Social Enterprise

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Social Enterprise 101 Presenter: Cynthia Gair, Director, Portfolio and Field Advancement, REDF Preparer: Jill Zeldin, Farber Intern, REDF

Transcript of Social Enterprise

Page 1: Social Enterprise

Social Enterprise 101Presenter: Cynthia Gair, Director, Portfolio and Field Advancement, REDF

Preparer:Jill Zeldin, Farber Intern, REDF

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What is REDF?• Created in 1997 as The Roberts Enterprise Development Fund

• A high engagement grantmaker that provides guidance, leadership and investment to a portfolio of nonprofit social enterprises, changing the lives of people who face poverty, homelessness, mental illness and other barriers to employment.

• Our work accomplishes three things

– We help people move out of poverty;

– We increase the organizational ability of nonprofit social enterprises to provide sustainable, long-term solutions to chronic poverty and homelessness; and

– We introduce new ideas and innovative methods that enrich the nonprofit community as a whole.

• In all areas of our work, we are deeply committed to measuring the results of our efforts

Welcome & IntroductionsWelcome & Introductions

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Our experience with social enterprise• We have funded and provided assistance to 35 enterprises that represent the following

industries:

• Professional landscaping

• Production and assembly

• Clerical and office services

• Catering, cafés and restaurants

• Janitorial / Cleaning services

• Bicycle shop

• Apparel screen printing and embroidery

• Ballpark concessions

• Bakery

• Our enterprises have employed over 3,000 individuals since 1998

• 75% still employed 2 years after hire

Welcome & IntroductionsWelcome & Introductions

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Social Enterprise 101 AgendaSocial Enterprise 101 Agenda

1. Welcome and Introductions

2. What is social enterprise?

3. Why are nonprofits considering social enterprise?

4. Developing earned income/social enterprise strategies to fit your organization

5. Applying the lessons REDF has learned

6. Social enterprise planning process

This Session’s Plan

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Social Enterprise 101 AgendaSocial Enterprise 101 Agenda

1. Welcome and Introductions

2. What is social enterprise?

3. Why are nonprofits considering social enterprise?

4. Developing earned income/social enterprise strategies to fit your organization

5. Applying the lessons REDF has learned

6. Social enterprise planning process

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What is Social Enterprise?: Evolution of Social EnterpriseWhat is Social Enterprise?: Evolution of Social Enterprise

Roots of Social Enterprise

Nonprofits employ income generation to support mission activities

Recent history

Nonprofits adopt business-like approaches to achieve their missions and sustainability

Source: Virtue Ventures, Social Enterprise Typology, Kim Alter, National Center for Charitable employment, The State of Nonprofit America, Lester Salamon, 2002, Professor J. Greg Dees; Center for Community Futures, 1999.

In the UK, cooperatives funded socioeconomic agendas

Mid 1800s

1960s US nonprofits began using enterprises to create jobs for disadvantaged populations

1970s • Community Development Corporations (CDCs) gained popularity in the US

• Fee-income provided 46% of total nonprofit revenue

• Declining support from traditional, philanthropic, and government sources

• Increasing competition for available funds

• Disappointment with the ability of large-scale government programs to solve social problems

Girl Guide Cookies first baked and sold

1920s

Shift from idea of charity as giving alms to means for creating lasting change

Late 1800s

1980s

1990s

Now

• The two main schools of practice of social entrepreneurship formed:

•Social Innovation School by Bill Drayton who founded Ashoka

•Social Enterprise School by Ed Skloot who assisted nonprofits in finding new streams of revenue

• Convergence of schools of thought: Mixing new and proven models and market-driven and social forces

• Momentum around social enterprise and social entrepreneurship but still confusion over their meaning

• Social enterprise / entrepreneurship catch on internationally and sector boundaries continue to be blurred

• Popularity of cause-related marketing partnerships grows

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What is social enterprise?

What is Social Enterprise?: The question…What is Social Enterprise?: The question…

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…And the answer is…

What is Social Enterprise?: The answer…What is Social Enterprise?: The answer…

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No single definition of social enterprise is uniformly

accepted!

