The word “sustainable” has two distinct, though related meanings in the realm of social entrepreneurship and impact investing. First, a business that is environmentally friendly and/or supports a more just society is often said to be sustainable and, second, a business that generates revenue and is financially self-sustaining and therefore not reliant on donations is also said to be sustainable.
While, I suspect, some use the term intentionally to cover both concepts, such use, in my opinion, is so vague as to rob the word of all its meaning.
It appears to me that the word sustainable was first used to apply to a business to convey the idea that the business is not only environmentally sustainable but that it is socially sustainable, that is that it doesn’t exploit employees, customers or other stakeholders, especially any who may be otherwise disadvantaged. For expediency, I’ll use the short-hand environmentally and socially sustainable to describe this use.
Using sustainable to describe a business as being financially self-sustaining on the other hand is a relatively new use and one that is confusing. First, the same group of people—the social good community of nonprofits, social entrepreneurs, impact investors and philanthropists—have been using sustainable (and more commonly sustainability) to describe businesses that are environmentally and socially responsibility.
Additionally, the for-profit world, apart from social entrepreneurs, has never used the term sustainable to describe a for-profit business’s ability to generate the required cash flow to support its operations without outside capital, yet it is exactly that feature of a for-profit business that social entrepreneurs wish to invoke when they use sustainable in this context.
The need for a term to describe a social enterprise as being financially self-sustaining is real, however. In the nonprofit world and among those deeply and primarily committed to a social mission, the idea of making a profit for its own sake is less important and to some repugnant. The appeal of a business model, however, that doesn’t require fundraising by constantly asking for donations—large or small—is huge. So, in an effort to avoid invoking the word profit, especially when trying to describe activities within a nonprofit entity that would make it more financially self-sustaining the word “sustainable” has become a clumsy short-hand.
The overlapping and somewhat incongruent definitions for the single term sustainable robs the word of its meaning in either context. If you simply say to an investor that you are creating a business that is sustainable, it isn’t at all clear what you mean. If the word you choose to use doesn’t convey a clear and definitive meaning in a reasonably complete context we need new words.
Therefore, I would argue for using the term self-sustaining to refer to the idea of being financially self-sustaining as you can reasonably infer from the typical context of the reference what is meant. I would also like to preserve the word sustainable as a reference to environmental and social sustainability.
If we adopt these two phrases as I propose, our ability to communicate these two critical ideas central to the social entrepreneurship movement to one another and to outsiders would be significantly enhanced.
So, what do you think? Does it make sense to socialize this idea a little bit to see if we can develop clearer language within our community?