6 Key Business Models for Social Entrepreneurs

Navigating the path of social entrepreneurship requires a deep understanding of the business models that can foster growth and increase social impact. At Kahani, we leverage our extensive expertise in supporting social impact enterprises to highlight strategies that are not just profitable but are also pivotal in driving societal change. This article delves into several effective models, from the Entrepreneur Support Model to the Market Intermediary Model, providing a detailed guide for entrepreneurs aiming to maximize their impact in the community.

Let’s dive in.

The Entrepreneur Support Model

The Entrepreneur Support Model is a strategic approach widely recognized for fostering social entrepreneurship by providing essential business and financial services to its clients. These clients typically consist of self-employed individuals or firms actively selling their products and services in competitive markets. By offering tailored support such as consulting, training, and microfinancing, this model not only aids in the development of viable business ventures but also ensures a steady revenue stream for the social enterprise itself.

At the heart of this model, organizations like Ashoka exemplify success by identifying and nurturing innovative social entrepreneurs who are committed to addressing pressing social and environmental challenges. These resources and support systems are crucial for empowering aspiring social entrepreneurs, enabling them to implement impactful solutions effectively.

Moreover, the versatility of the Entrepreneur Support Model is evident in its application across various sectors. It is utilized by economic development organizations, business development service providers, and microfinancers, all of which play a significant role in the ecosystem of social entrepreneurship. Whether it’s through selling specialized consulting services or providing technical support, these enterprises cater directly to the needs of entrepreneurs within their target population.

Wolfgang Grassi’s identification of this model as one of the nine essential social enterprise methodologies underscores its importance and effectiveness in the field. The Four Lenses Strategic Framework further highlights the model's role in enhancing social enterprise performance, presenting it as a key category for strategic development and assessment.

For social entrepreneurs, the array of business models available is vast, but the Entrepreneur Support Model stands out for its direct impact on the mission, integration type, and target population, making it a cornerstone for sustainable social change.

The Market Intermediary Model

The Market Intermediary Model plays a pivotal role in social entrepreneurship, particularly benefiting marginalized producers such as small farmers, artisans, and disadvantaged groups. This model does not directly sell products; instead, it builds crucial relationships, connecting clients with broader markets to enhance their reach and impact.

  1. Marketing and Selling Assistance: The model focuses on marketing or selling the products or services of small-scale producers, providing them with a crucial platform to reach wider markets.
  2. Strengthening Market Connections: By linking clients with potential markets, the model serves as a bridge that not only increases market access but also adds value through product development, production, and marketing assistance.
  3. Enhancing Financial Security: Central to this model is the mission to strengthen markets which, in turn, facilitates clients' financial security by helping them develop and sell their products effectively.
  4. Balancing Impact and Profit: Recognized for its ability to balance social impact with profit, this model is innovative in the field of social entrepreneurship.
  5. Examples of Implementation: Notable examples include Ten Thousand Villages, The Body Shop, and Krochet Kids intl., each utilizing the model to support various marginalized groups.
  6. Fairtrade Practices: Fairtrade International exemplifies this model by ensuring fair prices and sustainable practices, thereby supporting the livelihoods of producers in developing countries.

This model not only aids in the economic empowerment of producers but also aligns closely with the principles of social responsibility and sustainable development, making it a cornerstone for social enterprises aiming to create significant social change.

The Employment Model

The Employment Model in social entrepreneurship focuses on creating job opportunities and training for individuals facing significant barriers to employment, such as the disabled, homeless, at-risk youth, and ex-offenders. This model operates businesses that directly employ these individuals, selling products or services in the competitive market. The businesses are specifically chosen based on the appropriateness of the job creation for the clients, considering factors like skill development, the consistency of work with the clients' capabilities and limitations, and commercial viability.

Key to this model is the integration of social support services within the business structure, ensuring an enabling environment for the clients who work there. These enterprises often serve various disadvantaged groups, including low-income women and recovering addicts, offering them not only employment but also a supportive community. Common business types under this model include janitorial services, cafes, and bookstores, among others.