What is Social Enterprise?: The answerWhat is Social Enterprise?: The answer

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• As of 2001, nonprofits generated $48 billion in commercial revenue

• 47% of nonprofit organizations surveyed in a 2000 study1 operated an earned income venture, of which 5% had since discontinued their ventures

• 53% of nonprofits had never operated an earned-income venture

• Still, a significant minority of nonprofits are engaged in more developed social enterprise management

Source: Cynthia W. Massarsky and Samantha L. Beinhacker, Yale School of Management - The Goldman Sachs Foundation, Partnership on Nonprofit Ventures, 2000; Lester Salamon, The State of Nonprofit America, 20021) 512 nonprofit organizations completed the survey

What is Social Enterprise?: Social enterprise adoptionWhat is Social Enterprise?: Social enterprise adoption

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What is Social Enterprise?: Evolving definitionsWhat is Social Enterprise?: Evolving definitions

Original definitions

• “A revenue generating venture founded to create economic opportunities for very low income individuals, while simultaneously operating with reference to the financial bottom-line.”

• Jed Emerson and Fay Twersky, 1996

• Any earned-income business or strategy undertaken by a nonprofit to generate revenue in support of its charitable mission.

• Social Enterprise Alliance, before March 2006

Recent definitions

• “Double bottom-line businesses, social purpose enterprises, nonprofit business ventures and mission-based for-profit businesses. Social Enterprises typically pursue blended value returns that may embrace the subjugation of a certain amount of financial return or take on added risk in pursuit of social and/or environmental value creation.”

• Jed Emerson, The Blended Value Map, 2004

• “An organization or venture that advances its social mission through entrepreneurial, earned income strategies.”

• Social Enterprise Alliance, as of March 2006

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What is Social Enterprise?: Non-U.S. DefinitionsWhat is Social Enterprise?: Non-U.S. Definitions

“Business ventures operated by non-profits, whether they are societies, charities, or co-operatives.”

•Enterprising Nonprofit, Canada

“…businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners. “

•British Government

“Organisations with an explicit aim to benefit the community, initiated by a group of citizens and in which the material interest of capital investors is subject to limits. They place a high value on their independence and on economic risk-taking related to ongoing socio-economic activity.“

•European Research Network

“A social enterprise is simply a market-based venture for a social purpose.”

•Social Enterprise Partnerships, Australia

Social enterprise definitions not only differ by time period, but they also vary by region of the world.

“The promotion and building of enterprises or organizations that create wealth with the intention of benefiting not just one person or family, but a defined constituency, sector or community, usually involving the public at large or the marginalized sectors of society.”

•Asian Institute of Management (AIM), Philippines

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What is Social Enterprise?: Other DefinitionsWhat is Social Enterprise?: Other Definitions

“Social enterprise encompasses nonprofit and public enterprise management but also business leadership in the social sector through direct involvement and corporate social responsibility; cross-sector collaboration and the interdependence of the business, government, and social sectors; for-profit social purpose companies; socially focused private equity; high engagement philanthropy and social entrepreneurship.”

•Harvard Business School, Social Enterprise Initiative

“Any organization, in any sector, that uses earned income strategies to pursue a double bottom line or a triple bottom line, either alone (as a social sector business) or as part of a mixed revenue stream that includes charitable contributions and public sector subsidies.”

•The Institute for Social Entrepreneurs

•“The myriad of entrepreneurial or 'self-financing' methods used by nonprofit organizations to generate some of their own income in support of their mission."

•Nonprofit Enterprise and Self-sustainability Team (NESsT)

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Key points of agreement among Social Enterprise definitions:

What is Social Enterprise?: Common aspects of definitionsWhat is Social Enterprise?: Common aspects of definitions

Social Enterprise =

Revenue-generating

Socially-Minded +

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Not-for-profit

What is Social Enterprise?: Distinguishing elementsWhat is Social Enterprise?: Distinguishing elements

Tax Status

Objective

Distribution of Profits

For-profit

To supplement profit-generating activities and to achieve social

returns

Profit distributed to shareholders

E.g., Fund social programs

E.g., Diversify revenue streams

As a funding approach

Profit cannot be directly distributed to individuals.

