For-profit, non-profit, and everything between

I've noticed a trend in the last few years: organizations can no longer be cleanly divided into "for-profit" and "non-profit" entities. Instead, this is becoming more of a spectrum, with many creative business models occupying the space between those classic formats.

For example, last year's winner of the HBS business-plan contest (social enterprise track) was Yashmere, a project that of Ventures in Development aims to bring better incomes to Western China by connecting yak farmers with exporting opportunities; the group defines itself as a social enterprise with a double bottom line, and aims to be "profit-making but not profit-maximizing." Technically, it's a non-profit.

In the news recently (9/17), a New York Times story described the new for-profit philanthropy set up by the founders of Google. No, that wasn't a typo. It's a for-profit charity. Without the restrictions placed on non-profits, this new organization will be able to finance start-ups, partner with venture capitalists, and even lobby Congress. It will have to pay taxes, but maybe that's part of social responsibility too. The founders are starting the charity off with $1 billion in seed money - not exactly stingy.

Last week, my chapter of Net Impact (the Boston Professional Chapter) held a panel discussion on "Leading a Values-Based Business" with several chapter members as participants. I found that entrepreneurs are defining their ventures in all kinds of ways. For example, Cornelia Hoskin's Well Well Well is basically a business for high-income consumers, but it's committed to healthy organic food for busy people who might otherwise eat junk, to hiring and training disadvantaged women, and even to creative fuel-saving mechanisms for the delivery truck.

At the same time, organizations that were set up as non-profits (and retain a social mission) are rethinking their approach to financial sustainability. I'm working on a case study about a microfinance organization that is currently transitioning many of its affiliates from non-profit to for-profit, while still keeping its mission of poverty reduction front-and-center.

There are so many more examples - but hopefully these four will show you that it's not all in my head. Mark my words, organizations that are a hybrid of profits and values will be the wave of the future.