Employment Social Enterprises (ESEs) play a crucial role by providing job training and support, helping individuals reintegrate into society and the workforce after challenging life experiences like incarceration or homelessness. These enterprises focus on producing high-quality goods and services while offering employment and skill-building opportunities. Research indicates that ESEs significantly enhance job retention, wages, and overall income for their employees.

Supporting organizations like REDF provide essential financial and intellectual resources to ESEs, helping them grow and sustain their impact through grants, impact investing, and capacity-building programs. The employment model, recognized as one of the primary social business models, not only facilitates personal development and recovery for its clients but also contributes to the broader social economy by reintegrating disadvantaged individuals into the workforce.

The Fee-for-Service Model

Understanding the Fee-for-Service Model

The Fee-for-Service (FFS) model is a straightforward yet effective business strategy where organizations, particularly social enterprises, charge their clients for specific services rendered. This model is particularly beneficial in social entrepreneurship as it allows organizations to cover operational costs while still serving their target demographic effectively.

Key Types of Fee Structures

  1. Mandatory Fees: Essential charges clients must pay to access certain services.
  2. Voluntary Fees: Optional fees that clients can choose to pay to access additional services or support the organization further.
  3. Requested Fees: Charges that are asked from clients based on the services they utilize.
  4. Membership Fees: Regular payments made by clients who subscribe to continual services or benefits.
  5. Hybrid Fees: A combination of different fee types to provide flexible payment options for clients.

Application in Different Sectors

In Nigeria, the FFS model is widely adopted across various sectors including healthcare, finance, and eCommerce, proving its versatility and effectiveness in different market environments. Businesses benefit from this model as it allows for precise calculation of costs and revenue, ensuring financial sustainability.

Social Impact and Sustainability

Social enterprises often utilize the FFS model to fund their social work, balancing the need for financial viability with the mission to provide affordable services to low-income clients. For instance, small nonprofit social work organizations adopt this model during economic downturns to maintain revenue flow. Moreover, organizations like Bookshare.org implement FFS by charging a registration and subscription fee, which supports their service of providing digital books to individuals with disabilities.

Strategic Implementation

Implementing a FFS model requires careful planning to ensure it does not compromise the affordability of services for the target population. It is crucial for social enterprises to gradually shift towards this model, reflecting deeply on the sustainability and impact of such a transition.

This model not only supports the financial structure of social enterprises but also reaffirms the value of their services, aiding in long-term planning and program development. By generating revenue that directly supports their social missions, organizations can sustain their operations and expand their impact without heavily relying on donor funds.

The Low-Income Client Model

The Low-Income Client Model, a variation of the Fee-for-Service model, uniquely identifies the target population as a market for goods or services, specifically catering to those earning less than $5 a day at the 'base of the pyramid'. This approach is pivotal for social enterprises like Kahani Pictures, which focuses on crafting documentary films that highlight the challenges and triumphs within these communities.

Product and Service Accessibility

  1. Affordable Healthcare and Hygiene Products: Ensuring that essential health and hygiene products are affordable and accessible to low-income clients.
  2. Utility Services: Providing basic utility services tailored to the needs and financial limitations of the low-income demographic.

Embedded Social Programs

  • The model integrates social programs directly into its business activities, enhancing clients' quality of life through improved health, education, and overall opportunities.

Financial Strategies for Sustainability

  • Revenue through Sales: Income generated from product sales is crucial for covering operational and distribution costs.
  • Challenges in Financial Viability: The low-income nature of the target market poses challenges in achieving financial sustainability, necessitating highly efficient operations and creative financial strategies.

Innovative Distribution and Marketing

  • Creative Distribution Systems: Developing unique distribution methods to reach this specific demographic effectively.
  • Reduced Production Costs: Lowering production costs to maintain affordability without compromising quality.
  • Cross-Subsidization: Implementing cross-subsidy models to balance revenue from more profitable markets with subsidized rates for low-income clients.

Reinforcement through Reinvestment

  • Profits generated are reinvested into the organization to further social goals, demonstrating a commitment to sustainable impact over profit maximization.