Instead, profits are reinvested in nonprofit

E.g., Provide economic

opportunities

As a programmatic tool

Profit not a primary goal

Profit-motiveMission-motive

Purpose

Key points of difference among Social Enterprise definitions:

Notes: 1) This slide represents the U.S. social enterprise landscape, including U.S. tax status and legalities of return and profit distribution.

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What is Social Enterprise?: Causes of confusionWhat is Social Enterprise?: Causes of confusion

Profit-motiveMission-motive

Terms related to but not synonymous with social enterprise

Numerous approaches to combining social mission and revenue generation are not exactly synonymous with social enterprise.

Community Interest Company

Social Entrepreneurship

Nonprofit with Income Generating Activities

Nonprofit Venture

Nonprofit Enterprise

Social Venture

Entrepreneurial Nonprofit

Corporate Social Responsibility (CSR)

Socially Responsible Business

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What is Social Enterprise?: Social enterprise definition for today’s sessionWhat is Social Enterprise?: Social enterprise definition for today’s session

Profit-motiveMission-motive

Terms related to but not synonymous with social enterprise

Community Interest Company

Social Entrepreneurship

Nonprofit with Income Generating Activities

Nonprofit Venture

Nonprofit Enterprise

Social Venture

Entrepreneurial Nonprofit

Corporate Social Responsibility (CSR)

Socially Responsible Business

The social enterprise definition we will use today:

Businesses owned and operated by nonprofit organizations

In order to keep our discussion focused today, we will hone in on one particular definition of social enterprise.

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What is Social Enterprise?: Earned-Income vs. Social Enterprise What is Social Enterprise?: Earned-Income vs. Social Enterprise

What distinguishes a social enterprise from other earned-income activities?

Earned-Income Activities

Social Enterprise

Revenue generated through some commercial endeavor

• Has a long-term vision and is managed for the indefinite future

• Growth and revenue targets are set in a business or operational plan

• Separate and distinct staff manage and oversee the activity

Source: Virtue Ventures, Social Enterprise Typology, Kim Alter

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What is Social Enterprise?: Types of social enterprise activitiesWhat is Social Enterprise?: Types of social enterprise activities

Source: Virtue Ventures, Social Enterprise Typology, Kim Alter

As if the definition for social enterprise alone isn’t confusing enough, fee-for-service and income generating activities can be either social enterprise or solely earned-income!

Fee-for-Service activity

Private sector partnerships

Income generating activity

Employment development enterprise

Special Events

Annual Dinner

Charity Auction

Earned-Income Activities

Social Enterprise

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What is Social Enterprise?What is Social Enterprise?

• Nonprofits have long used income generation to support their mission activities

• More recently, nonprofits have adopted business approaches to achieve their missions and achieve sustainability through social enterprise

• No single definition of social enterprise exists

• Social enterprise is considered an earned-income activity that is planned as a business, with distinct resources and a long-term vision

Summary of “What is Social Enterprise?”

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Social Enterprise 101 AgendaSocial Enterprise 101 Agenda

1. Welcome and Introductions

2. What is social enterprise?

3. Why are nonprofits considering social enterprise?

4. Developing earned income/social enterprise strategies to fit your organization

5. Applying the lessons REDF has learned

6. Social enterprise planning process

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Why do nonprofits consider social enterprise?

Why do nonprofits consider social enterprise? SummaryWhy do nonprofits consider social enterprise? Summary

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• To increase the reach of the mission

– To create jobs and training opportunities

– To disseminate information

– To educate the community

• To meet needs that the market does not meet on its own

Why do nonprofits consider social enterprise?

Why do nonprofits consider social enterprise? SummaryWhy do nonprofits consider social enterprise? Summary

Profit-motiveMission-motive

• To create funding opportunities

– To generate revenue/profit

– To diversify revenue streams

– To create new donor interest (e.g., entrepreneurial community)

What risks might an organization operating a mission-motive social

enterprise face?

What risks might an organization operating a profit-motive social

enterprise face?

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“They made me more confident about myself. Helped me to keep a job.”

- CVE Employee

“This is the first job I ever had, it keeps me out of trouble. Rubicon gave me a chance when no one else would.”

- Rubicon Employee

“I have knowledge of a new field and increased earning potential for when I get another job. The work environment is very supportive.”

- GGCI Employee

“This was my first job and it lead me to where I am now. I have the confidence and motivation to go somewhere where I can move up.”

