Tri-Sector Business Models
Successful tri-sector business models are ones in which each sector—private, social, and public—contributes resources to and benefits from the model, for the overall good of society. The models can be led by companies, nonprofits, or government agencies. These symbiotic relationships vary in levels of commitment, but one shared characteristic is at the heart of every tri-sector solution: each sector benefits.
Below are examples of successful tri-sector business models.
COINSTAR
Leveraging tri-sector resources enabled Coinstar to become the de facto national coin recycling system.
Coinstar Kiosk
The seeds of tri-sector innovation started at Coinstar, which leveraged assets from the nonprofit and public sectors and grew into a billion-dollar company. By seeing this country’s $150B coin usage as a “market,” Coinstar has saved the U.S. government billions and has raised $150M for nonprofits
The ubiquitous kiosks in your local grocery store were born from a simple question: How could we leverage the 8 billion dollars in uncirculated coins collecting dust on people’s dresser tops in a way that would benefit across the public, private, and social sectors? The answer was a true tri-sector win-win-win, where each sector reaped the benefits.
Private Sector: Today, Coinstar has processed trillions of coins and billions of dollars for millions of people, providing a valued consumer service while increasing spendable cash power.
Social Sector: Coinstar kiosks have raised over $150M in donations to nonprofits, including Red Cross and UNICEF, via joint-marketing efforts.
Public Sector: The coins collected nationwide have saved the U.S. Federal Reserve and U.S. Mint billions by reducing manufacturing and distribution costs.
After the success of Coinstar, its founder Jens Molbak realized that tri-sector business models could be applied to many types of organizations, with the potential to help transform society. He created NewImpact as a public good, 501c3, to test this hypothesis, and has since helped apply tri-sector innovation to many different impact areas.
PROPEL
Fintech organization committed to building technology designed to help low-income Americans improve their financial health
This New York-based company is revamping the $70B US Food Stamp (SNAP) program by using a tri-sector business model. It currently serves over 6M people monthly and is growing exponentially.
Concerned with issues challenging the over 45 million food stamp (SNAP) recipients, Propel created an app called “Providers,” which enables users to track account cash flow through their phones and also access relevant discounts, download coupons, and find resources such as food pantries, farmers’ markets, and other social services. Users also benefit from double-SNAP value at Farmer’s markets, where they can purchase twice the amount of fresh, healthy foods at half the cost, and also qualify for summer meal programs.
Propel’s Providers App
Private Sector: Propel software engineers developed a powerful technology platform providing millions of food stamp users with a tool to not only track their SNAP benefits, but also access money-saving coupons and resources. Propel was able to expand their user base, while the app, in turn, offered increased spending power to SNAP users through additional programs and offers.
Social Sector: The model enhances the ability of nonprofits to reach their target demographics with region-specific social sector resources, such as job training, childcare, and other low-income support services.
Public Sector: By leveraging Department of Agriculture assets, Propel is able to improve the efficiency of the SNAP program, saving the government potentially billions of dollars annually.
Propel could have taken a more “inside the box” approach from problem to solution, by creating an app that simply tracks EBT balance for food stamp users. But by viewing the problem through a tri-sector lens, Propel expanded opportunities, discovered additional resources, and provided more benefits to individuals and organizations across all three sectors.
“When we met Jens, Propel was very much still in its infancy. We'd already identified a user-facing problem to solve (it was surprisingly hard for EBT cardholders to check their balances), and we'd prototyped a solution, but we hadn't really been thoughtful about the business ramifications and how we could offer more value to our users beyond EBT balance checking. Jens introduced the concept of a tri-sector business model to us, and it immediately resonated as a blueprint for how we could build an enduring organization, one that leverages the unique resources and strengths of the private, public, and nonprofit sectors.
Since Propel has chosen to focus on the financial challenges faced by low-income Americans, many of whom utilize government benefit programs and need to navigate nonprofit resources, the tri-sector model has been the obvious choice of how we'd build our organization.” - Jimmy Chen, Founder and CEO, Propel
Propel’s current investors include Kleiner Perkins, and they have recently secured a newsworthy $50M in Series B funding led by Nyca Partners and joined by other investors including Chase, Andreessen Horowitz, and JPMorgan Chase.
