Social Enterprise
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Ashoka - School For International Training February 2007 Social Enterprise Ashoka School For International Training
description
Social Enterprise. Ashoka School For International Training. Two Doors into Social Enterprise. Program Strategy. Financial Strategy. Motivations for Starting an SE. Massarsky, Cynthia and Samantha Beinhacker, 217 social enterprises, Partnership on Nonprofit Ventures, 2003. Some Facts. - PowerPoint PPT Presentation
Transcript of Social Enterprise
Ashoka - School For International Training February 2007
Social Enterprise
Ashoka School For
International Training
Ashoka - School For International Training
February 2007
Two Doors into Social Enterprise
Program Strategy
Financial Strategy
Ashoka - School For International Training
February 2007
Motivations for Starting an SE
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Massarsky, Cynthia and Samantha Beinhacker, 217 social enterprises, Partnership on Nonprofit Ventures, 2003
Ashoka - School For International Training February 2007
Some Facts
Ashoka - School For International Training
February 2007
Mission Correlation
3% of SE don’t relate to mission
19% SEs relate to mission
78% SEs central
to mission
Based on survey results: WB&A Market Research of 105 social enterprises, Community Wealth Ventures, 2003; Massarsky, Cynthia and Samantha Beinhacker, 217 social enterprises, Partnership on Nonprofit Ventures, 2003
Ashoka - School For International Training
February 2007
SE Impact on Organizations
0 20 40 60 80 100
Improved Performance
Better Service/ Program delivery
Improved Reputation
Attract & Retain Staff
Entrepeneurial Culture
Self-Sufficency
Attract Donors
Stronger Leadership
Source: Powering Social Change: Lessons for Community Wealth Generation for Nonprofit Sustainability, Community Wealth Ventures, 2003 Source: “Enterprising Nonprofits”, Yale School of Management – Goldman Sachs Foundation on Nonprofit Ventures
Ashoka - School For International Training
February 2007
Profitability Inconclusive
35%
13%
74%
19%
27%
35%
43%
24%
11%17%
5%
Loss Breakeven Profit Don't know
Surveys • Pew Charitable Trust• CWV • Bridgespan
Based on survey results: WB&A Market Research of 105 social enterprises, Community Wealth Ventures, 2003; Massarsky, Cynthia and Samantha Beinhacker, 519 nonprofits with 217 social enterprises, Pew Charitable Trusts, 2000Bridgespan survey 2004, unpublished
Ashoka - School For International Training
February 2007
Social Enterprise is a Hybrid
Purely Philanthropic
Hybrid Purely commercial
Type of Organization
Traditional NGO Social Enterprise
Traditional for-profit
Motives Appeal to goodwill Mixed motives
Appeal to self-interest
Methods Mission-driven Balance of mission and
market
Market-driven
Goals Social value creation
Social and economic value
creation
Economic value creation
Destination of
Income/Profit
Directed toward mission
activities of NGO (required by law or
organizational policy)
Reinvested in mission
activities or operational expenses,
and/or retained for business growth and development
Distributed to shareholders and owners
Adapted from Gregory Dees; and Lee Davis and Nicole Etchart.
Ashoka - School For International Training
February 2007
Embedded
Enterprise created to accomplish
mission
SocialPrograms
+EnterpriseActivities
Enterprise and social program are one and the
same
Ashoka - School For International Training
February 2007
Integrated
Enterprise created as a
funding mechanism and to expand mission
SocialPrograms
EnterpriseActivities
Business activities overlap withsocial programs; synergies, shared costs and assets
Ashoka - School For International Training
February 2007
Complimentary
SocialPrograms
EnterpriseActivities
$
Enterprise created as a funding mechanism to
support mission activities
Social and business activities separate and may or may not
be related to mission
Ashoka - School For International Training
February 2007
Unrelated
Mission Relevance
MissionCentric
Mission Related
Unrel
ated
Embedded
Integrated
Complimentary
Ashoka - School For International Training February 2007
Social Enterprise Operational Models
Ashoka - School For International Training
February 2007
Employment Model
MarketSocial Enterprise
Clients
Social Impact Financial
Sustainability
ProductProduct
Embedded
Ashoka - School For International Training
February 2007
Entrepreneur Model
Market
Social Impact
Client Social Enterprise
FinancialSustainabil
ity
ProductProductLoansLoans
Embedded
Ashoka - School For International Training
February 2007
Organizational Support Model
Financial
SustainabilitySocial Impact
Clients
Subsidiary
Complimentary
Ashoka - School For International Training
February 2007
Market Intermediary Model
Financial
Sustainability
Social Impact
ClientsSocial Enterprise Market
Embedded
Ashoka - School For International Training
February 2007
Service Subsidization Model
Social ImpactFinancial Sustainability
Social Enterprise Clients
Market
Services
Social Impact
Integrated
Ashoka - School For International Training
February 2007
Fee-For-Service Model
Services
Social Enterprise
Sustainability
Clients
Social Impact
Embedded
Ashoka - School For International Training February 2007
Social Enterprise Design
Ashoka - School For International Training
February 2007
Social Enterprise: the Vehicle
A social enterprise is any business venture (nonprofit/for-profit) created for a social purpose—mitigating/reducing a social problem or social market failure—while operating with reference to the financial bottom line and with the discipline, innovation and determination of a for-profit business.
