The term “social enterprise” can mean a lot of different things. Where on the spectrum does your favorite one fall?

“What exactly is a social enterprise?” It’s a question that comes up a lot, probably because there isn’t a consensus. Generally speaking, “social enterprise” means using business tools to address a social need. This concept may or may not overlap with “social innovation” which means addressing a social need in a new, groundbreaking way. While it’s possible to use business tools without using them innovatively, and it’s possible to innovate without using business tools, the posterchild for this sector works at the intersection of these two concepts.

Yet for most people, “social enterprise” winds up being the broad, default phrase used to cover both concepts. For better or worse, that expansiveness has snowballed the term’s popularity (the bigger the bucket, the more stuff you can throw in there), but has also led to trouble agreeing on a definition. The various “social enterprise” definitions can include some or all of a number of models: small nonprofits using entrepreneurial practices on one end of the spectrum; big, mainstream companies using environmentally sound practices, treating their employees particularly well, and/or donating a portion of their proceeds to pre-existing charities on the other. In the middle you’ll find other definitions, with plenty of debate over what belongs, including the degree to which an entity’s primary activities must tie to its a social mission, the necessity of including social commitment in an entity’s formational documents, and whether a side-project of an existing organization should count as a “social enterprise.” Meanwhile, some definitions provide for overlap. Bottom line: it’s confusing.

As a social enterprise consultant and lawyer, I’ve spent a lot of time trying to think about how to make sense of the various organizations we sometimes call “social enterprises.” Here’s how I categorize the spectrum.

1. Entrepreneurial Nonprofit

These are tax-exempt entities supported, at least in part, by earned income (although I’ve seen it argued once or twice that an innovative nonprofit idea, even without earned income, makes the cut). To reach entrepreneurial nonprofit status, these organizations can either (a) implement a revenue-generating program, or (b) adopt an overall entrepreneurial business model.

Funding

Their main funding source is typically grants from foundations and donations from the general public (the cornerstone of the tax-exempt nonprofit model), although in some circumstances loans from banks, or from foundations in the form of program-related investments, are also possible.

Examples

(a) Girl Scouts of America, with their much-loved cookie sale program; (b) Daily Table and With Love L.A., retail grocers bringing healthy, affordable food options to neighborhoods that don’t otherwise have access.

2. Non-nonprofit

Never heard of this one? I’m not surprised — I made it up, for the sake of clarifying often-overlooked yet meaningful distinctions. These organizations start with social mission, much like a nonprofit, and then figure out a way to make it work outside the restrictions of a tax-exempt model — in other words, they’re a for-profit business. They exist primarily to address a social issue (“mission-first” or “mission-centric”), with revenue-generating activities intertwined with change-making activities.

They don’t form as for-profits because they are in business “for profit”; rather, it’s a decision that allows for higher-capacity growth, sustainability, innovation, and risk-taking — all components of highly successful entities in other sectors — than is generally permitted under the regulations that come with tax-exemption.

Funding

The ideal funding source here is program-related investments from foundations, which provide low-cost capital at a critical early stage and prevent compromising the fullest expression of mission for financial returns down the road. In some cases, grants from foundations or investments from traditional angel investors or venture capital firms may also be possible.

Examples

Everytable, seeking to eliminate food deserts through affordable grab-and-go meals with a first-of-its-kind sliding scale model; and InvestED, opening access to capital to low-income entrepreneurs globally with a creative combination of edtech and fintech. Others that fall in this category include Generation Genius, Amplio Recruiting, Nightingale Apps, Tickleberry Place, Mini City, Neopenda, and Drinkably.

3. Socially Responsible Business

This is the biggest bucket of them all, and includes benefit corporations, B Corps, and all things double- and triple-bottom-line. While these types of entities can be created primarily to address a social issue, it’s more common that this categorical distinction is based on the adoption of practices benefiting community, employees, or environment (generally more aligned with the idea of doing business better than solving social problems). In the case of benefit corporations and B Corps, this distinction is included in the company’s formational documents, along with a provision stating that they are legally permitted to honor this distinction (whether that be company culture, responsible sourcing, etc.), even at the expense of shareholder profit maximization.

Worth noting here is that benefit corporations are a legal entity formed at the state level, whereas B Corp is a certification available to other for-profit entities (such as corporations and LLCs). Double-bottom-line denotes a focus on social returns alongside financial ones, while triple-bottom-line denotes a focus on environmental, social, and financial returns.

Funding

Primary funding options here include traditional angel investments and venture capital, as well as program-related investments in some circumstances.

Examples

THRIVE Farmers Coffee, on the more mission-centric side; Ben & Jerry’s and Patagonia, on the more build-a-better-business side.

4. Give One, Get One / Donate Portion of Proceeds model

These are companies that direct some portion of their business toward charitable work, and are almost always layered into the preceding and subsequent categories (falling on either side of it in the diagram above). Revenue-generating activities are generally wholly separate from change-making activities and, in many cases, the social component is an add-on to the company’s core business. Because these models generally feed back into traditional nonprofit system, I break it out as a separate subcategory.

Funding

Same as above

Examples

TOMS, Warby Parker, Good Spread, Newman’s Own.

