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Slide 2 Agenda What is SE?Why SE?The Development PathThe SEF Slide 3 What is SE? It is a sophisticated business model. It uses business to meet social, environmental and/or economic challenges. It places these challenges at the centre of the business model. It strives for blended value.It attaches profits to the challenge and not the investorIt is a long term strategy to self reliance. Slide 4 I saw how the concept of business could be reformulated simply by disconnecting investors from the expectation of financially gaining from their investment. .. Slide 5 Charity Non-Profit Social Enterprise Social Purpose Business For-Profit Business Where SE Fits Slide 6 Examples www.socialenterprisefund.ca Slide 7 Why SE? Something is happening!!What SE brings to the tableTrends in the operating environmentRisks are surprisingly similar to current risksIts tested; it worksAmbition: direction, level and pace of ambition Slide 8 Something is Happening: Change is a foot!! Net Impact is a global network of leaders who are changing the world through business. Mark Albion co-founder 2008 in Edmonton something in the water something has changed Slide 9 I believe that social entrepreneurship will be the driving force in the world over the next 100 years, the single biggest movement thats going to change the way we live. Jeff Skoll Slide 10 Slide 11 Charity Non-Profit Social Enterprise Social Purpose Business For-Profit Business Blurring boundaries: Interest in Doing Good Slide 12 35% of existing SEs were started in the last 2 years (October 19, 2010 Globe and Mail) Slide 13 Slide 14 What SE Brings to the Table Slide 15 Trends Changing demographicsTechnology changeChanges in the role of governmentPerformance measurement Slide 16 Conclusion Big Change is imminent. Slide 17 Risks are surprisingly similar NFPSE Director Financial risk Revenue risk Program riskBusiness risk Regulatory risk Reputational risk HR risks Environmental risks Slide 18 Revenue Risk Slide 19 So, the question is: If we have been successful managing a set of diverse and significant risk, why do we feel we will not be successful at managing SE risks? Slide 20 Answer: The 3 Cs Culture: The journey from grant funded organization to a sales led SE can require a massive change in org culture. It involves travelling a learning curve with a right angle in it Competency: Current competencies are not a good fit Comfort: As frustrating as things might be now, we know how to operate in our box we know the terrain - we know how to managing our risks. Slide 21 Its tested; it works 1844 : modern co-op movement founded 1895 : Goodwill Industries 1st thrift store. 1956 : Mondragn Corporacin Cooperativa. The worlds largest social enterprise by annual sales and size of staff. Today Slide 22 Ambition: Direction, level and pace What degree of control do you have over the direction and level of ambition and over the pace with which you achieve it? Slide 23 Development Path Slide 24 Organizational Readiness Assessment: (Board decides, This is a good fit; we are ready & committed) Development of Minimum Specifications : (Board ratifies the criteria by which to evaluate opportunities) Generation of Many Business Ideas Quick Assessment of 3 Ideas Board approves the short list of ideas that meet the minimum specifications Feasibility Assessment of 1 Idea Business Plan I mo. 2 Mos. 3 mos. 2 mos. Board selects one idea for market research & financial feasibility Board decides whether or not to complete the plan and prepare launch Slide 25 Catalyst ; agent of change; steward of org resources EntrepreneurRisk Manager Strategic advisor Owner Partner Leverager of social and financial capital Promoter Fiduciary Overseer Balancer of social and economic interests Does SE fit with the mission? Do we have the resources to take this on? Is SE a cultural fit? How are we going to balance social and economic goals? Are we prepared to compete in the market place? What is the only way to break even is by hiring fewer disadvantaged folks? What is the enterprise cannot afford to pay a living wage? What might our donors say and do? Who needs to owner this? How much debt are we prepared to take on? How much equity are we prepared to contribute? If we succeed, we likely will become less reliant on government funding. Is this a good thing? Slide 26 Participants Board; SMT Board committee + advisors SMT Stakeholders New Board Slide 27 Stakeholders Board Committee Board Slide 28 Stable: mission, funders, clients, board, SMT Resilient: demonstrated Financially Healthy : key financial indicators, reserves, deficits/surplus, growth, diversity, earned revenues History of Achievement Entrepreneurial Ready organizations are: Slide 29 Cultural Shifts ProgramBusiness Charity trumps economics Balance of charity and business Public sectorMarket ClientsCustomers ReferralsSales TopBottom Proposal writingBusiness planning GrantsMarket generated revenues Operating statementBalance sheet ShorterLonger Slide 30 Slide 31 Slide 32 Slide 33 Get legal advice Know yourself! Are you are society, a non-profit, a charity, a co-operative? Have you read your articles of association and your by-laws? What are the powers of the organization: are you able to own assets, distribute income, borrow? Remember the CRA Corporate Structure Legal Considerations Slide 34 Slide 35 Slide 36 Non-profits, charities, social purpose co- operatives operating in Edmonton Social entrepreneurs that agree to non-profit format Eligibility Slide 37 Social enterprise Planning Operating/working capital Capital What we Finance Slide 38 Social and affordable housing Planning Land acquisition Capital construction Renovations Acquisitions Slide 39 Asset building/strengthening balance sheets Slide 40 Eligibility Ability to execute Resilient, stable, financial strength, track record Business case Feasible, sustainable, doable Blended value Exit strategy What we Assess Slide 41 Term loans Patient capital Financial Products Slide 42 Flexible fit financing to need Term Interest rate Fees Security Terms and Conditions Slide 43 Social Enterprise Local economy mission Good Food Box Capital and working capital financing Term 6 year Interest 5% Repayments: Interest only for 1 year; blended P and I for next 5 years Examples Slide 44 Social Enterprise Affordable space to arts community Capital and working capital financing Term 5 year Interest 4% Repayments: Interest only for 1 year; blended P and I for next 4 years Examples Slide 45 Affordable housing: acquisition of supportive seniors complex Term - 1 year Interest - 5% Security - first mortgage Status Paid in full Slide 46 Examples Balance sheet strengthening: acquisition of program center Term Loan # 1 for 1 year; loan # 2 for 2 years Interest loan # 1 - 5%; loan # 2 6.5% Security - first mortgage Status Paid in full Slide 47 Path to Loan Grants Seminars Portfolio Development Services Slide 48 Loans Furniture Recycling Planning Clients - SE Slide 49 LoansPlanning Clients Housing Slide 50 LoansPlanning Clients Other Slide 51 Where can I learn more? www.socialenterprisefund.ca