- Virtue Ventures 2006
Ashoka - School For International Training February 2007
Social Enterprise Design is Driven by Social Concern Rather than Financial or
Market Opportunities
The social problem IS the business opportunity
Ashoka - School For International Training
February 2007
Reduce social problems w/enterpriseSocial Problem 1. Food insecurity
2. Deforestation3. Subsistence
farming 4. Limited
economic opportunities
5. Hunger6. Barriers to
employment
Social Enterprise1. Agricultural
products store & bakery
2. Ecotourism 3. Natural products 4. Tool Library &
School
5. Restaurant6. Landry,
housecleaning, thrift, etc.
Ashoka - School For International Training February 2007
What is the problem????
Social problem or social market
failure enterprise is trying to mitigate
Ashoka - School For International Training
February 2007
The Mission is the Anchor
To Vision
UnrelatedOpportunity
Ashoka - School For International Training
February 2007
Social Market “Beneficiaries” of impact Client Community Environment Public
Competitors Role of subsidies in the market
Collaborators Strategic alliances and partners
Ashoka - School For International Training
February 2007
Role of Client
Social Enterprise
Client #1
Market
Product
$$
Client #2
Client#3
$
Product
Client #4
Ashoka - School For International Training
February 2007
Social Criteria Business Venture Idea Evaluation Form
Venture Idea(Rate according to ability to fulfill criteria)
(Definitely will not meet criteria) (Definitely will meet criteria)
CriteriaJanitorialServices
AssemblyBusiness
LaundryServices
Restaurant CommercialCopy
CommercialBakery
Range of skill requirements –mostly low skill jobs
+2 +1 +2 +1 +2 0
Range of full time and parttime jobs – mostly part time
+2 +2 +2 +2 +2 0
Variety of tasks +2 0 +1 +2 +1 +2
High proportion of repetitive,predictable tasks
+2 +2 +2 -1 +2 +1
Environment that managementcan control
+2 +2 +2 -1 +2 +1
Daylight-hours jobs +1 +2 +2 0 +1 0
Monday through Saturday +1 +2 +1 0 +1 +1
Organized as supervisedteam/crew work
+2 +2 +2 0 +2 0
Room for quality checks andcontrols – time to correct formistakes
+2 +1 +1 -2 +1 0
Minimal deadline stress +2 0 +1 -2 0 0
Minimal seasonal layoffs +2 0 +1 0 +1 -1
Leads to living wage work +2 0 +1 0 +1 +2
Total Score: +22 +14 +18 -1 +16 +6
-2 -1 +10 +2
Business Venture Idea Evaluation Form
Venture Idea(Rate according to ability to fulfill criteria)
(Definitely will not meet criteria) (Definitely will meet criteria)
CriteriaJanitorialServices
AssemblyBusiness
LaundryServices
Restaurant CommercialCopy
CommercialBakery
Range of skill requirements –mostly low skill jobs
+2 +1 +2 +1 +2 0
Range of full time and parttime jobs – mostly part time
+2 +2 +2 +2 +2 0
Variety of tasks +2 0 +1 +2 +1 +2
High proportion of repetitive,predictable tasks
+2 +2 +2 -1 +2 +1
Environment that managementcan control
+2 +2 +2 -1 +2 +1
Daylight-hours jobs +1 +2 +2 0 +1 0
Monday through Saturday +1 +2 +1 0 +1 +1
Organized as supervisedteam/crew work
+2 +2 +2 0 +2 0
Room for quality checks andcontrols – time to correct formistakes
+2 +1 +1 -2 +1 0
Minimal deadline stress +2 0 +1 -2 0 0
Minimal seasonal layoffs +2 0 +1 0 +1 -1
Leads to living wage work +2 0 +1 0 +1 +2
Total Score: +22 +14 +18 -1 +16 +6
-2 -1 +10 +2
Ashoka - School For International Training
February 2007
Profile Demographics
Economically active Weak social ties Vulnerable
Few assets Inability to repay
Psychographics Transient Risk adverse Extra burdens
Geographic Refugee camps Poor or degraded market & infrastructure
Financial Services Grants and training before loans
Mobile lending Monitoring Mentoring Certificates – credit rating
Support to start up micro-businesses
Transparent processes
Continue service Branding
Social Criteria: Products
Ashoka - School For International Training
