There is no longer a clear distinction between non-profit and for-profit organisations. “Hybrid” models are becoming increasingly common to simultaneously deliver social impact and scale. But is this new organisational form more effective, or does it risk getting “stuck in the middle” between the two orthodox forms?

This was the topic tackled by a diverse panel. Tina Seelig, Executive Director of the Stanford Technology Ventures Program grounded the issue by touching on different hybrid forms. One model is a for-profit company sacrificing profits by designing for extreme affordability to meet the needs of people otherwise excluded by the market. Another is for an organisation to develop either two market segments or two distinct businesses – in each case a for-proft component sibsidises a non-profit one.

The discussion from the audience really got things going. Nigel Kershaw, founder of Big Issue Invest, won a round of applause with his comment that the challenge of social pioneers is not to imitate the for-profit or non-profit model, but to create something new and innovative that is valued. Another person interjected with the wise insight that all organisational forms are embedded in a complex and interrelated web – a Northern business buying handicrafts from a Southern village is linked to all of the charitable programmes that support artisan livelihoods.

For me, the most interesting insight came from Liza Kimbo, Director of the Live Well Kenya Foundation. She noted how the presence of a non-profit component tends to overtake a hybrid organisation so that it over time becomes a charitable entity. To her, an initiative either makes business sense or it doesn’t – you can’t have your cake and eat it too. Dr. Tralance Addy, President and CEO of WaterHealth International, intervened to note that non-profits often face an internal struggle whenever profits are involved that can undermine project implementation.

I have seen evidence of this struggle with the partner organisations I worked with in Ghana and Zambia as a volunteer for Engineers Without Borders (EWB) Canada. It is extremely difficult for an organisation that has traditionally operated on a charitable model to suddenly switch to an enterprise-based approach. Both the skillset and more importantly the mindset are very different.

However, non-profit organisations often have no choice. It is surely progress to switch from giving handouts to recognising the role of local entrepreneurs to bring about development, and there is often no one else providing this support. In addition, insufficient or tied funding is often what drives non-profits to try their own hand at profit-making activities. Seen this way, is a hybrid organisation an innovation adding value or a symptom of deeper problem?