5. Awareness Brand

While some will expand these terms to include virtually everything in the previous two categories, we think they also capture a different type of company not yet mentioned — those that sell products designed to engage community and bring awareness to a social issue, but whose primary activities don’t necessarily address the root cause of the social problem they’re bringing awareness to.

Funding

Same as above

Examples

Beautiful in Every Shade, So Worth Loving.

6. Everything else

There is no one size fits all, and not every entity will fit neatly in these categories (particularly given the constantly evolving nature of this sector). The social enterprise employment model, which uses the business to provide meaningful work and empowerment to a disadvantaged population (like Bitty and Beau’s Coffee), is a component that can be layered into any of the categories discussed above

Then there’s outliers like Fruitcraft (formerly the California Fruit Wine Company),  which is pioneering an entirely new model they call social value enterprise (SVE). While an untrained eye might classify this as a socially responsible business (group 3 above), the folks behind Fruitcraft are very clear about striving for more — namely using market forces to incentivize and reward thinking about the whole — with three defining aspects they claim put SVE in a category of its own:

  1. democratic ownership by employees, (including accountability and decision making within the company)
  2. no possibility of sale (keeping the company permanently stewarded by the workforce for the benefit of society)
  3. unleashing 100% of profits for social good

Don’t get caught up in the labels

While there are a lot of options out there, at the end of the day, the label doesn’t really matter, except for those that have tax and legal considerations (talk to a professional about those). What matters is that you’re creating something meaningful — whatever model or business idea you’re considering, whether it’s one on this list, or something else altogether. The moral of the story: If you feel a tug from deep inside to do something good, just do. I bet you’ll wind up creating something beautiful and adding social value in a way that only you can.

#socialenterprise #socialfinance #mba #wbs #toronto #ontario #consulting #sdgs #sustainability #ESG #impactinvesting #venturecapital #privateequity #thesectorinc #bradfordturner #peace #love #change #socialentrepreneurship

Change Creator™ has identified 9 working social enterprise business models that bring value to customers. As they state, there are 3 measures that define if a business model in generalis successful or not: the model’s ability to generate profit for its owners, its ability to generate positive change in the world, and its ability to achieve a balance of profit and positive change. The latter is applied to social enterprises.  A social business model is therefore a structure, design or framework that a social business follows in order to bring about a positive change while maintaining healthy financial returns.

According to a study by Wolfgang Grassi, there are 9 types of social enterprises.

1. The entrepreneur support model that sells business support services directly to the entrepreneurs in its target population.

2. The market intermediary model that helps their clients by marketing or selling their clients’ products or services for them.

3. The employment model, in which a social enterprise provides their clients with job opportunities and job training.

4. The fee-for-service -model where a social enterprise charges the customer directly for the socially beneficial services it provides.

5. The low-income client model where a social enterprise generally offers social services directly (as in the fee-for-service model) while focusing on low-income clients.

6. The cooperative model, a fee-based membership organization that provides member services to a group that shares a common need or goal.

7. The market linkage model that focus on building relationships and otherwise connecting their clients with markets for their clients’ products and services.

8. The service subsidization model that funds social programs by selling products or services in the marketplace.

9. The organization support model also sells products or services to fund social programs (as the service subsidization model). However, the social programs they fund are part of a separate, parent organization.

As there are many variations of these models, they can provide ideas on to how to create sustainable benefit to society while balancing your finances.

Read more on the 9 business models from the original research or the story by Change Creator™

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More and more organizations are working on sustainability and social impact, and link this to the Sustainable Development Goals (SDGs): the 17 sustainable development goals that were launched by the UN in 2015 as an action agenda up to 2030. The SDGs offer a good starting point for sustainable strategy, measuring results and reporting: but where do you start? In this blog series, we share some examples of our customers and how we support them to anchor SDGs more firmly in their organizations.

In this blog: an SDG strategy and Theory of Change for Oneplanetcrowd and StartGreen Capital. About Oneplanetcrowd and StartGreen Capital Oneplanetcrowd and StartGreen Capital stimulate the transition to a sustainable and inclusive economy by financing innovative entrepreneurs and facilitating investors. They offer ‘more than money’ (in addition to financing, including business support, network and strategic advice), helping entrepreneurs to contribute to the creation of a sustainable society for people and the environment and, more specifically, to one or more of the Sustainable Development Goals.

Theory of Change as an SDG strategy The wish of Oneplanetcrowd and StartGreen was to make it more explicit how the investments and activities of both organizations contribute to the SDGs. The reasons? On the one hand to clarify the strategy and vision internally and to link objectives to this, but also to communicate clearly to external stakeholders who Oneplanetcrowd and StartGreen Capital are there for and how they create social value.

Sinzer thus helped StartGreen and Oneplanetcrowd to draw up a Theory of Change at the organizational level: a visual description of the activities the organization undertakes, and how these lead to certain effects (outcomes) and social objectives in the short and longer term.

Strategy and then?

The next step is to translate the strategy and Theory of Change into measurable indicators and targets to monitor and report on the realization of the social objectives, more about this in the next blog of this series.

Knowing more?

