The Breath of Life for Capitalism?

 15. Juli 2009, 18:55:26 | Chris Meyer & Julia Kirby, HBR Blog

Dial 1298 for Ambulance, a new 911-style emergency dispatch service in Mumbai and neighboring cities, is a for-profit company with an intriguing business model. (Prior to Dial 1298, India’s cities had no such services, despite governmental efforts to establish them in the past.) Its financial success derives from the fact that it is linked to a separate and codependent nonprofit foundation. The foundation, called Ambulance Access for All Foundation India (AAA), procures and maintains ambulances solely for use by Dial 1298. And in turn, Dial 1298 takes them out on a pay-by-the-sip (or in this case, by the trip) basis, incurring no price penalty for its lack of direct ownership. Any manager from a capital-intensive business will appreciate what a boon this is to the company’s bottom line. Imagine if Hertz or Avis could reap the earning power of a fleet of cars without ever having to lay out the capital to buy them. What if GM could simply shed the encumbrance of all its factories and still have access to them to operate with scale efficiency? It could probably be profitable, too. (Note to self: write congressman.) As a Foundation, AAA is able to attract philanthropic support. Benefactors like Rotary International, as well as other businesses, donate ambulances because they value the social benefit of more accessible ambulances. Dial 1298 also benefitted from the generosity of the London Ambulance Service, which shared its operational systems and know-how. Would outsiders be as keen to lend their support if they saw Dial 1298 making money hand over fist? Probably not. The company must tread the line between being too profitable to deserve soft funding and being too strapped to grow. Sweta Mangal, CEO of Dial 1298 and one of its five founders, told us in a recent interview that she loved the time she spent as a student in the US, but wasn’t inspired to launch a new venture there. The trails had already been blazed, and everything about doing business seemed cut and dried. “I missed the messiness of India,” she said. So she and her colleagues came back, plunged in, and invented their own way. Click here for a snippet of that interview: It’s a cleverly improvised arrangement, and it probably would never have gotten off the ground if not for the passion of its founders. But it’s consistent with the trend in philanthropy–which is not simply to pay for services, but to invest in capabilities – and it’s working so well that we have to wonder: where else is it being applied? Where else could it be?

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