Editor’s note: This article was first published in June 2011. The finalists of the Momentum Project (BBVA and Esade), the forecast that philanthropic funds would grow during 2011 and 2012, and the tax advantages mentioned refer to Spain at that time.
Helping people who struggle to integrate into society, and turning it into a profitable business, is possible. Of course, these business ideas have one small drawback, which is funding, so you need to study the project’s long-term viability. Here’s a summary.
Imagine if it were in your hands to give work to people with disabilities, women who have suffered gender-based violence firsthand, or immigrants who can’t return to their country and can’t find work. Other ideas include a property scheme offering cheap rentals for unemployed people, selling fully recyclable products that don’t pollute the environment, or any kind of business that brings people who struggle in the job market into its workforce.
All these business ideas have something in common: they fall under the label of “social entrepreneurs” or socially responsible businesses (see their tax and humanitarian advantages).
The problem with this kind of business is that if you go to a bank for funding, you’ll usually be turned down, unless the bank is working with projects of this type, as with Momentum Project, the initiative run by BBVA and Esade, which has already chosen the finalists of its competition.
New venture capital funds devoted to philanthropic causes have now been created. To give an example, instead of donating part of his fortune directly to a social cause, Warren Buffett would join the entrepreneur in building the business. In this way, these investors, known as “philanthropic angel investors“, support the cause they had in mind and create wealth for the country by backing entrepreneurship.
These philanthropic funds are expected to grow over 2011 and 2012 because, among other things, they are offered tax advantages for the capital they put in, and for them it ends up being a profitable investment that gives them a return on their capital.
One of the business ideas that reached the final of Momentum Project was “Catering Solidario”, a company that only hires abused women who have had to leave their homes and must support their children. Why fund that project? Simply because consumers are increasingly aware of these causes, so, at the same price, they tend to choose a business that supports a good cause.
Another business idea that had no trouble getting funding is Sostre Cívic, a company that can offer you a home without going through a bank mortgage.
If your project is willing to fill more than 90% of its workforce with people with disabilities or people who struggle to integrate, these philanthropic funds may see your business model as an investment opportunity. But always remember that, even with a humanitarian cause behind it, your business plan must show that your project is sustainable and will be profitable in the long run.
Further reading
- Business ideas to start this year
- Where to find funding for your business idea online
- Types of funding for your business
- How to start a business with no money
Featured image: Jordiferrer, CC BY-SA 3.0, via Wikimedia Commons.