Would you like to know more about Oneplanetcrowd’s vision on SDGs, and the reason and process surrounding the SDG’s strategy and measurement?

Then read Oneplanetcrowd’s blog, including an interview with Sinzer, here:

https://www.oneplanetcrowd.com/nl/blog/zo- maken-we-uw-en-onze-impact-meetbaar

To work with The Sector Inc & Sinzer in Canada, contact us: info@thesectorinc.ca

#socialfinance #socialentrepreneurship #impactinvesting #sdgs #wbs #mba #sustainability #philanthropy #toronto #love #peace #change #venturecapital #thesectorinc #bradfordturner

You are ready to launch a social venture.

You have an idea for a business activity that will generate a blend of social and/or environmental benefits and revenues for your organization.

Under current legislation in Ontario, there is no legal structure that combines some of the benefits of both the for-profit and not-for-profit worlds.

Legal structures in Canada, the U.K. and the U.S.: “B” Corporations and Community Interest Companies

A number of hybrid structures have emerged in the U.K. and the U.S.: the “Community Interest Company” (“CIC”) in the U.K.; and the low-profit, limited liability corporation (“L3C”) and the “Benefit Corporation” (“B Corporation” or “B Corp”) in the U.S., the latter of which has expanded to Canada.Experts believe that these legal structures provide better opportunities for social ventures to attract investment and scale their operations. Research conducted by groups such as Ogilvy Renault LLP and SiG@MaRS have led to the the adaptation of the B Corp structure to the Canadian Social Business landscape. Their recommendations to the Ontario Ministry of Research and Innovation can be read here.

Incorporating your social venture within CanadaYour social venture must carefully consider the current legal environment and existing legal structures and requirements associated with for-profit, not-for-profit, registered charities and co-operative corporations before you incorporate in Canada.

You will need to hire qualified legal counsel to assist with the process, and should choose a firm that is knowledgeable and experienced with either social enterprises and/or social-purpose businesses, depending on your situation.

Your organization you should ask the following key questions: What is the underlying nature and intent of the profit-making activities of your operation? What will your operation’s profit be used for?

Regardless of which business structure you choose, you may consider applying for certification as a B Corp if your business is able to qualify. The B Corporation website provides an excellent overview of reasons to join their network.

Social businessIf you expect that there will be a broad range of profit-making activities to generate levels of profit that are similar to traditional businesses or slightly less (due to your social or environmental commitments), then you will likely choose a for-profit organization structure and become a social-purpose business.

Social enterpriseIf, in the course of achieving a social mission, your organization generates profits through profit-making activities which meet the definition of “related business” (as determined by the CRA), you will likely choose to be a social enterprise in a registered charity legal structure.

“Related businesses” are defined as activities related to or ancillary to the charitable objects but can also be unrelated activities as long as substantially all (more than 90%) of the persons employed in the profitable activity are volunteers and not remunerated. For example, a storefront operated by a charity and staffed by its volunteers, selling donated goods may be considered a related business.

Social enterprises outside “related business” in a charityIf your organization is an innovative social enterprise that wants to scale beyond the limits set by “related business,” grants and donations, you will likely rule out a registered charity structure and consider the not-for-profit organizational structure (“NFP”).

NFPs can engage in profit-making activities provided that the activities are compatible with the not-for-profit objects of the NFP and the profits are used exclusively for promoting its stated goals. Indicators that an NFP may be operating an impermissible profit-making business include the following:

1. operation in a normal commercial manner

2. goods and services are not restricted to members and their guests

3. operation on a profit basis rather than a cost-recovery basis

4. the business is operated in competition with taxable entities carrying on the same business.

CooperativesIf you are an organization that will provide a centralized set of services to a group of members who will have an equal vote on how the organization will be operated, and the business activities of the organization will be operated as nearly as possible on a cost recovery basis, you will likely choose a Co-operative Corporation structure.

What legal structure should you choose?Today, there is no right or wrong answer to whether you should establish your social venture as a not-for-profit social enterprise (stand-alone or part of a registered charity), a for-profit social-purpose business, or a co-operative.

In the current legal environment, social entrepreneurs need to work with legal counsel, their boards and advisors to determine which legal structure works best for their situation. Where possible, you can then add ancillary agreements and processes to make the structure work better for your organization and your stakeholders.

Interested in learning more about social innovation and social entrepreneurship? Contact info@thesectorinc.ca