February 2007
Somers, Shaping the Balanced Scorecard for use in UK Social Enterprises, “Social Enterprise Journal”
Ashoka - School For International Training
February 2007
Somers, Shaping the Balanced Scorecard for use in UK Social Enterprises, “Social Enterprise Journal”
Ashoka - School For International Training
February 2007
Leverageble Assets Tangible
People Land Money
Intangible Reputation / Brand Methodologies Content Relationships Skills and expertise
Ashoka - School For International Training
February 2007
Surprising Examples of Leveraged Assets
PRODUCT Zookeepers in Thailand turned their Elephant dung into lucrative handmade paper products
AN ASSEMBLED MARKET A national youth organization discovered
that its target group was valuable to large advertisers and assembled focus groups and market research studies for major companies.
SPECIALIZED EXPERTISE Following 911 a grief and loss organization
experienced high demand for its specialized grief counseling services and won contracts with NY and DC local gov’t and the US military.
Ashoka - School For International Training
February 2007
Organizational Factors
Core competencies Capacity
Human Resources Financial
Stakeholder buy-in Risk Profile Preferences Competitive advantages Culture
Ashoka - School For International Training
February 2007
Market Forces
Market: size, growth and trends
Demand Income potential Industry dynamics Competitive environment Ease of entry (regulatory, legal, etc.)
Ashoka - School For International Training
February 2007
Financial Criteria Start up costs
Amount organization can invest Financial need to start up
Operational funding Maximum $$ org can subsidize venture Duration can subsidize Breakeven a requirement
Financial Objectives $$ financial contribution to social/program costs
% of shared fixed costs covered Diversified sources/unrestricted
Ashoka - School For International Training
February 2007
Role of Revenue and Profit
Years Enterprise Revenue Social Expense Business Expense
Breakeven AFTERSocial CostsBreakeven Before
Social Costs
Social Subsidy
Investment
EnterpriseRevenue Subsidizes Social costs
ProfitFor biz & programinvestment
Ashoka - School For International Training
February 2007
Income In 000s
Sales $565
Socio-economic expenses
Wage premium to clients $40
Soft skill training $30
Job coaches $60
Shared expenses (SE-Parent)
25% ED $20
Rent + utilities $60
Back office expense $40
Pure Business expenses
Business manager $80
Hard skill training $30
Marketing $20
Wages $160
Supplies $10
Total Expenses $550
Profit (loss) $15
Social program costs
Counseling & Health services $120
Social costs $120
Required Subsidy $95
• socio-economic costs are social program costs covered by running a social enterprise; objective is NOT to make profit but cover more social costs through biz activities
• Share expenses enable parent organization to leverage assets and have unrestricted income
• Business expenses pure business cost, but also underwrite social objectives—i.e. wages to client workers
• Social costs can be allocated separately and subsidized with grant funding
Ashoka - School For International Training
February 2007
Social Subsidies and ROI
Job Hard Skills Soft Skills Insurance Heath Care Literacy
$$
Mission Accomplishment Business Performance
Ashoka - School For International Training
February 2007
Prioritize Screens
Prioritizing screens depends on: What are you trying to achieve?
What you have? What you don’t have? Organizational culture/priorities?
Market conditions? Costs and cash flow?
Ashoka - School For International Training
February 2007
Scoring OpportunitiesOpportunity/
Business idea
Fit with
Mission
Fit with Social
Criteria
Fit with Strengths
Fit with Assets
Fit with financial criteria
Market Potential
