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Originally, Jhoole’s staff invented the term Humanitarian Enterprise to avoid oxymoronically calling ourselves a “nonprofit business”. Of course, just like any business, Jhoole wants to make a profit: it is just that rather than giving it to shareholders we prefer to invest all revenues in our social mission. Our goal is not only to pay all of our employees a good living wage, but also to distribute profits (what we like to call “Social Shares”) to community programs that benefit the public at large. Through Jhoole’s work in Maheshwar, we have witnessed firsthand the tangible, positive power of Humanitarian Enterprise. The realization that this model can potentially create positive change throughout the world, even in "affluent" countries where growing inequality is having an adverse effect on the overall quality of life, inspired us to create a Humanitarian Enterprise legal framework and certification mark.
Because the name of the nonprofit sector is misleading, people often assume that the difference between a nonprofit and a for-profit is straightforward: a nonprofit does not make a profit. This is not really true. In reality, the traditional dividing-line between a nonprofit and a for-profit is the "non-distribution constraint": for-profits can distribute profits to shareholders, nonprofits must invest all profits back in their social missions.
There are many businesses on the social enterprise spectrum, with a variety of different legal models, creating positive social change. For-profit social enterprises have their own distinct advantages such as being able to get seed-capital from investors often making it easier for them to achieve scale. Different models have unique assets that should be explored and leveraged by social entrepreneurs.
The Humanitarian Enterprise model proudly celebrates adherence to the non-distirbution constraint and the values it promotes: mission-motivation, collective action for the greater good and the power of grassroots engagement. The goal of the Humanitarian Enterprise legal framework and mark is to generate greater public awareness of the distinct beauty of the non-distribution constraint and public recognition of the social enterprises, both nonprofit and for-profit, who embrace it.
In addition to highlighting the value of the non-distribution constraint, the Humanitarian Enterprise model aspires to transform the values of the work environment as employees participate in distributing Social Shares to worthy causes and, ideally, become motivated to work hard for a purpose larger than themselves. While employees in Humanitarian Enterprises must be paid a good living wage, the model also actively encourages people to become intrinsically motivated, to get off the materialistic, hedonic treadmill (that strange state where the more you get, the more you want) and to engage in a life-enhancing social mission. Scientific evidence is starting to show that one of the few things that actually makes people happier long term is becoming engaged in a philanthropic mission that connects them to something greater; for some ideas on the correlation between social mission and happiness, check out Positive Psychology pioneer, Martin Seligman, on The Meaningful Life or the work of Harvard Business School professor,Michael Norton, on the psychological benefits of pro-social and philanthropic spending.
The goal of the Humanitarian Enterprise term, legal framework and certification mark is to create greater visibility for social enterprises who adhere to the non-distribution constraint in order to inspire entrepreneurs, create greater public awareness of the social enterprise spectrum and spread the model.
This year we are focused on certifying a small number of pioneering Humanitarian Enterprises who have been operating either as nonprofit social enterprises or “shareholder-less” for-profit social enterprises who reinvest 100% of profits in their social missions, and have a track record of creating great social returns. This select group of businesses will be among the first, along with Jhoole, to assume the title of “Humanitarian Enterprise” and the Humanitarian Enterprise mark. We will then begin working together in solidarity to further refine the model and develop educational resources before automatizing the application process and opening it to other organizations in 2017-2018. We are currently approaching organizations based on nominations. If you are interested in nominating an organization, please write to HumanitarianEnterprise@jhoole.org.