For the month ending 30th April 2007, MYA is operating in 247 villages in Bagalkot & Badami Taluk covering a population of 3,66,433. We have promoted 951 SHGs consisting of more than 17,637 members.

MYA plans to expand its operations into districts of Bagalkot, Bijapur and Belgaum covering a population of 7.7 million and subsequently franchise out the business across rural regions in the poorest districts of India.
For more information: http://www.moksha-yug.in

I think we will see even more companies head towards social enterprise as nonprofits face increased funding pressure and more people become in need.

Craigslist is a for profit business model…
http://www.startupboy.com/journal/2006/2/6/craigslist-is-worth-more-than-ebay.html

Melissa, you may want to check out Community Wealth Ventures.

Melissa, I am not sure of any not-for-profit companies driving for-profits out of business nor do I know of any grants that will do what you would like. Sorry I am not of much help here!

One more thing - I did want to point out quickly that this post was not intended to discuss business models. Alex seems to think I meant to say business models when I used the term profit models (based on his post about being disappointed in my writing). This was not the case. I just wanted a term that sounded a bit nicer than tax status for the title. Well, carry on!

I’m glad someone brought up tax status. Seemed like the original post was missing a key issue.

I was surprised this was about non-profit status at all - I thought there was to be a dicsussion of business model. Non-profit and for-profit tax status has little to do with the question of business model, unless you are talking about companies that receive donations. Business model is a question of how the business makes money - does it sell advertising? Does it charge users? Does it subsidize users by selling advertising? Does it strike clever deals with other value chain participants (for example, Hertz, owned by Ford, was used to get people to try Ford cars).

Non-profit status may be about more than tax status, but the original post missed the tougher question for these high operating leverage, hard-to-scale businesses - namely, “How are you going to cover your costs, and maybe turn a profit?”

Interesting post. I’ve long thought that microfinance provides an interesting parallel for our industry, in which you have for-profits and non-profits competing directly.

In the microfinance world, there’s an additional wrinkle, which is competition for capital. These banks need pools of money when they start, and the capital markets work very differently in the non-profit and for-profit world. For-profit investors expect to see a return. Non-profit “investors” are making a grant.

This difference sounds great for non-profits and their customers, who theoretically benefit from the cheaper capital. But in reality, the dynamic can be bad for pretty much everybody. Competition for customers causes everyone to lower their prices. Non-profits, with their access to grant pools, drive the for-profits out of business. But relying on grants isn’t sustainable in the long run, so the non-profits either go out of business themselves or end up jacking up their prices.

I don’t know to what extent this dynamic still plays out. The microfinance industry has matured quite a bit, and presumably everyone has gotten savvier about building for long-term success.

But as a general point, I do believe it makes sense for organizations to sustain themselves via a for-profit structure in industries where such a model is viable. It’s better for the industry and better for customers in the long run.

A final point in response to the issue of passion in for-profit and non-profit enterprises. Being for-profit vs. non-profit is an indication of tax status — nothing more, nothing less. Organizational behavior is driven by industry structure, not by tax status. And in our industry at least, for-profits and non-profits look and behave very much the same.