What should sustainable business models of social organizations look like?

Hendrik Epe made the following statements in his article “User Experience in Social Work”, which I find very interesting and worth talking about it here:

“Even the established providers of person-related social services, such as the aforementioned welfare associations, for example, are forced to take care of the “user experience” of their services. In concrete terms, this means that they have to put users of the services at the center of the providers’ attention.
In concrete terms, this means that new, innovative services offered by established providers must be designed from the user’s perspective.
And the calls for organizations to address the question “Are we doing the right things?”

My very spontaneous answer to this was the assertion: we are doing things right, i.e. we are working on the right problem of the customer, when the business model works in the long term without funding.
This gives rise to several further questions, which I would like to illuminate in the following:


If so, why? And what does functioning actually mean?
The reality for many social organizations is that they search through funding programs from the EU, the federal government, local authorities or private foundations, consider which ones might be a good fit and what they could “knit” for their organization. Then they apply, and when they have been approved and the funds have been received, they begin to find participants for the program. You can do it that way, but it raises a lot of problems:

First of all, it raises the question: are we doing things right and not, as Hendrik Epe has already said: Are we doing the right things? With this approach, we are then looking for customers for the offer and have not even checked and found out whether there is a problem at all.

This is tragic, because often not enough participants are found – because there was obviously no problem from the customer’s point of view – and the money has to be paid back. I don’t even want to mention all the organizational effort that is required to acquire, manage and document funding. You need your own employees to manage all that. Does that make sense? Probably not. In my eyes, this is an absolute waste of time and energy and completely misses the point.

That’s why I’m putting forward the thesis here that social organizations also need a functioning business model!

The only dependency, which may decide whether the (social) organization can exist in the long term on the market or not, is the increase in value/use for the customer. If this is in focus and can be satisfied and at the same time all costs are covered… then you have the certainty that the business model is right.

That doesn’t mean you can’t accept donations. I accept donations too, of course… it just makes a lot of things easier. But you can’t attach the existence of the organization on it. And you shouldn’t make your offer dependent on it.

I have only ever applied to foundations or funding bodies where I was relatively sure that the application or the interview would be successful, and not to others. And I only did that at the beginning of the project, because larger machines and inventory had to be purchased.

Now that the business is up and running, the whole organization and the underlying business model has to PROVE that it will work without external funding.

What can the solutions to this look like?


First of all, you have to put THE PEOPLE’S PROBLEM FIRST, NOT THE OFFER! Design thinking is a good approach to this, and I’ve had some great experiences with it. We also have communication designers and service designers on our team with whom we always have really good discussions and with whom we constantly adjust the direction in which we are going.


So as soon as the day-to-day operations start, you have to get rid of grants and see that the organization is self-funding from revenue, because otherwise that creates a huge dependency that quickly becomes pitfalls.

At some point, every funding program expires and if you have used the temporarily higher income to hire employees or otherwise increase your fixed costs, then sooner or later you will need funding program X or donor Y again to pay these fixed costs. You can’t otherwise meet your payment obligations – which you have imposed on yourself, e.g. personnel costs. This is a real problem, and I would argue that more than one social organization has failed precisely because of it.

A second reason why I am not in favor of hiring employees for the respective social or community task before the company stands on its own financial feet simply has to do with motivation.

Money is a pretty poor motivator in my eyes and in my (own) experience. There are simply no better employees – myself included – than those who see a sense in what they are doing, who experience themselves as effective and who are burning for a task and yes, perhaps also have their own benefit from being involved. So one should go in search of exactly these people:

So you can ask yourself:


– In Deventer in the Netherlands, students live free of charge in a home for the elderly if they engage with the elderly and do some shopping.
– In the Werkraum Augsburg – that’s the organization I founded – skilled craftspeople can use the workshops for their own purposes in return for helping customers/users with their craft projects during opening hours.
– At the Grandhotel Cosmopolis, also in Augsburg, refugees and hotel guests live together in one house. The refugees feel comfortable there, have nice accommodations, and on the other hand are integrated into the hotel routine, help with cleaning, and cook a wide variety of delicacies from their home countries for the hotel guests every noon.

These are just a few examples to show how the personnel costs of organizations can be drastically reduced by finding other user groups and creating a win-win situation for all involved.


Then you can enter into strategic cooperations by finding other companies that are interested in the service or product or have an advantage from the offer in some other way… you can cooperate with them:
In the case of Werkraum, for example, we use it to solve the following problems:
– Every month 20-30 bags of wood shavings are produced in the wood workshop. We give them to animal shelters and sanctuaries. This saves us the cost of disposal and we don’t have to worry about anything because everything is picked up.
– In addition, the wood workshop produces about 5 cubic meters of glued wood waste per month. This is also picked up free of charge. The person has a special stove in which he can burn it all and use it for heating.
– We have free Internet, telephone and a WLAN hotspot in exchange for memberships.
These are just a few examples, and they don’t really add up. But they just show that creativity can go a long way to improving your cost structure.


And apart from the effect that personnel costs can be saved, you also have, as already mentioned above, a completely different commitment from the people than if they are just “normal” employees. You create added value for them, which they also perceive as added value for themselves. Then you can bind the employees to your company without paying them materially, or the payment is a concrete added value that the organization itself offers.

Thus, the chance that the customer is convinced is also much higher, because he gets first-class feedback on the offer. Customers and employees are virtually in the same boat, working together and learning from each other for the future.

In the workroom, for example, the contact between customers and employees is great because people work together on a much higher level of understanding. And the employees’ desire to advance the entire project, to create functioning structures, to establish systems of order, to improve the range of services, etc., is also much higher, because in the end everyone – including the employees themselves – benefits from it.

And we have often had the experience that customers become employees. That’s great, too, because we don’t have to spend a lot of time and effort on recruiting, and the community grows steadily with the “right” people.


A really important point – and here many of the existing social organizations have a huge untapped potential – concerns the social media presence.

In my opinion, social media is essential and an absolute part of the user experience. It can be used to engage the public, make internal structures and successes visible, showcase experiences and events, solicit financial donations and material donations, support crowdfunding campaigns, and it can be used to turn customers into fans.


When the organization is completely transparent with the help of social media, customers become fans and understand the benefits much more intuitively. Prices are then no longer negotiated, everyone knows exactly what the money is used for elsewhere. They know what the organization does to make people/customers/users happy and satisfied, what added value is created for society, or what environmental problem is solved.

And last but not least


To get the non-profit status confirmed by the tax office brings a significant relief, because you can receive donations at all and also get tax benefits compared to normal business enterprises. As a social organization, you should definitely “take advantage” of this.
One can then participate not only with national price competitions, but also e.g. with the Google adgrants program, providing free of charge adwords advertisement, which leads to clearly higher range and more visibility.


Social organizations that stand on their own feet financially and do not depend on funding are forced to focus on the customer benefit and put the user experience in the focus of all considerations. That is success! By that I don’t mean economic success, because economic viability can only ever be a means to an end and never the goal – this is also the case with normal companies, by the way, even if some people would probably disagree with me there in this point.