By focusing on these strategic areas, social enterprises employing the Low-Income Client Model not only address immediate social needs but also work towards long-term sustainability and impact, embodying a dual focus on social responsibility and financial viability.

The Cooperative Model

Member Ownership and Participation

  1. Diverse Ownership Forms: Social cooperatives demonstrate a unique structure where ownership can vary significantly, such as a childcare center owned by parents or a public service managed by individuals with disabilities.
  2. Democratic Decision-Making: Members of social cooperatives enjoy equal voting rights, ensuring a democratic process that reflects the community's needs and values.
  3. Community-Centric Services: These cooperatives focus on delivering essential services like childcare, which can significantly reduce costs for working parents, exemplifying the direct impact on community welfare.

Characteristics and Impact

  • Mission-Driven: Social cooperatives are deeply mission-oriented, focusing on the general interest of the community or specific groups, which is central to their operations.
  • Governance Structure: They are characterized by a multi-stakeholder membership and substantial worker representation, ensuring varied perspectives in decision-making.
  • Economic and Social Integration: By providing employment and social services, social cooperatives address both economic and social needs within the community, aiding those who are unemployed or under-employed.

Regulatory Frameworks and Models

  • Global Presence and Legal Recognition: Social cooperatives are increasingly recognized worldwide, with over ten European states modifying legislation to accommodate them, reflecting their growing importance.
  • Variety of Regulatory Models: These cooperatives operate under diverse regulatory frameworks ranging from minimal to detailed regulation, which influences their structure and functioning.

Cooperative Principles in Action

  • Service to Members and the Community: The cooperative model not only supports its members but also serves the broader community, reinforcing its social responsibility.
  • Financial Sustainability through Member Fees: Members contribute fees for services, which helps sustain the cooperative financially while fulfilling its social mission.
  • Equitable Profit Distribution: Any surplus generated is usually reinvested into the cooperative or distributed among members in a limited manner, ensuring that the primary focus remains on social impact.

By adhering to these principles and structures, The Cooperative Model not only fosters a supportive environment for its members but also significantly contributes to social change, making it a vital model for social entrepreneurship.


Through exploring various business models in social entrepreneurship, from the Entrepreneur Support Model to the Cooperative Model, we have seen the significant impact these strategies have on addressing social challenges while ensuring economic viability. Each model, with its unique approach towards empowerment, market access, employment, fee-for-service, and catering to low-income clients, highlights the multifaceted nature of social enterprises.

The exploration of these models demonstrates that social entrepreneurship is not just about innovative solutions but also about sustainability, inclusivity, and creating a ripple effect of positive change across communities. As we have seen here at Kahani, social enterprises possess the potential to weave social impact into the fabric of their business operations, making a significant difference in the lives of individuals and communities. Looking ahead, the continued innovation and strategic implementation of these models offer promising avenues for addressing global social and environmental challenges, underscoring the importance of support, research, and action in the realm of social entrepreneurship.


  1. What defines the business model of a social enterprise? Social enterprises leverage business strategies to address social issues, aiming to become self-sustainable by generating their own revenue through innovative means, rather than depending solely on external funding like grants and donations.
  2. What are the primary areas of focus for social entrepreneurs? Social entrepreneurs typically concentrate on three main areas: creating eco-friendly products, addressing the needs of underserved populations, and engaging in philanthropic efforts.
  3. In what ways do social entrepreneurs serve as agents of change? Social entrepreneurs play a pivotal role as change agents in society by committing to a mission that creates and maintains social value. They continuously seek new opportunities to fulfill this mission, engage in ongoing innovation, adapt to changes, learn from experiences, and take decisive actions to make an impact.
  4. How does social entrepreneurship facilitate social change? Social entrepreneurship is vital, particularly in regions like India, where it tackles significant issues such as unemployment, poverty, and inadequate healthcare. Through innovative and inclusive strategies, social entrepreneurs enhance community well-being, drive positive societal transformations, and promote sustainable development.
Written By
Inder Nirwan
Co-Owner & Filmmaker