ReferencesBridge, R., and Corriveau, S. (2009, February). Legislative Innovations and Social Enterprise: Structural Lessons for Canada. BC Centre for Social Enterprise. Retrieved November 10, 2009, from www.centreforsocialenterprise.com/f/Legislative_Innovations_and_Social_Enterprise_Structural_Lessons_for_Canada_Feb_2009.pdfCarter, T.S., and Man, T.L.M. (2008, October 24). Canadian Registered Charities: Business Activities and Social Enterprise—Thinking Outside the Box. Presented at National Centre on Philanthropy and the Law Annual Conference: Structures at the Seam: The Architecture of Charities’ Commercial Activities.https://thesectorinc.ca/wp-content/uploads/attachments/tsctlm0507.pdfMaRS Discovery District. Legislative Innovations. [white paper]Imagine Canada NonProfit Library Commons. Establishing a Charity or a Nonprofit Organization. Retrieved November 10, 2009, from  nonprofitscan.imaginecanada.ca/en/tir_establish_charityImagine Canada NonProfit Library Commons. Legal and Regulatory Issues. Retrieved November 10, 2009, from nonprofitscan.imaginecanada.ca/en/legal_regulatoryIndustry Canada. (2009, September 1.) Not-for-Profit Organizations (Canada Corporations Act, Part II). Retrieved November 10, 2009B Corporation. Retrieved November 10, 2009 from www.bcorporation.netCommunity Interest Companies. Retrieved November 10, 2009 from www.cicregulator.gov.uk/Vermont Secretary of State: Corporations Division, Low-Profit Limited Liability Corporation – www.sec.state.vt.us/corps/dobiz/llc/llc_l3c.htm – Vermont Secretary of State: Corporations DivisionCanada Revenue Agency. (2001, August 2.) Bulletin IT-496R Non–Profit Organizations. Retrieved November 10, 2009Co-operative Corporations Act (R.S.O. 1990, c. C.35), ss. 143, 144.CRA, Bulletin RC 4108 Registered Charities and the Income Tax ActCharitable Gifts Act (R.S.O. 1990, c. C.8), s. 2(1).

#socialenterprise #socialfinance #ESG #philanthropy #consulting #sdgs #thesectorinc #wbs #mba #bradfordturner #impact #impactinvesting #love #peace #change

Social enterprise businesses (SEB) emerge from industries like clean technology, health, education, finance and micro-finance, to name a few. No matter what the industry, innovative, non-traditional business models that capitalize on socially and/or environmentally beneficial opportunities have arisen.

A business model describes how the program or initiative will work and how it will sustain itself. Social enterprises and social purpose businesses have the added goal of generating social value (measurable impact) in addition to the economic value (revenue).

The key difference between social enterprise and traditional business models

In a SEB, the social mission is core to the business model. A viable SEB business model consists of a clearly defined social mission guiding the strategy, value proposition and best practices.

The business model makes the case that the SEB can achieve its intended social impact and sufficient profit simultaneously. A strong SEB business model will be built where these two goals intersect successfully—where both social and economic value creation result.

Social enterprise business model examples

The key commonality for social enterprises is that the company’s social and/or environmental goals are not add-ons or marketing ploys—they are part of the DNA of the business. Some examples include:

  • One company may focus on changing an industry by making it more sustainable, such as renewable energies.
  • One company may strive to have a targeted economic impact and be located in depressed areas or grant access to products to deprived populations (such as medicines in the developing world).
  • Some companies link their mission to their own sustainable internal processes and operations.
  • Specific examples like IceStone, a glass recycling company that produces consumer products, demonstrate endless ways social and economic goals work together.

How not to build a strong business model

The top reasons businesses fail (including social purpose businesses) are:

No viable market

You have a great idea for a service or product that you think will change the world, but you have to make sure that someone will pay for it.“Build it and they will come” has proven to be a failed business model. However, if the incubating, parent, NPO, operates and possess scale in, an established ecosystem, this risk can be mitigated.

Lack of Marketing Expertise

If your target customer does not know about you, they cannot buy from you. Determine what potential tactics work for your industry, whether they include advertising, direct marketing, trade shows, websites and blogs. Build demand for your product. However, if the parent organization has internal marketing expertise and budget to retain additional capabilities, this risk can also be reduced.

Out of touch with customers

Be as close to your customer as possible– focus on good quality products and services and try to satisfy your customer (both the economic buyer and the end user) with your offering. Again, if the parent NPO’s constitute base is strong and can be converted, in a value-added relationship, this risk can also be minimized.

Ineffective or non-existing partnerships

Picking the right partners and leveraging them effectively is key to successfully implementing and scaling your business model. Finally – it’s all about, the ecosystem.

Expert advice on how to create sustainable social businesses

Your primary goal is to create a business model with a product or service that people will want and an effective way to sell it.

“Just because you have a social mission doesn’t mean you have a right to exist in their marketplace. To earn that place, approach your social mission with the heart of a bean counter, refining it until you have a goal you can achieve.”—Jay Coen Gilbert, co-founder of B Lab.

Often social entrepreneurs choose a for-profit model to provide the capital to grow the business more rapidly.

“We could have done it as a non-profit over a hundred years, but if we wanted to do it in five or 10 years, then we believed it needed to be fueled by profit. That’s the way to grow.”—Sam Goldman, co-founder, D.Light design.

Choose a business model that fits your mission and covers your costs.

Better World Books collects textbooks donated by students and resells them online. Initially, the company gave 15% of its revenues to charities that combat illiteracy.

But after a period of time, the company began recording losses and could not contribute to the employee profit sharing plan. Management had to make a tough decision: keep more profits by cutting to 7.5% the share of revenues for its non-profit partners, fund the profit sharing plan and then split the remaining profits 50/50 with those partners.

As you grow, ask yourself if the economies of your business work in favour of your mission or against it?