- Juma Employee

Social Enterprise Success Stories: In Their Own Words

Why do nonprofits consider social enterprise?: Program expansion success storiesWhy do nonprofits consider social enterprise?: Program expansion success stories

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Top Ten Myths about Social Enterprise

Myth #1 Starting a social enterprise requires minimal investment.

Myth #2 There’s nothing better than free retail space!

Myth #3 Our staff already has all the skills needed to run a social enterprise.

Myth #4 People will buy from us because we have such a great cause.

Myth #5 If it’s not working, we’ll know.

Why do nonprofits consider social enterprise?: MythsWhy do nonprofits consider social enterprise?: Myths

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Top Ten Myths about Social Enterprise

Myth #6 We can scale this puppy, no problem!

Myth #7 This will solve our financial crisis and we’ll never have to fundraise again.

Why do nonprofits consider social enterprise?: MythsWhy do nonprofits consider social enterprise?: Myths

Myth #10 Our board chair is totally behind us, that should be enough!

Myth #9 Our program staff and enterprise staff will get along just fine.

Myth #8 Nonprofits can’t make a profit.

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• There are two main reasons an organization might pursue nonprofit enterprise:

• To further its social mission

• To create funding opportunities

• Social enterprises can create successful outcomes, significantly improving the lives of those affected

• Be aware of the myths of creating a social enterprise. Social enterprises require significant planning and resources

Why do nonprofits consider social enterprise?Why do nonprofits consider social enterprise?

Summary of “Why do nonprofits consider social enterprise?”

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Social Enterprise 101 AgendaSocial Enterprise 101 Agenda

1. Welcome and Introductions

2. What is social enterprise?

3. Why are nonprofits considering social enterprise?

4. Developing earned income/social enterprise strategies to fit your organization

5. Applying the lessons REDF has learned

6. Social enterprise planning process

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Developing earned income/social enterprise strategies to fit your organization Developing earned income/social enterprise strategies to fit your organization

• Is your primary goal mission or profit?

Social Enterprise Strategy

Assess the organization

Define goals

• Which current assets and capabilities can you leverage?

The answers to these key questions will drive your organization’s social enterprise strategy

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Developing earned income/social enterprise strategies to fit your organization Developing earned income/social enterprise strategies to fit your organization

Profit-motiveMission-motive

Why is your nonprofit considering social enterprise?

Is your primary goal to expand the mission?

Is your primary goal to generate income?

• To increase the reach of the mission?

• To meet needs that the market does not meet on its own?

• To generate revenue/profit?

• To diversify revenue streams?

• To create new donor interest (e.g., entrepreneurial community)?

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• Organization

• Core mission

• History and leadership

• Effectiveness of agency

• Current assets

• Clients? Services? Employees? Intellectual capital? Physical assets?

• Outstanding liabilities?

• Capabilities

• Do you already manage earned-income activities?

• Do leaders possess business experience?

• What "value" or competitive advantage could you bring to the market place?

Developing earned income/social enterprise strategies to fit your organization Developing earned income/social enterprise strategies to fit your organization

Assess the Organization: Current assets and capabilities

Is your organizational culture entrepreneurial and ready for change?

Do you possess resources that would be relevant to a business venture?

Does the organization possess experience that would transfer to managing a business?

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Developing earned income/social enterprise strategies to fit your organization Developing earned income/social enterprise strategies to fit your organization

• Is your primary goal mission or profit?

Social Enterprise Strategy

Assess the organization

Define goals

• Which current assets and capabilities can you leverage?

The answers to these key questions will drive your organization’s social enterprise strategy

• Should you engage in social enterprise or other earned income activities?

• How integrated should your social enterprise be?

• Which industries may work?

• Should you expand on your existing operations or start something completely new?

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Developing earned income/social enterprise strategies: Earned Income vs. Social EnterpriseDeveloping earned income/social enterprise strategies: Earned Income vs. Social Enterprise

Should your organization undertake social enterprise or should it consider other earned income activities instead?

Earned-Income Activities Social Enterprise

Does your organization have the organizational capacity to start and run

an enterprise?

Will a separate business provide the best opportunity to meet your goal?

(mission or profit)

Are your organization and its key stakeholders risk averse?

