Whenever Chennai floods, Vikram Cotah, CEO, GRT Hotels and Resorts, is out in the field with his staff, helping out the needy and distributing food and relief material. And, even when the sun’s shining and all’s well, Cotah and his team work to ensure that the company provides employment to the less privileged, that their buildings are green and pet-friendly and to nurture women leaders.
“Once you have achieved your financial goals or profit, the next step is social profit wherein you focus on creating long-lasting social impact and focus on the well-being of the community and planet,” says Cotah. “We are part of the entire ecosystem, and unless everything works in sync, the company will not profit. This includes all other aspects of society – people, environment, working with local communities and artisans. The entire staff also needs to be sensitised and engaged in it.”
What is Social Profit?
Usually, when you hear the word ‘profit’, we think about money. That’s because most investments, jobs etc. are about creating or preserving financial profit.
The term ‘social profit’ was coined by David Grant in his book, The Social Profit Handbook: The Essential Guide to Setting Goals, Assessing Outcomes, and Achieving Success for Mission-Driven Organizations. It offers “those who lead, govern, and support mission-driven organisations and businesses new ways to assess their impact in order to improve future work rather than merely judge past performance”.
According to Fordham University’s Gabelli School of Business’ website, social profit orientation is an “organisation-wide perspective whereby entities embrace in their core mission the creation of sustainable, positive social and/or environmental impacts on individuals, communities and society at large”.
Such organisations invest knowledge, infrastructure, labour, reputation, money and time with the explicit goal of enhancing the common good, especially improving the well-being of people and safeguarding the health of the planet.
Social profit is a conscious, organisational effort to address systemic social or environmental challenges and is different from corporate social responsibility activities.
Social profit is more about keeping societal good at the core of the organisation’s mission, while CSR is a strategy employed by businesses to align with ethical and social values, benefiting both society and the company.
“Most organisations that make money earmark 2% for CSR. But social profit is different, it is not a chequebook charity. Instead, such companies make it part of their mission, invest in it and their own employees are a part of it,” says communications and DEI consultant Chandrashekar Duraiswamy, adding that it has other feel-good benefits for the employees as well. “Apart from the benefit to the society and company, the employees also feel that they are part of a venture that contributes to larger social good.”
Cotah says that GRT hotels have an environment, social and governance policy that fuels their social profit approach. “GRT hotels have become sustainable, 100% plastic-free and pet-friendly. “By 2026, 25% of our workforce, including leadership positions, should be women,” he says.
How does Social Profit benefit Companies?
Having a social profit orientation can benefit companies in various ways — it leads to tangible advantages for businesses in terms of brand reputation, employee satisfaction, customer loyalty and financial performance.
It builds a positive image of the brand as companies that prioritise social profit are seen as ethical and responsible by consumers, investors and the public. This leads to increased trust and credibility and sets the organisation apart from other competitors. Customers also feel more connected to the brand on an emotional level, which fosters loyalty.
It helps with employee attraction, engagement and retention as more people are looking to work with companies whose values align with their own. According to an article in Management-Issues.com, a recent study among 100 leading businesses in India found that social mission trumped shareholder value for every executive surveyed.
That’s why companies are adopting a social profit approach that resonates with employees. “We work with the local community, so they also benefit and feel connected. For instance, in Tirunelveli and Madurai, housewives who are single mothers come to our hotels and make a few dishes at the buffet. The guests feel they are getting something authentic from the region, the single mothers are able to earn and we also benefit,” says Cotah, adding that employee sensitisation and engagement is vital to these initiatives that are at the core of the company’s mission to work for the larger good of society.
Going the Non-profit Way
Nonprofits and social profit are closely linked as there is a shared mission of creating positive social change. NGOs are usually established with the goal of addressing specific societal issues such as poverty, inequality, education, health, environmental conservation or human rights. They also often measure their success based on the positive change they create. For example, an NGO focused on education might measure success in terms of the number of students educated or improved literacy rates, which directly correlates to social profit.
NGOs focus on improving people’s lives and the well-being of the planet, and social profit is their primary aim. For instance, Doctors Without Borders provide medical care in underserved areas, improving public health and well-being. Greenpeace works to preserve natural resources and combat climate change, benefiting the environment and planet.
The mission of Smile Foundation is to work as a catalyst in bringing sustainable change in the lives of underprivileged children, youth and women, with a life-cycle approach of development. It also works to enable civil society across the world to engage proactively in the change process through the philosophy of civic driven change. And also adopt the highest standards of governance to emerge as a leading knowledge and technology driven, innovative and scalable international development organisation.
Smile Foundation has also evolved a working model Social Venture Philanthropy (SVP), which is based on the successful business model of ‘venture capital’. SVP, the application of a hitherto successful business concept to the social and development sector, is a concept which pertains to linking social investment strategies to charitable giving with a clear focus on achieving scalability and sustainability, creating a culture of leadership and excellence and inculcating a deep sense of accountability amongst the nonprofits.
