social delta

Consulting and support for social enterprise in Canada

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2016 Gift Guide featuring social enterprises and progressive businesses

Social Delta is pleased to recommend the holiday gift guide that has been produced by Social Enterprise Ontario. Please consider supporting these businesses, as you share holiday cheer with friends, family and colleagues.

Each gift you buy this holiday season can have significant impact on your community. Thanks to the newly launched Social Enterprise Gift Guide, extending the impact of your gift giving is now easier than ever. The Guide features a wide variety of products created by Canada’s diverse social enterprise sector, representing for-profit and non-profit organizations, cooperatives and B Corps.

The Social Enterprise Gift Guide includes a broad range of products and is fully searchable by product type, price range, region and other categories. For example, you’ll be able to purchase calendars or greeting cards from Options Mississauga Print and Office Services, beer from Beau’s All Natural Brewing Company, meals cooked by Syrian refugees from Newcomer Kitchen, Inc. and order a gift basket of local preserves made by Youth Opportunities Unlimited in London.

In addition to the main online guide there is a printable Feature Product Gift Guide (PDF) with selected products from different social enterprises from across the province

The Guide is available in English and French (ESontario.org).

This project was made possible thanks to a collaboration of various community organizations and the financial support of the Government of Ontario.

You can find the full catalogue of 100+ products and services online at http://seontario.org/social-enterprise-gift-guide-2016.

If you’re a social enterprise and you’d like to showcase your products & services please fill out this form. (Deadline: December 9)

Funding–yes grant money–to reduce homelessness

Employment And Social Development of the Government of Canada recently launched two calls for proposals for innovative projects that aim to prevent and reduce homelessness. This is an excellent opportunity for social entrepreneurs with a social mission related to homelessness.

Below is a message they have sent out to be shared:

The call for proposals for microgrants has been extended and will end on November 14, 2016.

  • The call for proposals for microgrants – Apply for funding up to $25,000 for small-scale projects. Projects must focus on exploring effective and innovative practices, tools or initiatives that prevent or reduce homelessness in Canada.

Note that there is also a more comprehensive funding program for larger scale initiatives, also with a deadline of November 14, 2016. For more information, please visit the Innovative Solutions to Homelessness funding page.

Why invest in a social enterprise that doesn’t break even?

The goal of a social enterprise is to create positive social change.

To sustain its social impact it has to make enough money to pay all its expenses… in order to remain financially viable, correct?

Would you believe that a $50K investment in a financially unsustainable social enterprise (generating revenue that never exceeds 80% of its costs) can still create more than four times the social impact than making the same donation to charity, while at the same time creating more than $360K in retained earnings, keeping the business in operation over 22 years without any further investment?

There is a strong case to make a social investment in a business that doesn’t break even. If your investment goals are to create social change, then better to invest in a business that can use your money to multiply the social benefit.

Read my guest blog post at SEEChange Magazine for the full story and calculations.

Market share equals what to social enterprise?

One key measurement of success in a for-profit business is market share. Does this also apply to a non-profit housing cooperative?  An employment-based catering company?  An up-cycling storefront?

The goal of a social enterprise is to maximize the positive impact on those who benefit from their business: affordable housing to all, new job opportunities for the disenfranchised, tons of diverted waste from landfills.  In many cases, mission maximization can only be achieved by increasing the scale of their business; therefore,  unless the market expands, scaling up means someone else must scale down or be joined.

However, it is almost “un-social enterprise” to be creating a vision in which market share is a goal, or evemarket-share-graphicn plausible. Most social enterprises operate locally, and all work with a social mission that drives them. The thought of putting a for-profit out of business—or even acquiring that company—is likely not in their initial thinking, nor explicitly in their business plan.

But why not? Why shouldn’t a social enterprise seek to minimize competition and/or take customers from another local business? Why wouldn’t they attempt to buy that local business in order to increase their inventory, maximize their social mission, minimize competition, and benefit from economies of scale? There is no imperative to leave your competitors alone when you are a social enterprise.