Read more about Propel’s powerful growth and success:
Fintech Startup Helps Families Keep Track Of Food Stamps And Other Government Benefits, Raises $50 Million In Series B Round Led By Nyca Partners - Forbes: Mar 8, 2022
Read more about Jimmy Chen and how the Propel app is working to breaking down barriers between government aid programs and the people they are designed to assist:
How Tech Is Helping Poor People Get Government Aid
- Forbes: Dec. 8, 2021
MoCaFi
Breaking barriers to wealth building for all people, regardless of race, circumstance, or financial position.*
When CEO Wole Coaxum launched MoCaFi, it was with a singular goal in mind: closing the racial wealth gap by providing financial access and services to the 50M U.S. population of unbanked and underbanked. This Newark-based company is increasing credit and lending to Black and Brown urban communities by leveraging data from the $45B Section 8 Housing program. It was able to do so by adopting a tri-sector approach that repurposed existing resources from all three sectors, strategically re-aligned the resources, and structured its business model to align the self-interests of each sector.
Private Sector: MoCaFi has become a leader in product innovation, uniting purpose and profit by creating a sustainable business model providing financial access and services to an under-served demographic.
Social Sector: Social organizations such as United Way, Covenant House, the YWCA, and others have partnered with MoCaFi to extend reach to their clients and directly distribute MoCaFi’s prepaid cards and credit-building products, producing greater outcomes for the people they work to serve.
Public Sector: By partnering with local cities and accessing government databases, MoCaFi is able to reach more individuals and provide more benefits, creating pathways to economic mobility.
MoCaFi continues to grow, creating financial products and services designed to meet the needs of the communities it serves. Its investors include Radicle Impact, Newark Venture Partners, and MasterCard.
Read more about how MoCaFi continues to narrow the racial financial gap:
Ex-JPMorgan Chase Exec Has A Plan To Narrow Racial Wealth Gap In Every Major U.S. City
-Forbes: Jun 18, 2021
[* from MoCaFi Website]
UPTRUST
Creating communication software designed to help people navigate and successfully exit the criminal justice system.
Uptrust, a San Francisco-based private technology company, has made it their mission to keep individuals out of jail. Cofounders Elijah Gwynn and Jacob Sills witnessed too many individuals being incarcerated for the wrong reasons, such as missed court dates due to transportation issues, fear, or simply forgetting. These real challenges can result in life-altering consequences, so Uptrust adopted a tri-sector approach to solving the problem, leveraging public sector databases and working closely with social sector organizations to provide clients with a valuable and effective communication tool.
The Uptrust app enables attorneys, probation officers, and other officials to directly communicate and build relationships with their clients, while also connecting them to valuable community-based social service resources and opportunities.
Private Sector: Uptrust’s purpose-driven software engineers created a communications tool designed to meet the needs of public defenders working to keep clients out of the prison system, while offering additional resources and expanded opportunities.
Social Sector: The app contains several wrap-around services enabling social sector organizations to have a more direct reach to their recipients, providing resources such as financial services, preventative healthcare, and job opportunities.
Public Sector: The app effectively reduces the workload of overburdened public defenders. And, by keeping jails clear of unnecessary arrests, has saved 8M in tax dollars and has resulted in a 50% reduction in failure-to-appear rates.
Uptrust is funded by the Draper Richards Kaplan Foundation, Schmidt Futures, Heising-Simons Foundation, Robert F. Kennedy Human Rights, the De-carceration fund, Luminate, Stand Together Venture Lab, and others.
Read more about Uptrust’s growth and seed funding:
These stories exemplify tri-sector solutions in which all three sectors reap the benefits of collaboration. There is no one-size-fits-all formula as to the level of involvement of each sector, and tri-sector solutions are designed to be scalable, meaning they can be applied swiftly to a wide variety of impact areas. We actively encourage entrepreneurs building their business models, and members of existing organizations, to consider taking a look at their own business plans through our unique tri-sector lens.
For more information and examples of NewImpact tri-sector work, please see our Innovation Projects page.
Interested in finding out more about tri-sector innovation or how your organization could benefit from a tri-sector business model? Contact us here!