Sometimes the bigger you get, the less expensive your product may become to produce based on the economies of scale.

Target customers who value the kind of social impact you intend to create.

A great example is Newman’s Own all-natural food products. The fact that all of the profits are donated to charity likely attracts customers who are deciding between products that are of equal quality and price.

Not all social problems respond well to the for-profit model—for example, childhood education.

“If you set it up as a business, you might be able to raise money more quickly and grow more quickly. But if you want to be profitable, you might find that you have to make choices that diminish the quality of your program and then children won’t learn to read as quickly,“—David Bornstein, author, How to Change the World

Like any entrepreneur, you should be willing to change your business model if necessary.

Consider which legal structure makes the most sense for your business.

Consider quantifying the impact of operating your social purpose business on a“social or environmental basis” rather than a“regular basis.”

For example, if you have extra training or support costs for your employees or if you have to buy more expensive product to meet your environmental goals, you can quantify the difference and use that input to manage the potential for lower returns when speaking with for-profit investors. You may also consider seeking non-repayable funding like grants from innovative non-profit funders as financing for the social or environmental differential for your business.

For more information about developing a business model, download the MaRS workbook, Business model design. The information and exercises will help you design a business model by working through the key variables in executing a market strategy—competition, partnership, distribution, pricing and positioning.

Interested in learning more about social innovation and social entrepreneurship? Contact: info@thesectorinc.ca

Links and sources:

Alboher, M. (2009, March 4). A Social Solution, Without Going the Nonprofit Route. The New York Times. Retrieved April 27, 2009, from http://www.nytimes.com/2009/03/05/business/smallbusiness/05sbiz.html?_r=2&ref=businessStrategies: Mission Possible. (2007, December 14). BusinessWeek. Retrieved April 27, 2009, from48.htmDees, J. G.& Anderson, B.B. (2003). For-Profit Social Ventures. International Journal of Entrepreneurship Education (IJEE), Senate Hall Academic Publishing.

#socialfinance #socialenterprise #socialinnovation #sustainability #philanthropy #fundraising #sdgs #CSR #ESG #impactinvesting #wbs #mba #thesectorinc #bradfordturner #love #peace #change

Social enterprises apply business solutions to social problems. The ultimate goal is to achieve sustainability by enabling non-profits to support themselves financially in innovative ways instead of relying solely on grants and donations. Since there are no shareholders in a non-profit organization, the profits from the related social enterprise are completely re-invested in the work of the organization.

The emergence of revenue-generating activities for non-profits has created a new operating model where business principles, market characteristics and values (competition, diversification, entrepreneurship, innovation, and a focus on the bottom line) co-exist and work with traditional public sector values like responsiveness to community and serving the public interest. Essential to the success of a social enterprise is an effective business model.

A business model includes two key elements:

    1. an operating strategy that includes internal organizational structure and external partnerships that are crucial for creating the organization’s intended impact; and,

2. a resource strategy that defines where and on what terms the organization will acquire the resources (financial and human) it needs to do its work.

The business model for a social enterprise is the channel that the social entrepreneur converts inputs into outcomes; the generation of both social value (measurable impact) and economic value (revenue).

A social enterprise can be integrated with the non-profit organization in one of several ways:Embedded:

      •  The enterprise and the social program are one and the same
      • The business is created to serve clients (central to the mission)

Integrated:

      • The business activities overlap with the social programs
      • The business is created as a funding mechanism and to expand/enhance the mission of the organization

External:

      • Social and business activities are separate and may or may not be related to the mission of the organization
      • The business is created mainly as a funding mechanism to support social activities

Virtue Ventures provides an excellent summary of the various types of business models that are summarized in the table here. These social enterprise business models can be applied equally to institutions, programs, or service delivery. These models are designed in accordance with the social enterprises’ financial and social objectives, mission, marketplace dynamics, client needs or capabilities and legal environment. Most of the business models are embedded within the organization.

If you want to launch a social enterprise you should ensure that:

      1. It is a good fit with the agency
      2. You know your industry
      3. You treat your enterprise as a business
      4. You hire the right people
      5. You set realistic expectations
      6. You improve your financial literacy

Source: Doing Well While Doing Good: How to Launch a Successful Social Purpose Enterprise.www.torontoenterprisefund.ca

You should also consider the following questions:

      • How can you tell if your group is ready to embark on a social enterprise?
      • What are the steps in a social enterprise planning process?
      • How do you identify and assess enterprise opportunities?
      • How do you plan for a social enterprise?
      • How can you measure social returns in a business setting?
      • What do you need to know about the legal context?

Source: www.enterprisingnonprofits.ca , The Canadian Social Enterprise Guide

For more information about developing a business model, download the MaRS workbook, Business model design. The information and exercises will help you design a business model by working through the key variables in executing a market strategy—competition, partnership, distribution, pricing and positioning.