NY

YN

YN

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Mission-Unrelated

Source: Virtue Ventures, Social Enterprise Typology, Kim Alter

Mission-Related

Mission-Centric

Mission-Centric Social Enterprise

Mission-Related Social Enterprise

Mission-Unrelated Social Enterprise

Developing earned income/social enterprise strategies: Connection to MissionDeveloping earned income/social enterprise strategies: Connection to Mission

The goals of your social enterprise can dictate how integrated the enterprise should be with your mission and social programs.

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Source: Virtue Ventures, Social Enterprise Typology, Kim Alter

• The primary purpose of the enterprise is to advance the social mission

• Social programs and business activities have a significant effect on each other

Mission-Centric Social Enterprise

Mission-Related Social Enterprise

Mission-Unrelated Social Enterprise

• Provides funding for the nonprofit's operations and social mission activities

• Can expand the reach of the nonprofit’s mission to achieve greater social impact

• Not related to or intended to advance the social mission

• Profit/funding potential is the primary purpose of the enterprise

Profit-motiveMission-motive

Social Programs

+

Enterprise Activities

Social Programs

Enterprise Activities

Social Programs Enterprise

Activities

$

Developing earned income/social enterprise strategies: Enterprise IntegrationDeveloping earned income/social enterprise strategies: Enterprise Integration

Social Enterprise Integration Options:

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Source: Virtue Ventures, Social Enterprise Typology, Kim Alter; benetech.org

Mission-Centric Social Enterprise

Developing earned income/social enterprise strategies: Mission-Related OptionDeveloping earned income/social enterprise strategies: Mission-Related Option

Mission Organization Social Enterprise

• Lead the world in creative, effective applications of technology for unmet social needs

• A subscription service providing an online library of digital books for blind and low vision adults

• About 95% of Bookshare.org members are legally blind or dyslexic

• World leader in reading machines for the blind

• Affordable tools to individuals with reading disabilities

• Benetech was founded in 2000

Social Programs

+

Enterprise Activities

Social Programs

+

Enterprise Activities

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Source: Virtue Ventures, Social Enterprise Typology, Kim Alter; whitney.org

Mission-Related Social Enterprise

Developing earned income/social enterprise strategies: Mission-Related OptionDeveloping earned income/social enterprise strategies: Mission-Related Option

Social Programs

EnterpriseActivities

Social Programs

EnterpriseActivities

Mission Organization Social Enterprise

• To create opportunities for groundbreaking new art works

• The Whitney Museum operates both an in house and online museum store, including such items as jewelry, books, CDs, t-shirts and posters

• Proceeds from merchandise sold through the Whitney Museum of American Art benefit the Museum and its programs

• A New York museum that features a large permanent collection and fine changing exhibitions of contemporary and modern American Art

• Supports American artists at every stage of their careers

• Founded in 1931

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Source: Virtue Ventures, Social Enterprise Typology, Kim Alter; clf4kids.org; ; www.nonprofitlicensing.com; www.causemarketingforum.com

Mission-Unrelated Social Enterprise

Developing earned income/social enterprise strategies: Mission-Unrelated OptionDeveloping earned income/social enterprise strategies: Mission-Unrelated Option

Mission Organization Social Enterprise

• To lift the spirits and enhance the quality of life of children living with cancer and to do whatever we can to make their lives (and their smiles) a little brighter!

• HoneyBaked Ham chose Childhood Leukemia Foundation to be their national charity partner

• HoneyBaked Ham and CLF introduced the Hope Tote, a soft-sided cooler

• For every $15 tote the stores sold, $5 was donated to the Childhood Leukemia Foundation

• Make kids feel better about their appearance, provide fun camp experiences, help kids keep in touch with loved ones, provide gifts for hospital stays, and help families get much needed financial support.

• Programs are need-driven and free of charge

• CLF was founded in 1992

Social Programs Enterprise

Activities

$Social

Programs Enterprise Activities

$

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• Mission-Centric: For the first example regarding Benetech, the organization that provides affordable technology tools to serve unmet social needs:

• If the organization had been solely focused on profit, what service might Benetech have commercialized instead?

• What other enterprise might you have suggested to reach the mission of Benetech?

