Above is the old school way of dividing organizations: for-profits and non-profits, or businesses an charities. Non-profits help social problems, for-profits make money. An easy categorization, but hardly accurate, and certainly outdated. It’s also makes a dangerous assumption, that the good created for society is most easily judged be assessing an organization’s tax status. This paradigm assumes that there is no overlap between the two (i.e. all non-profits create more good for society than all businesses). The world isn’t that simple, and below is a more accurate depiction of how organizations might be categorized (click the image for an enlarged version):
At the left hand side of the spectrum are entities that harm society, and to the right are organizations that seek social good for society. For the purposes of this illustration, “social good” is the generally positive intent of an organization’s product or service, or the positive outcome sought from the way the product or service is delivered. Favorable results that stem from job creation, economic growth, etc. are not represented here.
These categories don’t imply that a business or charity is either “all good” or “all bad”, either; there are bright and ugly sides to any organization, but these nuances can’t be included here. Instead, this spectrum ranks how actively each type of organization generally seeks to better (or worsen) society.
For-Profit (Active Social Ill) – these are companies that actively harm the world through their actions. Thankfully there are few of these, but Girls Gone Wild is a good example. Sorry, no link included here.
For-Profit (Social Ill from Company) – a business that harms society through the way it runs itself falls into this category. A shady mortgage company certainly fits the bill.
For-Profit (Social Ill from Industry) – these are entities that operate in an industry in which unwanted social outcomes are generally unavoidable. Coal mining, for example, provides a needed product, but no matter how its done and no matter how coal is used, it harms nature.
For-Profit (Neutral) – a business that doesn’t actively harm society, but doesn’t go out of its way to improve it, could be defined as neutral. A large number of business would fall into this category, like a local car dealership.
For-Profit (Social Good at Discretion) – it’s not uncommon for a large corporation to develop its own foundation to make grants to other non-profits, and that’s how these businesses would be categorized. This is ranked lower than other categories, because donations are not necessarily tied to sales or the behavior of customers.
For-Profit (Social Good from Revenue/Social Good from Profit) – companies like Patagonia and Newman’s Own pledge a minimum percentage of revenue or pre-tax income towards causes. These arrangements directly link the success of the company with donations to charities.
For-Profit (Social Good from Product) – this is a gray area, but there are certainly some businesses whose products are genuinely designed to improve people’s lives. A medical device company, like Medtronic, fits this bill.
B-Corp (Social Good Before Profit) – these are a more recent creation, but more and more business are created with the intention of a double- or triple-bottom line, in which social outcomes are placed on par or even before the pursuit of profits. Better World Books is a good example of this.
Non-Profit (Advances Culture) – organizations like the art museums, opera houses, performance centers, and the like all seek to improve society, and in general, the more of these, the better.
Non-Profit (Corrects Social Problems) – these are charities that seek to feed the hungry, house the poor, heal the sick, and so on. It would be difficult to make an argument that these types of organizations don’t deserve their won place at the far right of the spectrum.
Disagree with any of the categories or rankings? Have a better way of breaking out types of organizations? Be sure to leave a comment.