Interested in learning more about social innovation and social entrepreneurship? Get in touch: info@thesectorinc.ca

Read next: Legal structures for social ventures: Social enterprise, social business and cooperatives in Canada

References

Virtue Ventures. Retrieved April 27, 2009, from http://www.virtueventures.com/setypology/index.php?id=MODELS&lm=1

Dooling, A., Liburd, J., and Taylor, M. (2008). Doing Well While Doing Good: How to Launch a Successful Social Purpose Enterprise. Toronto Enterprise Fund. Retrieved April 27, 2009, from www.torontoenterprisefund.ca

Enterprising Non-profits. The Canadian Social Enterprise Guide. Retrieved April 27, 2009, from www.enterprisingnonprofits.ca

Center for the Advancement of Social Entrepreneurship (CASE). (2008, June). Developing the Field of Social Entrepreneurship, Duke University. Retrieved April 27, 2009 from Duke University’s Fuqua School of Business, Center for the Advancement of Social Entrepreneurship Web site: http://www.caseatduke.org/documents/CASE_Field-Building_Report_June08.pdf

MaRS Social Entrepreneurship. (2009). Part 1 – Social Venture Financing: Enabling Solutions to Complex Social Problems [white paper]. Toronto.

#socialfinance #socialenterprise #impactinvesting #ESG #CSR #mba #wbs #bradfordturner #thesectorinc #toronto #ontario #canada #love #peace #change #sustainability #sdgs

Writing a business plan helps to ensure you focus on the core of your business. You must concentrate on key deliverables in a resource-constrained organization and communicate effectively with your stakeholders, including your funders or investors, customers, community, board, employees and volunteers.

The value of social enterprise business planning

Business planning will help any social enterprise to:

  • Attract investment
  • Identify risks
  • Measure social or environmental outcomes
  • Demonstrate that you are using a business approach
  • Showcase the management team
  • Build alliances
  • Check thinking
  • Determine feasibility

In a business plan, you must clearly articulate:

  1. The mission of your social enterprise
  2. The outline of specific actions to achieve your goals and objectives
  3. Establish targets for planning, measuring and improving performance
  4. Project the necessary resources, costs and revenues of your program

Sample business plan templates

Many business plan templates exist in the public domain, including this one.

The elements are best used as prompts by social entrepreneurs to build their own plan, assessing along the way whether or not the question (or element) is relevant for the Social

Enterprise or the social business.

Social enterprise business plans versus non-profit plans

Description of the business/mission statement

The social mission and the importance of meeting both the financial and social goals should be discussed in this section.

Management and organization

Financing the capacity of the organization is as important as supporting the programs. Include an assessment of the current organization, planned additions and/or changes as well as the cost of building the team’s capacity in order to achieve the projected growth. Demonstrate that the staff has both programmatic and business skills.

Market assessment and marketing plan

The plan should focus on delivering market-driven products or services as opposed to program-driven products or services to the target customer.

You will also need to articulate how to promote your social objectives along with the product and service.  Partnerships and collaborations extend the reach of the social venture.  Highlight your partnership strategy in this section.

Your marketing plan includes the strategies and tactics to reach your customers, partners and the community.  Outline the public relations, media relations, and advertising that will be required to meet your objectives. The marketing plan should be linked in with your financial plan and your overall strategy.

Financial

A solid financial position will allow you to pursue your mission with flexibility and high-quality service, beyond mere stability.  Investors must feel confident their investment will be used effectively to achieve both the social mission and financial results that will enable your organization to thrive and achieve continued growth.

The financial plan provides the framework for social entrepreneurs to forecast the resources they need to create and sustain social and economic value. Commercial entrepreneurs prepare business plans to show why they need money and how they will use it.  Social entrepreneurs should use the same approach and not worry about the limited resources currently available.

Social Enterprise Investors

Investors and funders alike want to know the cost to develop, start up, offer and deliver services or products, whether or not any one user or payer is willing to cover it.

When interacting with potential funders or investors, you need a detailed budget and projection of required outside investment tied in with a plan to reach the desired market position.

Investors want returns, typically a blend of financial and social. Your plan must describe the potential “return” on investment for investors and the desired social outcomes, and provide a framework for assessing social performance.

Remember that a social purpose business is similar to any other for-profit business, but the organization will likely raise financing from investors who are interested in a double bottom line.Social enterprises in the non-profit environment will typically raise funding from traditional fundraising, loans and other forms of social finance.

References

Dees, J.G., Emerson, J., & Economy, P. (2001). Enterprising Nonprofits: A Toolkit for Social Entrepreneurs. Toronto: John Wiley & Sons.

#socialenterprise #socialinnovation #mba #wbs #rotman #CSR #ESG #impactinvesting #bradfordturner #philanthropy #thesectorinc #toronto #ontario #canada #love #change

The Sector Inc Thought of the Day: Starting a Social Enterprise in a Charity/Non-profit: What are the natural cultural drivers of, and resistance to, change?

Starting a social enterprise (a business) in a charity is not the same as starting one as a sole founder, in a LLP, as a spin-off of a larger company, etc. It is starting one in a charity. Within the culture, of that charity.

The Canadian Government’s landmark $755 investment in Canada’s social finance ecosystem will see this undertaking occur across the country, in many such organizations. There has been much work done on the legal, financial, operational risks and opportunities, etc., specific to creating social enterprise; but are they really the most important analytical aspect of continuously improving the approach?

