Finding Balance Between Purpose and Profit

Guest blog by Dr. Julia Fursova, Assistant Professor, Renaissance College, Interdisciplinary Leadership Studies Program, UNB

An existential question for social enterprises (SEs) is how to keep the balance between ‘purpose’ and ‘profit’. In conversations with our participants, this theme was discussed at a greater length by founders of for-profit SEs.

Figure 1: Holding Balance Between Purpose and Profit

While for the founders of non-profit SEs, the enterprising arm is complementary and usually comes with a non-profit or charitable arm that brings some limited core funding, for-profit SEs must rely exclusively on their enterprising capacities. The latter makes holding the balance between profit and purpose even more complicated.

Among the strategies discussed in relation to navigating profit and purpose binary, two broad thematic categories emerged – ‘individual’ and ‘organizational’ strategies.

Within ‘individual strategies’ there are sub-themes such as finding work-life balance amidst irregular schedules and accepting one’s limitations.

Figure 2: Balance Between Purpose and Profit: Key Themes

The theme for ‘organizational strategies’ appears more complex. The following sub-themes emerged: ‘strategies for achieving financial viability’ and ‘strategies for nurturing social purpose’. This theme was prominent for ‘for-profit’ SEs. If they are not paying attention to their social purpose, it is easy to fall into the trap of mission drift while pursuing contracts that ensure financial survival but are not aligned with SE mission and values.

The more ‘granular’ subthemes illustrate how they do it, as the founders discussed a variety of organizational strategies for staying true to the social commitments in their enterprise.

Founders stay focused on and grounded in their mission and purpose. They intentionally pursue contracts and activities that align with their SE’s values and mission and refuse those that do not align with or may jeopardise their social purpose.

This results in making hard decisions when founders turn down potentially lucrative contracts or high-profile activities. It is not an easy task, and oftentimes it is plain scary to say ‘no’ to a contract not knowing where the next paycheque will be coming from. Frantic pursuit of the next paying contract may blur the focus on social purpose. To keep their focus sharp founders continuously reflect on congruence of their activities with their mission and values.

To stay afloat financially, founders rely on a core, trusted clientele base, engage in relational marketing rather than ‘cold calls’, and take on so called ‘vanilla projects’. The ‘vanilla projects’ metaphor covers contracts that pay the bills but do not necessarily add to the leading edge of those SEs that are explicit in their commitments to systems change.

A tension inherent in the unconventional approach to doing business is captured in a quote by one of the research participants as ‘persevering with a terrible business model’. For more radically oriented ‘for-profit’ social enterprises, the goal is to minimize or eliminate the need for their services. Their ultimate goal is not ‘growth’, it is ‘sustainability’. This goes against the grain of conventional business mindset that aims to sustain the ‘need’ or ‘want’ for the services or products to ensure profitability. That makes social enterprise model, and especially those who fit the category of ‘disruptive social enterprises’ (Lionais, 2015), a ‘terrible business model’ with lower chances of attracting investors and making financial gains.

If you’ve ever practiced a balancing pose in yoga, you know it requires focus on alignment, strong core muscles, and continuous, intentional adjustments to stay steady. Social enterprise founders engage in a similar balancing act as they navigate the ongoing tension between purpose and profit. Like in yoga, maintaining this balance depends on staying aligned, making thoughtful adjustments, and strengthening the “core muscles” of the organization. For social enterprises, those core muscles are their values—essential to sustaining balance between purpose and profit.

Figure 3: Core Values

Data Party #2 Research Poetry Writing with Project Participants

During our second data party session we came together with research participants to collectively review emerging themes. We had 8 participants joining us this time. Focusing on data sets coded to ‘Motivations’ and ‘Finding Balance Between Purpose and Profit’ we collectively reviewed the emerging themes and even wrote some research poetry!

The themes related to the tricky balancing act between profit and purpose resonated deeply:

Participants shared how validating it was for them to see the shared recognition of how poorly social entrepreneurs are served by conventional entrepreneurship training. That constant struggle to stay balanced between two conflicting goals is connected to ‘identity struggle’ discussed as one of the challenges SEs experience.

“Am I really an entrepreneur if I’m not motivated by profit?” is one of the questions SE founders grapple with. Reviewing the data collectively reassured the participating founders that it is ok to carve their own path. It is a mixture of perseverance and purpose that really sets SEs apart as expressed by one of the participants: ‘If I see a need, I can find a way’.

“It’s a terrible business model…” – a quote from an interview resonated deeply with participants of the data party. Struggling to fit conventional ‘business as usual’ model, SE founders recognize that within the status quo, SE model is technically ‘bad’, because its foundational goal is the idea that in the long run, they will minimize or eliminate the need they are responding to. SEs do not perpetuate needs, nor do they create additional ‘wants’. Instead, they build capacities with the goal to reduce dependencies.

Staying true to this ‘terrible business model’ have financial consequences. It requires constant attention to questions that become existential for SE founders: “How do we remain a social enterprise without sliding into simply an enterprise? How do we uphold our commitments to social purpose without letting the financial viability piece slide?”.

These questions are especially painful for ‘for-profit’ SE founders as they feel that in the current financial and funding environments, they are pushed to compete with non-profits instead of collaborating with them and forming alliances around the issues they all are trying to address. For non-profit SEs on the other hand, conversations about revenue targets should become more acceptable.

SE founders do not dismiss lessons that can be learned from conventional business models, but they are firm with their boundaries as they increase their confidence and grow their knowledge:

Founders know that despite their struggles, they are legitimate entrepreneurs. They emphasize that there’s a lot to be learned from the business community, but they will use this knowledge in a way that aligns with, and honours SE core values, capacities, and commitments. Despite not fitting the conventional mold, SE founders know – they represent sustainable futures!

Our conversation reached its peak on the shared agreement that it is important to have spaces that bring founders together based on the shared ideas and values, rather than organizational structures.

Research Poetry

To inspire SE founders and their allies for action, we share some research poetry crafted during our data party. Research poetry, or ‘poetic transcription’ represents artistic engagement with the data, where quotes from interview transcripts are arranged in a poetic form with attention to repetition, rhythm, and the invocation of emotions and feelings present in the data to amplify participants’ voices.

For creating poetry pieces, participants of the Data Party were given excerpts from fully anonymized transcripts arranged by sub-themed within the thematic category ‘Nurturing Social Purpose’.

Participants were invited to focus on one sub-theme and craft a poetic response to it, either using direct quotes from the transcript or capturing their response to the quotes in free-form short poetry.

Through the exposure to excerpts from interview transcripts participants were able to get intimate with the data and gain a sense of validation and solidarity.

Poems containing direct quotes from anonymized transcripts:

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Research Team:

• Dr. Julia Fursova, Research Lead, School of Leadership Studies, UNB
• Ryca McCullough, BPhil., Data Collection
• Ellie Petersen, BPhil., Data Collection and Analysis
• Hillary Russell, BPhil., Knowledge Mobilization