerala, Andhra Pradesh, and Karnataka. These centres and clinics provide diagnoses and treatments designed to help reduce cases of preventable blindness. They also raise awareness about eye health. The processes are streamlined: Medical records are electronic. Each patient teleconferences with a doctor, after having their diagnostic tests performed by the onsite clinicians. A very practical approach is taken to providing the best care possible, while saving on expensive equipment. For example, Aravind uses modified digital cameras for retinal imaging.
Aravind employs over 3,700 people. This contributes positively to local economies. A 2011 case study released by the Coimbatore School of Business recognises Aravind’s unique benefits to the workforce: “The organisation follows unique HR practices also. It trains mid-level ophthalmic personnel, mostly women from villages […] in a two-year course. These women never had the chance to go to college, now they get the opportunity to enter the work stream as mid-tier technicians.” Aravind’s training practices and rate of surgical accuracy are comparable (and sometimes superior) to those found in other countries. At the same time, Aravind provides its services to millions of patients for less than 1% of the cost paid in more developed nations.
In about thirty years’ time, Aravind has treated over 32 million patients, and performed over 4 million eye operations. Almost 66% of patients are either treated for free, or at deeply discounted rates.
How can Aravind afford to treat the lower-income patients, often without charging them at all? This is possible partly because Aravind uses the fees generated from paying patients to subsidise those who cannot pay.
Another piece of the puzzle is Aurolab, Aravind’s in-house manufacturing arm. The lab produces high-quality ophthalmic products at greatly-reduced cost. Aurolab’s products are sold around the world at affordable prices.
Aravind’s reach extends beyond India. Its training center, the Lions Aravind Institute of Community Ophthalmology (LAICO), has helped educate more than 6,500 practitioners from almost one hundred countries. LAICO consults with nearly three hundred eye hospitals. This collaboration has increased the number of eye surgeries performed annually by an estimated five hundred thousand surgeries.
Most charities rely on donations to function. Although Aravind performs charitable works, it operates as a social business. It is financially self-sustainable. Aravind essentially cuts out the middlemen of branding, packaging, and profiteering. Instead, it is focused on the needs of the patients. Efficiency and quality are imperative, driven by the ongoing need to prevent blindness in as many people as possible. Because of Aravind’s vision and drive, it has been able to consistently offer very high-quality treatment at highly-reduced cost.
“Being of service to God and humanity means going well beyond the sophistication of the best technology, to the humble demonstration of courtesy and compassion to each patient.”
– Dr. G. Venkataswamy, Founder, Aravind Eye Care
Olowo-n’djo Tchala, co-founder of Alaffia beauty products, notes that traditional methods can often offer a quality lacking in factory-made products. Alaffia is a social business based in Togo, with American distribution. The company combines the native shea nuts with the traditional processing methods to provide the raw materials for a line of natural personal-care products.
Many social businesses in India follow a similar path to Alaffia’s, embracing traditional handicrafts and manufacturing processes as a saving economic grace. Archana Handicrafts, headquartered in New Delhi, produces beautiful, delicate bead necklaces. U. P. Dastakar, a workshop in northern India, creates carved wooden puzzle-boxes. U. P. Dastakar follows Fair Trade principles; it is associated with Asha Handicrafts, a Fair Trade organization in Mumbai.
Social businesses often use traditional manufacturing or processing techniques. The handicraft-based social business model puts those in need at the center of solving their own socioeconomic issues. It draws its strength and inspiration from traditional crafts and processing methods, passed down through generations. This preserves ancestral knowledge for generations to come. Using their own proud heritage, the very people in need of aid find ways to help themselves.
Traditional crafts are one but facet of what India can offer to the rest of the world. India’s farmers bring native herbal and plant products to the table. These products are used in culinary pursuits, and in herbal medicine preparations.
Organic India partners with many small family farmers in India to source sustainably-grown herbal teas and supplements. They pay for thousands of farmers to be trained and certified in these sustainable growth techniques, which include organic farming and crop rotation.
Organic India employs more than five hundred people. Its products are distributed internationally. The company has participated in BioFach, the world’s largest organic trade fair. Organic India’s products are vegetarian, free of genetically-modified organisms, and sustainably produced.
Organic India’s customers tend to be more educated about the issues of fair trade. They are much more likely to purchase from a company that pays its workers and suppliers fairly. They are also more likely to be concerned about environmental stewardship.
Social businesses like Organic India connect their customers with their company vision, interwoven with the personal stories of their workforce.
Connecting with Customers
Social businesses raise global awareness of pressing socioeconomic issues. They also create a casual ambassadorship, allowing people from other countries to learn current information about the history and cultures of developing nations.
Social media facilitates this process. Consumers who feel a connection to the farmers and artisans whose products they buy are much more invested in the social business. And they are more likely to become habitual customers.
Changing Lives in the Developing World
Social businesses reinvest in their communities in many ways. The profits from the products sold can be used for social empowerment projects, such as the hygiene education ventures and awareness campaigns undertaken by Aakar Innovations.
In addition, the very process of participation in social business can equip generations of people in the developing world with the business skills to raise themselves out of poverty. They can do this while celebrating their uniqueness and their cultural identity. In turn, the rest of the world can be enriched with the culture of these crafters and artisans.
“It was very clear to me that there’s only one way […] out of poverty. And the only way […] is to participate in the mobilization of our resources. Which mean[s] traditional knowledge.”
Social Business: A Way Forward to a Better Life
Social businesses leverage business practices for social good. In some cases, this means using high-tech methods and social consciousness to provide clean water, health care, or other necessities to those who otherwise cannot afford them.
Some social businesses harness the powerful compulsions of consumerism and the compelling drive of capitalism. These forces are used to create an infrastructure of fair trade, community investment, and a self-propelling stream of revenue for those in need.
Rather than competing with mass-produced goods, many social businesses elevate the artisanal treasures created from native resources and handicrafts. Artisans are paid a living wage for their work. In many cases, they learn to run part or all of the manufacturing arm of the business themselves. When the artisans become business partners, the larger social business functions primarily as a distributor of the handmade products, promoting them to customers in more economically-secure parts of the world.
Consumers in more developed nations can become weary of the soulless uniformity of factory-produced goods. The character and uniqueness of handcrafted goods can have immense appeal. In addition to the quality of the products themselves, many consumers appreciate the opportunity to contribute to the economic success of those who truly need it. Best of all, they can accomplish this by doing something that is generally simple and pleasurable: shopping.
Rather than making the rich richer by exploiting the poor, social businesses serve to redirect profit back to the community that created the product. They reinvest in the community, strengthening it both socially and economically.
In some cases, they affordably provide a needed good or service to the economically challenged. In other cases, social businesses give the economically challenged a means to improve their own financial situations. In either case, social business offer long-term solutions to entrenched social problems.
What possibilities do you see in social businesses? What can be some of the challenges? Express your thoughts in the discussion area below.
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Michelle Baumgartner is a freelance writer and editor. One of her current projects is an internship with LEAF Society. Michelle’s company, StellaWriting LLC, provides blogging, online content, and marketing materials for businesses and nonprofit organizations.