While VITAL, The Sector Inc would hold, effective Change Management and cultural integration, to be paramount and the critical success factor.

Enterprising Non-profit organizations, should take to time to carefully apply multiple change-management models and frameworks in mapping out their drivers of, and resistance to, the internal cultural change which will foster and sustain, successful social enterprise. Perhaps begin with the ultimate classic, in Lewin’s 3-Step Model of Change.

What is the 3 Stage Model of Change?

A leader in change management, Kurt Lewin was a German-American social psychologist in the early 20th century. Among the first to research group dynamics and organizational development, Lewin developed the 3 Stage Model of Change in order to evaluate two areas:

  • The change process in organizational environments
  • How the status-quo could be challenged to realize effective changes

Lewin proposed that the behavior of any individual in response to a proposed change is a function of group behavior. Any interaction or force affecting the group structure also affects the individual’s behavior and capacity to change. Therefore, the group environment, or ‘field’, must be considered in the change process.

The 3 Stage Model of Change describes status-quo as the present situation, but a change process—a proposed change—should then evolve into a future desired state. To understand group behavior, and hence the behavior of individual group members during the change process, we must evaluate the totality and complexity of the field. This is also known as Field Theory, which is widely used to develop change models including Lewin’s 3 Stage Model.

The 3 Stages of Change

Let’s look at how Lewin’s three-step model describes the nature of change, its implementation, and common challenges:

Step 1: Unfreeze

Lewin identifies human behavior, with respect to change, as a quasi-stationary equilibrium state. This state is a mindset, a mental and physical capacity that can be almost absolutely reached, but it is initially situated so that the mind can evolve without actually attaining that capacity. For example, a contagious disease can spread rapidly in a population and resist initial measures to contain the escalation. Eventually, through medical advancement, the disease can be treated and virtually disappear from the population.

Lewin argues that change follows similar resistance, but group forces (the field) prevent individuals from embracing this change. Therefore, we must agitate the equilibrium state in order to instigate a behavior that is open to change. Lewin suggests that an emotional stir-up may disturb the group dynamics and forces associated with self-righteousness among the individual group members. Certainly, there are a variety of ways to shake up the present status-quo, and you’ll want to consider whether you need change in an individual or, as in a company, amongst a group of people.

Let’s consider the process of preparing a meal. The first change, before anything else can happen, is to “unfreeze” foods—preparing them for change, whether they’re frozen and require thawing, or raw food requiring washing. Lewin’s 3 Step Model believes that human change follows a similar philosophy, so you must first unfreeze the status-quo before you may implement organizational change.

Though not formally part of Lewin’s model, actions within this Unfreeze stage may include:

Determining what needs to change.

  • Survey your company.
  • Understand why change is necessary.

Ensuring support from management and the C-suite.

  • Talk with stakeholders to obtain support.
  • Frame your issue as one that positively impacts the entire company.

Creating the need for change.

  • Market a compelling message about why change is best.
  • Communicate the change using your long-term vision.

Step 2: Change

Once you’ve “unfrozen” the status quo, you may begin to implement your change. Organizational change in particular is notoriously complex, so executing a well-planned change process does not guarantee predictable results. Therefore, you must prepare a variety of change options, from the planned change process to trial-and-error. With each attempt at change, examine what worked, what didn’t, what parts were resistant, etc.

During this evaluation process, there are two important drivers of successful and long-term effectiveness of the change implementation process: information flow and leadership.

  • Information flow refers to sharing information across multiple levels of the organizational hierarchy, making available a variety of skills and expertise, and coordinating problem solving across the company.
  • Leadership is defined as the influence of certain individuals in the group to achieve common goals. A well-planned change process requires defining a vision and motivation.

The iterative approach is also necessary to sustain a change. According to Lewin, a change left without adequate reinforcement may be short-lived and therefore fail to meet the objectives of a change process.

During the Change phase, companies should:

  • Communicate widely and clearly about the planned implementation, benefits, and who is affected. Answer questions, clarify misunderstandings, and dispel rumors.
  • Promote and empower action. Encourage employees to get involved proactively with the change, and support managers in providing daily and weekly direction to staff.
  • Involve others as much as possible. These easy wins can accumulate into larger wins, and working with more people can help you navigate various stakeholders.

Step 3: Refreeze

The purpose of the final step—refreezing—is to sustain the change you’ve enacted. The goal is for the people involved to consider this new state as the new status-quo, so they no longer resist forces that are trying to implement the change. The group norms, activities, strategies, and processes are transformed per the new state.

Without appropriate steps that sustain and reinforce the change, the previously dominant behavior tends to reassert itself. You’ll need to consider both formal and informal mechanisms to implement and freeze these new changes. Consider one or more steps or actions that can be strong enough to counter the cumulative effect of all resistive forces to the change—these stronger steps help ensure the new change will prevail and become “the new normal”.

In the Refreeze phase, companies should do the following:

  • Tie the new changes into the culture by identifying change supports and change barriers.
  • Develop and promote ways to sustain the change long-term. Consider:
  • Ensuring leadership and management support and adapting organizational structure when necessary.
  • Establishing feedback processes.
  • Creating a rewards system.

