THE BLOG
02/21/2014 06:51 pm ET Updated Apr 23, 2014

Doing Well by Doing Good

We are just back from three weeks in East Africa, where the need for simple solutions to overwhelming problems related to providing safe essential surgery confronted us wherever we journeyed. Even the untrained eye could recognize the problems that had been repeatedly told to us by doctors and nurses.

These days, the landscape of "doing good" is more complex than ever. Governments, international organizations, philanthropies, foundations, large corporations, impact investment funds, non-profits and social enterprises are just a few examples of modern entities that tackle the challenge of solving the world's problems. Meanwhile, the daily news provides constant reminders of those "doing well" (billion dollar acquisitions of the latest mobile phone apps, for example), and the extreme contrast presented by much of the rest of the world, where maternal and infant mortality rates remain sky high. As a result, we have seen an active discussion focused on income inequality, the nature of capitalism and free markets. Within practically the same breath, aid from donor countries is hailed as incredibly successful and then condemned as the single most harmful intervention of the last 50 years. The non-profit model is saddled with accusations of a lack of transparency, accountability and verifiability of results, fueling a demand for data driven proof of efficacy. Which leads to our simple solution. We will "do good" as a customer supported business rather than a donor supported non-profit. We create a sustainable, scalable and successful business model for local implementation.

Despite the assertions and arguments about lives saved and impact made, the reality of these issues is that reliable information is extremely difficult to find. In places where every human and financial resource available is being stretched to its life-saving limit, data collection cannot be a priority. We encountered this dilemma first-hand this month in visits to hospitals throughout East Africa where we were hoping to collect data to unequivocally prove that increased surgical instrument sterilization would reduce rates of hospital-acquired infection, save the lives of many and reduce the economic burden of disease. It quickly became apparent that conducting a base-line study to establish that instruments could not be sterilized with broken autoclaves, and that rates of infection were high, would simply divert resources in order to prove something that was glaringly obvious to anyone who worked at the hospitals.(What Dr. Bernstein refers to as "visual epidemiology") The people for whom the intervention (power-independent surgical instrument sterilization) was intended knew that they needed it, even if the hard data could not be generated. "After all, Dr. Bernstein, don't you use sterile procedure in the US for all surgical interventions? You want us to repeat years of your research?" Yet in the absence of hard evidence, decisions about the most effective way to make a difference tend to be made based on the biases and priorities of donors, while the needs of the world's poorest get lost. We find it more effective to meet the needs of these customers and create value for our investors in exchange for their capital.

The business model for social impact differs from the non-profit/philanthropic route in several important ways. By conceptualizing the world's poor as customers rather than recipients of donations, businesses need to listen and adapt to the desires of the people who are the target of the intervention. Once these desires have been appropriately met, a business can be scaled up and can sustain itself without donor dependency, and it can create value beyond the initial product by creating local jobs and infrastructure as well as outsized returns for investors. A business succeeds by reaching as many customers as possible. Socially motivated businesses measure their impact by how many people's lives they are able to improve through their product while at the same time providing robust returns for their investors.

Why isn't this model being attempted in earnest by development leaders? It is clear that our methods of evaluating social impact efforts are flawed. The trillions of dollars spent over the last 50 years through aid, philanthropy and donations to non-profits, coupled with the seemingly intractable nature of the problems still to be solved indicate that we could do better. We can start by unpacking the biases that still dominate development and global health conversations, and suggest new ways of thinking about impact.

In the global health and development worlds, one of the most deeply entrenched biases is the perception of "business" and "for profit" as dirty words. Over the last century, for-profit business interests have come to be associated with exploitation rather than remediation of the world's problems. Yet the last ten years have seen the development of businesses that challenge these notions by having a social impact mission at the very core of their profitable business plan. These companies (often small and started by passionate individuals), consider environmental and social impact to be equally important to, and facilitated by, financial return. Individuals choose to start these businesses not only because they see emerging markets as an untapped opportunity for profit, but because they feel frustrated with the world's failure to meet a pressing need, and are looking for creative ways to fill a gap. And they fuel innovation with investor, not donor, funds.

Unfortunately this potential has yet to be fully realized because social impact businesses occupy a grey area between non-profits and traditional business, which makes it difficult to get them off the ground. Investors see an emerging market focus as too risky, and grant-makers and other sources of funding for non-profits avoid for profit businesses, in part due to the limitations of the U.S. tax code but also out of habit and outdated notions. It is time for business, the public sector and donor interests to rethink their historic roles and support innovative customer supported models. Until then, we will continue to miss out on important opportunities for serious innovation and sustainable impact.

This post was co-authored by Huma Malik:
Huma Malik is the co-founder, COO, and Senior Vice President for International Programs of Eniware, LLC. She has more than eighteen years of experience in the non-profit sector, including in project development and public relations at the Center for Strategic and International Studies and Georgetown University. She is the founder Walkabout Development Solutions International, a sustainable economic development organization active in Pakistan.

Research and editorial assistance for this article was provided by Ariel Trilling.