Of course, it is possible that putting competitors out of business, or challenging their cost structure by using grants to get a competitive advantage, or taking them over in order to employ a disadvantaged segment rather than their existing employees, may have unintended social costs. No social enterprise ought to decrease the employment of others in favor of their “target” population, or diminish the value of for-profit colleagues in the marketplace. Healthy competition is good, arguably even necessary for innovation and improved social outcomes, and seeking market share without recognizing the social costs could potentially jeopardize the net social impact on the community.

Social enterprises are modest by nature, in my experience, and aggressive business practices are seen as unsavoury at best and downright nauseating at worst. However, if increased market share means increased (net) social benefit, then by all means a social enterprise ought to be unabashedly bold in their business aspirations to increase market share.

Charities are selling… more than ever!

As a follow up to an earlier post,  Social Delta is pleased to report that there has been an increase of $2 billion in annual revenue earned by charities in 2014. This represents a 12.4% increase from the 2012 returns. (which in turn was 3.8% higher than 2011)

Charities are expected to file T3010 forms at the end of each fiscal year. As part of this annual reporting, they submit financial statements in a specific format and these documents are then made public at the CRA Website.  Blumberg Segal LLP has painstakingly aggregated the data for the 2014 submissions to help define the scale and scope of the charitable sector in Canada.

Some key facts from the April 10th Blumbergs’ Snapshot of the Canadian Charity Sector 2014:

  • Total revenue from all sources in 2014: $246 billion
  • Total sales revenue (not including to government): $19.9 billion
  • Total  membership revenue: $1.6 billion
  • Total value of tax receipts issued: $15.7 billion

As was the case in the 2012 report, earned revenue by charities is greater that donated revenue for which tax receipts were issued.  Admittedly, not all of these revenue generating activities would be considered social enterprise, but the data underlines the growing importance of earned revenue in charitable activities in Canada.

For more details on the report, and the host of other resources available from Blumberg Segal LLP, visit their web page devoted to legal issues facing the charitable sector in Canada.

 

Key Ingredients of Flourishing Social Enterprises

Poverty & Purpose

It is no accident that some of the hotbeds of new and successful Canadian social enterprises are in specific, economically depressed regions: North end Winnipeg, Downtown Eastside Vancouver, Regent Park in Toronto,  and rural Nova Scotia and Newfoundland. It is said that necessity is the mother of invention, and indeed, the needs of the population in these regions are acute and entrenched: discrimination, drug use, alcoholism, obesity, crime, unemployment, marginalization… Where there is poverty, inequality, and significant loss of livelihood there is a need to try anything; poverty creates an irrefutable purpose to develop a mechanism to arrest human suffering. Social enterprise is one such mechanism, where a business model is employed specifically to address a human need.

Innovation & Investment

Desperation may be a driver for change, but someone has to create an idea for the business. In my experience, social enterprise business ideas are rarely conceived by committee.  More commonly, a single person is responsible for a creative social enterprise idea, and they need to then invest their time, energy and often finances to bring that idea to the market. That individual can work independently as a solo-preneur, or as an intrepreneur within government, the private sector, co-operatives or non profits. Growth and development of the idea will of course require support from many actors within these organizational structures, and even from a broader community, but innovation and investment typically starts with one person who has a dream to make life better for others.

Risk & Reslience

However, business is not easy; ask any entrepreneur. Social entrepreneurs face an increased challenge because they live in a world where success is measured in social wealth, not in financial returns. Creating a business where maximizing social benefit drives all business decisions can—and in most cases does—suppress financial returns. Risk is therefore large and the expectation of future financial wealth is optimistic at best, and frequently a myth.  In the private sector, individuals and organizations assume risk on the presumption that future financial rewards will compensate them for risking their time, energy, money and social capital. Social enterprise flourishes when the innovators have a resilient constitution, and a way to accept, manage and even embrace personal losses for the sake of a common good.

Patience & Prudence

The worst part is that starting a business creates risks that last for a long time. For many individuals and organizations launching a social enterprise, the initial energy can be whittled down by a thousand tiny cuts, often over years. In my experience, social enterprises that are spearheaded by an innovator in the non-profit sector may take up to three years to launch, and perhaps five  years to break even (if ever). Accepting, managing and embracing losses and risk over that length of time—all motivated by a sense of optimism and altruism—requires exemplary patience and a strong, informed, and flexible plan to succeed. A full-fledged business plan may seem excessive, but there has to be at least an understanding of the market, the risks, the operational requirements, proposed budget including both projected income and expenditures.