Offer training, support, and communication for both the short- and long-term. Promote both formal and informal methods, and remember the various ways that employees learn.

    • Celebrate success!

Lewin’s 3 Stage Model of Change provides an intuitive and fundamental understanding of how changes occur, in context of the social behaviors observed at an individual and collective level within a group. Since the theory was first introduced in 1951, change management has taken both supportive and opposing directions. This is a vital reminder: when modern-day change management frameworks are not working for specific use cases and business needs, consider these fundamentals of understanding social behavior in light of change.

The Government of Canada’s landmark $755 million, investment in the national Social Finance Strategy and Investment Readiness program will see NPO’s receive grant funding, across the country, to launch their own social enterprises. It is vital, they are prepared to become, social entrepreneurs. These are exciting times!

#socialfinance #impactinvesting #socialenterprise #ESG #CSR #mba #wbs #philanthropy #charity #fundraising #love #peace #change #bradfordturner #thesectorinc

Using insights from the Australian Priority Investment Approach to Welfare, the $96.1 million Try, Test and Learn Fund is trialing new or innovative approaches to assist some of the most vulnerable in society onto a path towards stable, sustainable independence.

The fund focuses on priority groups identified, through analysis of Priority Investment Approach data and other policy considerations, as being at high risk of long-term welfare dependency.

The objective of the Try, Test and Learn Fund is to generate new insights and empirical evidence into what works to reduce long-term welfare dependence. Project selection is based, in part, on the value of the evidence that they will generate. Projects will be evaluated to produce high-quality policy evidence about the effectiveness of interventions, for whom, and under what circumstances. In this way, the fund will allow the Government to identify approaches that work, and use this evidence to transform our investment in existing programs or make the case for new investments.

The Try, Test and Learn Fund takes an open and collaborative approach to policy development. This approach is focused on seeking new ideas from and collaborating with a diverse range of stakeholders, including the community sector, business, academia and the general public, in order to develop new ways of tackling complex social challenges. Co-development activities are embedded into projects supported by the fund to refine and optimize project design. These co-development activities are tailored to the needs of each project and may involve collaboration with end users, the Commonwealth and other stakeholders.

The Try, Test and Learn Fund will help achieve the objectives of welfare reform—that is, to develop a modern welfare system that increases the capacity of individuals, reduces the risk of welfare dependency and maintains a strong welfare safety net.

Tranche one and tranche two

The first tranche of the Try, Test and Learn Fund was open for ideas from 9 December 2016 to 24 February 2017. Read more about tranche one.

The second tranche of the Try, Test and Learn Fund was open for applications from 22 November 2017 to 28 September 2018. Read more about tranche two.

Source: Australian Government, Department of Social Services: https://www.dss.gov.au/review-of-australias-welfare-system/australian-priority-investment-approach-to-welfare/try-test-and-learn-fund

#socialfinance #impactinvesting #toronto #ontario #canada #sdgs #mba #wbs #rotman #schulich #socialinnovation #ESG #csr #socialenterprise #thesectorinc #bradfordturner #fundraising #philanthropy #charity #peace #love #change

What planning issues should be considered

when establishing a social enterprise?

When a social entrepreneur considers beginning a new social enterprise or when the directors of a charity or NPO consider introducing a new social enterprise program, a range of issues must be addressed. Having a well-considered business plan is vital to success.

Andrew Valentine, LL.B. • Partner, Miller Thomson LLP in brilliant fashion, outlines the various factors to be taken under serious consideration, in detail. This blog-post will provide his description of the operational priorities which should be questioned and clearly addressed in the business plan; for directors to consider when planning to introduce a new social enterprise.

Operational priorities

Determining the operating goals and priorities of the social enterprise is crucial. What is the enterprise’s fundamental purpose? Is it to further a social purpose directly, for example, by providing employment to marginalized individuals? Or is it primarily to generate a financial

return that can be used to support the operations of a charity or NPO.

These questions affect both the initial structure of the enterprise and ongoing operational decisions, so thinking them through carefully is crucial. As the organization operates, it will likely encounter tension between the competing priorities of revenue and social mission.

For example, if revenue from the enterprise disappoints, how flexible should the enterprise be with its business model or its willingness to seek new revenue opportunities? Should such changes be made even if they might diminish the social mission? Or should the social mission

remain paramount, even if this means lower revenue and greater need to supplement revenue through grants or public donations?

These questions can be answered more coherently and consistently if the founders of the social enterprise have established a clear purpose and set priorities for the social enterprise at the outset.

Source: 20 Questions Directors of Not-for-Profi tOrganizations Should Ask About Social Enterprise, Andrew Valentine, LL.B. • Partner, Miller Thomson LLP, Charted Professional Accountants Canada: https://www.cpacanada.ca/en/business-and-accounting-resources/strategy-risk-and-governance/not-for-profit-governance/publications/social-enterprise-questions-for-nfp-directors

#socialenterprise #socialfinance #entrepreneurship #impactinvesting #ESG #sustainability #sdgs #mba #wbs #bradfordturner #thesectorinc #toronto #canada #rotman #schulich #csi #fundraising #philanthropy #peace #love #change #futureofwork