• Mission-Related: For the second example, the Whitney Museum:

• How might the museum have created a social enterprise that more closely related to the mission? That generated more profit?

• Mission-Unrelated: For the third example, Save the Children which licensed artwork for the primary purpose of fundraising:

• What risks does Save the Children face in licensing artwork?

• Which category might a charitable organization’s thrift store fall into?

• To think about: Based on your organization’s goals for social enterprise, which social enterprise integration option makes the most sense for you?

Developing earned income/social enterprise strategies: Discussion of OptionsDeveloping earned income/social enterprise strategies: Discussion of Options

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Source: Community Wealth Ventures, Social Enterprise Alliance Directory of Social Enterprises

Which types of industries might work well with which missions?

Advocacy

Alternative Trade and Development

Arts, Culture and Humanities

Blindness and Vision Impairment

Children and Youth

Community / Economic Development

Counseling

Disaster Relief

Education and Research

Elderly

Employment Training

Environmental and Animals

Health Services

Homelessness

Housing

Human Services

Hunger and Poverty

International

Management and Technical Assistance

Mental Health Services

Other Social Services

Philanthropy / Grant making

Rehabilitative Services

Religious

Sports/Recreation

Substance Abuse

Women

Types of Nonprofit OrganizationsAgriculture/Farming 

Clerical Services

Clerical Services 

Construction 

Consulting and Training

Education and Training 

Employee Assistance Program 

Heavy Manufacturing 

Home Healthcare 

Housing Rehabilitation 

Information Technology 

Janitorial/Cleaning Services 

 

Landscaping/Grounds Maintenance 

Light Manufacturing

Packaging/Distribution

Print/Copy Services 

Property Management

Publishing 

Recycling 

Restaurant/Café/ Catering 

Retail 

Sales / Product Vendor

Staffing Service 

Strategic Alliances 

Theater / Musical

Thrift Store 

Wholesale 

Types of Industries

Developing earned income/social enterprise strategies: Which Industry?Developing earned income/social enterprise strategies: Which Industry?

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Source: Community Wealth Ventures, Social Enterprise Alliance Directory of Social Enterprises

Which industries might leverage the assets of a Health Services agency?

Advocacy

Alternative Trade and Development

Arts, Culture and Humanities

Blindness and Vision Impairment

Children and Youth

Community / Economic Development

Counseling

Disaster Relief

Education and Research

Elderly

Employment Training

Environmental and Animals

Health Services

Homelessness

Housing

Human Services

Hunger and Poverty

International

Management and Technical Assistance

Mental Health Services

Other Social Services

Philanthropy / Grant making

Rehabilitative Services

Religious

Sports/Recreation

Substance Abuse

Women

Types of Nonprofit OrganizationsAgriculture/Farming 

Clerical Services

Clerical Services 

Construction 

Consulting and Training

Education and Training 

Employee Assistance Program 

Heavy Manufacturing 

Home Healthcare 

Housing Rehabilitation 

Information Technology 

Janitorial/Cleaning Services 

 

Landscaping/Grounds Maintenance 

Light Manufacturing

Packaging/Distribution

Print/Copy Services 

Property Management

Publishing 

Recycling 

Restaurant/Café/ Catering 

Retail 

Sales / Product Vendor

Staffing Service 

Strategic Alliances 

Theater / Musical

Thrift Store 

Wholesale 

Developing earned income/social enterprise strategies: Which Industry?Developing earned income/social enterprise strategies: Which Industry?

Types of Industries

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Source: Community Wealth Ventures, Social Enterprise Alliance Directory of Social Enterprises

Advocacy

Alternative Trade and Development

Arts, Culture and Humanities

Blindness and Vision Impairment

Children and Youth

Community / Economic Development

Counseling

Disaster Relief

Education and Research

Elderly

Employment Training

Environmental and Animals

Health Services

Homelessness

Housing

Human Services

Hunger and Poverty

International

Management and Technical Assistance

Mental Health Services

Other Social Services

Philanthropy / Grant making

Rehabilitative Services

Religious

Sports/Recreation

Substance Abuse

Women

Types of Nonprofit OrganizationsAgriculture/Farming 

Clerical Services

Clerical Services 

Construction 

Consulting and Training

Education and Training 

Employee Assistance Program 

Heavy Manufacturing 

Home Healthcare 

Housing Rehabilitation 

Information Technology 

Janitorial/Cleaning Services 

 

