Businesses make money, charities help people; that is the accepted way of the world. But between the two lies a new, highly innovative type of organization which combines the market-driven practices of full-blown capitalism with an overriding sense of social duty.
Aurolab, an Indian-based firm which in less than 15 years has become one of the world's biggest manufacturers of specialist lenses to cure cataracts, is a striking example.
The company's ethos puts it "way beyond" corporate social responsibility, the current buzz-word in big business for giving something back to the community, argues Aurolab founder David Green.
"Corporate social responsibility is basically still capitalism organized as it always has been - an ethical, even legal obligation to maximize return on investment to shareholders.
"At Aurolab, everything is based on bringing affordability to patients."
Cataracts, in which the lens of the eye becomes clouded, is a common form of sight loss, especially in less developed countries.
Before founding Aurolab, Green organized charitable work in which cataract patients at the Aravind Eye Hospital in Madurai, the capital of South India's Tamil Nadu state, were treated with the insertion of a plastic replacement lens, donated by manufacturers along with other equipment such as surgical sutures and drugs.
However, the supply of these so-called intraocular lenses began to dry up, and Green decided to try making them himself using a philosophy he describes as "philanthropy which by-passes the middle man."
Started in 1992, Madurai-based Aurolab is officially a "non-profit business trust," which works as a fully commercial enterprise but has no shareholders and recycles any surpluses back into its work.
"The idea is that we basically do everything that big companies do in terms of equipment, products, the fulfillment of regulatory requirements, except that we price it lower," Green says.
"When we got started, intraocular lenses cost around $300 a piece. Now it's down to about $150, and our pricing is anything from $3 to $4. The supply of the affordable lenses has made it possible for programs to be able to do better surgery and pass the cost along to the patient, because it is affordable."
Aurolab is now one of the biggest manufacturers of intraocular lenses in the world, producing more than 700,000 a year, as well as suture needles, pharmaceuticals and surgical instruments such as blades. Around a quarter of its production goes to commercial companies, who pay slightly higher prices.
Aurolab "has to make enough money not only to survive but to grow the operation," Green says. "It is trying to cut margins all the time to keep the product affordable for end users."
The philosophy goes all the way down to the Aravind Eye Hospital, which runs five facilities and operates on around 240,000 people a year.
Slightly less than half the patients pay nothing, around a fifth pay two-thirds of the operation's cost and the remainder pay "well above" this, based on a price equating to around one month's personal income.
"With that model they are able to be very profitable and plough back their profitability into the operations," Green notes.
"It's different from just having corporate social responsibility. It's using what they have to be socially transforming in a way that brings about a sea change in how a given market functions."
What do you think?
It is an commendable initiatives. Please keep it up. As a development worker if I could be of any help to you, please let me know.
Why shouldn't poor people who make most of the NGOs operate as companies? Does poverty mean that they can't earn profits? What is wrong with charities making money and then pumping it back to causes dear to them?
I feel we have allowed the poor to remain so to enable the banks/ moneylenders to remain rich.
Very good case -- social objectives combined with business orientation.
First of all, I would like to show appreciation for your efforts. Even though you have reduced your prices to a considerable extent, the majority of our population cannot afford it. Hence, state intervention is required to provide a few necessary things like healthcare, education, social security etc.
I fully endorse that charities will have to work in a professional manner to earn and to distribute prosperity to the poor .It will be a good idea that they function as companies with full transparency and commitment to the cause of society.
Instead of paying income tax to the corrupt officials, why don't the multinational companies fund brilliant minds to start new businesses? Will this not benefit the societies?
I think that charity organizations shouldn't operate as companies, because there is a belief that companies are set up for profit seeking only.
I really do think charities can operate as companies for the poor and the needy, especially because when all we see around us is poverty and starvation.
Our world need more of this kind of extremely positive action (and activists).