Traditionally, those who operate or work in nonprofit organizations have been seen as people with a social conscience tackling a need. But things have changed. While there continues to be nonprofit organizations and people dedicated to those causes, more people are striking out in the for-profit business world to make money to directly take on social causes and issues.

Building profits for literacy

Better World Books, founded by Christopher “Kreece” Fuchs and Xavier Helgesen in 2002, earns money from selling books it gets from people and organizations. The founders graduated from Notre Dame in 2001, and finding few options available in the time of the dot.com bust, stayed in South Bend, Ind., tutoring members of the football team. To earn some extra money they tried to sell some books, but the bookstore either didn’t want the books any longer or was offering little money for the once-costly materials. They turned to the Internet where the books sold quickly.

From there the business with a mission to support literacy was born. Using the business model of a for-profit company partnering with charitable organizations allows Better World Books to impact literacy immediately, instead of spending time fundraising for literacy.

Operating business each day translates into funds to support literacy programs and provides books to those in need. This translates into time and money that the nonprofit organization does not have to spend fundraising, explained John Ujda, vice president of marketing for Better World Books.

Today, the company has venture capital investors and did $55 million in business in fiscal year 2011. To date, Better World Books has given $10 million to nonprofit literacy programs and libraries – making a social impact immediately, Ujda said. In addition, the company recently announced its Book For Book program in which it donates one book for each book sold.

While its original partner, The Robinson Community Learning Center, continues to receive support from Better World Books, other organizations also have been added to the list. The five primary partners are Books for Africa, Room to Read, Worldfund, the National Center for Family Literacy and Invisible Children.

Working outside of the traditional nonprofit realm allows the company to raise funds through venture capitalists, returning profits to investors, but also making an immediate impact on a social issue, like literacy. In addition, time and money isn’t spent on fundraising as a nonprofit would. Instead, daily business operations support the social issue.

Building profits for health

Using a similar business model, but without outside investors, Impact Makers, based in Richmond, Va., has put its mark on the local community when it comes to health care for the needy.

Michael Pirron, CEO of Impact Makers, said his model is simple compared to that of a charitable organization that must handle business activity to supplement its charitable work. The problem arises when the board and executive director, and possibly the fundraiser, of a nonprofit organization are business savvy, but not all staff has that focus.

When compared to a for-profit venture with a charitable foundation that gives away profits to social service ventures, Pirron said his model works better because there are no laws requiring maximization of profits for shareholders. The focus can be business and the profits can be directed to charitable organizations.

“In our model, we are a unique, for-profit company with no shareholders and all of our profits go to charitable areas,” Pirron said.

The health care management and consulting firm serves all customers, not only those in the health care industry or nonprofit organizations. And like most for-profit businesses, the best employees are sought to make it successful. Pirron explained that the focus is hiring the top skill sets to perform business, and the business has a charitable purpose. The bottom line is that the profit goes to charity instead of shareholders.

The charitable purpose for Impact Makers is providing free medication to those in need through its partnership with RXpartnership.org, as well as helping families of children with chronic disease navigate health care systems by partnering with Children’s Health Involving Parents (CHIP) of Greater Richmond.

Impact Makers constructs disease-management programs, performs IT work and systems consulting and performs program audits. In addition to providing its profits to charitable organizations, it also performs services for those agencies and leases office space from them, giving even more to the cause, Pirron said.

“It’s how we use business for social impact,” he said.

Pirron projected that revenue this year will be $3 million for the company that employs 37 people and hopes to give $60,000 – $75,000 away this year. “Our goal is to provide 10 percent of our total revenue, to give away our profit margin,” Pirron said. “By 2013 we expect to be a $6 million revenue company so we can give away $800,000 to $1 million.”

Will we see more of these business models?

More on Social Entrepreneurship from HalogenTV.com:

1. New Program Supports Faith-based Social Entrepreneurs
2. Ditching the Corporate Life for the Social Good Sector
3. Empowering Entrepreneurs to Do Social Good: Q&A with Ryan Eliason