Landscaping/Grounds Maintenance 

Light Manufacturing

Packaging/Distribution

Print/Copy Services 

Property Management

Publishing 

Recycling 

Restaurant/Café/ Catering 

Retail 

Sales / Product Vendor

Staffing Service 

Strategic Alliances 

Theater / Musical

Thrift Store 

Wholesale 

Developing earned income/social enterprise strategies: Which Industry?Developing earned income/social enterprise strategies: Which Industry?

Which industries might leverage the assets of a Community Development agency?

Types of Industries

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• Commercialize something your organization already does

• E.g., Create a fee for service model with your existing programs

• Develop a new aspect of something your organization already does

• Leverage existing assets

• Cause related marketing

• Existing service to new population

Developing earned income/social enterprise strategies: Expand or Start New?Developing earned income/social enterprise strategies: Expand or Start New?

Expand what you already do Start something new

• Create a new commercial product or service for existing customer base

• E.g., Direct beneficiaries (who can afford to) pay for new product or service

• Do something totally new – a new product or service for a new customer base!

• Buy a business

• Start a new business

Two options exist for nonprofits starting social enterprises or earned income ventures

Source: Kellogg School of Management

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Developing earned income/social enterprise strategies to fit your organizationDeveloping earned income/social enterprise strategies to fit your organization

• Should you engage in social enterprise or other earned income activities?

• How integrated should your social enterprise be?

• Which industries may work?

• Should you expand on your existing operations or start something completely new?

Social Enterprise Strategy

Assess the organization

Define goals

• Mission or profit?

• Current assets and capabilities?

Summary of “Developing earned income/social enterprise strategies to fit your organization”

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Social Enterprise 101 AgendaSocial Enterprise 101 Agenda

1. Welcome and Introductions

2. What is social enterprise?

3. Why are nonprofits considering social enterprise?

4. Developing earned income/social enterprise strategies to fit your organization

5. Applying the lessons REDF has learned

6. Social enterprise planning process

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• Strong entrepreneurial team

• Supportive and engaged board of directors

• Fit with overall goals and needs

• Comprehensive planning progress

• Compelling and genuine market opportunity

• Unique competitive edge

• Financial controls and tools for planning

• Long-term and adequate financing

• Commitment to sound business practice

• Metrics to assess economic and social impact

Applying the lessons REDF has learned: Critical Success FactorsApplying the lessons REDF has learned: Critical Success Factors

REDF’s Lessons Learned: Critical Social Enterprise Success Factors

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• Need to balance dual (social and financial) missions

• Organizational structure complicates decision-making/authority

• Enterprise management staff need to possess a broader set of skills

• Importance and scope of training

• Additional social costs

• Different funding sources

• Social mission outcomes tracking and reporting

REDF’s Lessons Learned: Unique Challenges (and Opportunities!) in Social Enterprise

Applying the lessons REDF has learnedApplying the lessons REDF has learned: Unique Challenges (and Rewards!): Unique Challenges (and Rewards!)

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Applying the lessons REDF has learned: Case Study 1Applying the lessons REDF has learned: Case Study 1

Mission: To assist youth in developing their skills and transitioning to college.Description of organization: A small, 30-year-old youth-focused organization with a well-running set of programs, including college and career prep, and a track record of results.Current situation: Agency is seeking ways to expand the mission. Agency has solid funding.Key stakeholder viewpoints: A board member runs several electronics plants and believes the agency should take advantage of some light assembly work that could be directed toward the social enterprise. The founder, also a board member, is skeptical of this idea.You: E.D. for over 8 years. You feel ready to take on something new.

What is the appropriate social enterprise strategy for the agency? What process do you employ to ensure the right decision is made?

• Should you engage in social enterprise or other earned income activities?

• How integrated should your social enterprise be?

• Which industries may work?

• Should you expand on your existing operations or start something completely new?

Social Enterprise Strategy

Assess the organization

Define goals

• Mission or profit?

• Current assets and capabilities?

