Social Impact Business Models: Is Impact Employment The New Charity?&
In recent decades, new methods of doing business that address social needs have evolved into something called impact employment and impact sourcing. This unique way of doing business stems from the idea that social impact is not just about donating money to charity, it’s about providing opportunities to disadvantaged people to help them rise out of poverty for good. Instead of handing out money to individuals and communities who need it, the goal of this type of business model is to create sustainable change within the lives of individuals – while still running a successful and profitable business!
Impact employment, as defined by the Rockefeller Foundation, is a hiring and human resources model that intentionally employs vulnerable or disadvantaged individuals with the goal of creating a positive impact on the employees, their families, and eventually a broader community
Impact sourcing is a business process sourcing model that employs disadvantaged people with high potential to transform the lives of disadvantaged people, their families and communities around the world, while corporations and governments benefit from their work.
Below are four companies pioneering the social impact business model:
31 Bits uses fashion and design to empower people to rise above poverty. Their model and mission, which is funded through product sales, is to create work opportunities and sustainable wages for artisans worldwide. Because they believe in providing safe and joyful working conditions, 31 Bits provides artisans with access to counseling, health care, and education, as well as ways to improve their communities and support their families.
Krochet Kids intl.
Krochet Kids intl. has developed a program to empower women in Northern Uganda and Peru to lift themselves out of poverty. Before the women graduate from the program, Krochet Kids provides them with jobs, education, and mentorship.
They employ women so they can provide for their families. They educate women so they can continue their individual careers independently. They provide mentorship to each woman to help them along a sustainable career path. Throughout the entire process, Krochet Kids tracks each woman’s personal development.
This model Krochet Kids has developed aims to empower, not give. To equip, not aid. It ensures that the women who graduate from their program have the tools they need to be self-reliant, and build a future for themselves and their families without depending on anyone else.
ABLE says, “We believe that social businesses whose aim is to alleviate poverty should use their business skills to create job opportunities for the poor, not give them more charity.” With the idea in mind that the solution to ending poverty is helping people provide for themselves, ABLE aims to create jobs for those lacking opportunity, especially women. They purchase goods to help businesses grow and employ more, doing the manufacturing in communities they wish to impact and creating jobs along the way to break the cycle of dependency.
Noonday Collection’s business model combines the work of women in developing countries with the help of women in U.S. They collaborate with 29 Artisan Businesses in 12 countries to design a collection of handcrafted jewelry and accessories, and then connect them to a global market.
Noonday works with women in the United States to become ambassadors for the collection, to create a growing marketplace for the Artisan Businesses through hosting trunk shows. By working with the artisans and connecting them with a marketplace, Noonday Collection empowers them to grow their businesses sustainably.