Organization: YouthOrg

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Applying the lessons REDF has learned: Case Study 2Applying the lessons REDF has learned: Case Study 2

Mission: To provide programs for seniors, including meals, housing and activity center Description of organization: Established in mid 60s. Program quality has improved with time.Current situation: Your largest donor has just informed you that he/she will be cutting back funding over the next two years.Key stakeholder viewpoints: A prominent board member and successful business person recommends social enterprise to make up for lost revenue.You: ED with MSW. You took the organization from $1M to $15M budget in 15 years.

What is the appropriate social enterprise strategy for the agency? What process do you employ to ensure the right decision is made?

Social Enterprise Strategy

Assess the organization

Define goals

• Mission or profit?

• Current assets and capabilities?

• Should you engage in social enterprise or other earned income activities?

• How integrated should your social enterprise be?

• Which industries may work?

• Should you expand on your existing operations or start something completely new?

Organization: SeniorOrg

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Applying the lessons REDF has learned: How to think about social enterprise for Applying the lessons REDF has learned: How to think about social enterprise for YOUR nonprofitYOUR nonprofit

Social Enterprise Strategy

Assess the organization

Define goals

• Mission or profit?

• Current assets and capabilities?

Mission: ________________________________________________________________________Description of YOUR organization: __________________________________________________Current situation: _________________________________________________________________ ________________________________________________________________________________Key stakeholder viewpoints: _______________________________________________________You: __________________________________________________________________________

What is the appropriate social enterprise strategy for the agency? What process do you employ to ensure the right decision is made?

• Should you engage in social enterprise or other earned income activities?

• How integrated should your social enterprise be?

• Which industries may work?

• Should you expand on your existing operations or start something completely new?

Organization: _________________

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Social Enterprise 101 AgendaSocial Enterprise 101 Agenda

1. Welcome and Introductions

2. What is social enterprise?

3. Why are nonprofits considering social enterprise?

4. Developing earned income/social enterprise strategies to fit your organization

5. Applying the lessons REDF has learned

6. Social enterprise planning process

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Social enterprise planning processSocial enterprise planning process

ExecutionBusiness plan

Feasibility study

Pre-feasibility study

Develop venture criteria

Assess organization

Define goals

• Why is your agency considering social enterprise?

• Is your agency ready for social enterprise?

• How will you screen different social enterprise options?

• Is your social enterprise feasible from a business standpoint?

• In depth analysis on social enterprise viability

• Thorough business planning for developing your social enterprise

• Make it happen

• 1 month • 1 month • 1 – 2 months

• 2 – 4 months

• 2 – 4 months

• 3 – 6 months

• 3 – 12 months

Discussed today

Source: Center for Community Futures, 1999.

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Social enterprise planning process: Plan your next stepsSocial enterprise planning process: Plan your next steps

• What is your view of social enterprise?

– If you are the one spearheading the process, determine your own objectives first, then seek input from other key stakeholders

• Involve the right people

– Which key stakeholders should be included?

• Educate the key stakeholders on social enterprise

• Determine what stakeholders' goals are and what your organization’s capacity is

• Follow the social enterprise planning process

So what are your next steps?

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Appendix: Going DeeperAppendix: Going Deeper

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Applying the lessons REDF has learnedApplying the lessons REDF has learned: Words of wisdom: Words of wisdom

“If you like your staff, board, and clients the way they are, then don’t do this, because it will change everything.”

- REDF Portfolio Executive Director

Distraction from mission

Donor cannibalization

Inadequate resources

Diversion of resource – Staff, Management, Money, Time

Cultural differences: create tension between program and enterprise staff

Conflicting stances among board

Cause of financial losses

Risk of failure –Reputation and Morale

Caution: Consider how Social Enterprise can affect the rest of your organization

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Why do nonprofits consider social enterprise?Why do nonprofits consider social enterprise?: REDF : REDF Success storiesSuccess stories

Social Enterprise Success Stories: REDF Portfolio • The REDF Portfolio has

included 13 organizations.

• The REDF Portfolio has included a cumulative total of 3,074 enterprise employees.

• The majority of enterprise employee hires are African-American, Latino/a and White. The proportion of racial/ethnic minority hires has been increasing since 2000.

• Approximately three-fourths of enterprise employee hires are younger than age 40.