NEW: RECIPE FOR IMPACT

  • Is your social enterprise engine sputtering?
  • Are you and your team frustrated or overwhelmed?
  • Is revenue stagnant? Is financial sustainability in jeopardy?
  • Are you maximizing your social impact?
  • Is your founder looking for other work?

Social enterprises can have troublesome adolescent years as well, and Social Delta knows how to help  you overcome the challenge through a practical, effective one-day strategy session.

We offer a full day facilitated strategy workshop to help you and your social enterprise stakeholders identify strengths and challenges, and refine your objectives. This is a co-working session which draws upon Social Delta’s decade of experience working with and studying social enterprises, and your intimate knowledge of your own business.

This is not just any business strategy session. It is specifically designed for social enterprises, whether run as a co-operative, a non profit corporation, or a private company. We don’t just look at the numbers, we review the whole business proposition and identify how to maximize your social impact through improved business practices.

This unique service starts with an online survey completed by your team of stakeholders (clients, managers, employees, volunteers, board members and owners). This survey sets the foundation for an objective group evaluation of the financial and social health of your business in 12 different thematic areas.  The survey results form the foundation of a day of in-person discussions allowing your team to make concrete decisions about what areas need to have more focus, and what aspects of the business can be relaxed in the short term. The whole process is designed to “round the wheel” by reallocating scarce resources–time, physical assets, operating capital, and human resources–to create a stable, robust and effective social enterprise.

Together, we will write your business Recipe for Impact

In only one day:  Concrete, realistic, measurable  next steps to maximize the social impact and the financial health of your business.

Contact us for more information on pricing or to learn about this unique service for social enterprises.

Social Entrepreneurship: Are you the One?

It is the New Year, and you are resolved to feel better about working.

You have worked for others, and maybe you feel frustrated by their vision not matching your own. You maybe even have felt that your work was not being recognized? Perhaps you feel that you are doing work that is “beneath you?” Maybe you go to the stores and you are annoyed, perhaps even distraught, by the many frivolous products and services that one can buy? Do you follow the news, and are you struck by how greed and fear is seemingly driving the world to ruin…community by community?

You want to work for something to make the world a better place, and where your vision guides your daily grind. Where you can make a living by helping others live better.

Social entrepreneurship might be the answer.

But is it right for you? Here are seven initial questions to ask yourself.

  1. Can you afford to be a social entrepreneur? Starting a business is hard work, and frequently doesn’t generate a lot of revenue (ie salary) quickly. Moreover, most entrepreneurs don’t work 9-5. They live their business during start-up and beyond. Starting a social enterprise is even harder, and will likely not generate a lot of revenue in the medium term, as the social mission may require lower prices, workplace supports, or even higher input costs.
  2. Do you have an idea for a product or a service? Social enterprise relies on one fundamental concept; you must sell something in the market to generate revenue. Sounds obvious, but selling a product or service means that you need to have demand for that product or service. Creating demand is hard work, and advertising is an inexact and costly endeavor. Your product or service needs to have potential customers and you need to know more about them before you commit to your business.
  3. Can you find a sponsor, a partner, or a host? One way to mitigate the high cost and low salary prospects is to consider taking your idea to a charity or non-profit that shares your values. Rather than entrepreneurship, perhaps intrapreneurship might suit you better. You manage the revenue generating activity, but the non profit organization owns the business and helps share some of the risk. They may even pay you a salary if you can help them find money from grants, reserve funds, or philanthropic supporters to underwrite the new initiative. (to be clear…if you start the business on your own, you’ll still need to find start-up money)
  4. How strong is your constitution? You need to have more than just a “second gear” to weather the rough times. You have to believe that this idea will be what makes you whole. Your must have a passion to make your business work in the face of adversity, illness, competition, naysayers, and budget crunches.
  5. Do you have community support? Social enterprises are different from other businesses, in that the social impact is the main motivator. You can use that social mission to engage talent as advisors, sponsors, mentors, and sometimes even customers. Because of the communal wealth you seek to increase, you have an opportunity to engage the community in your business idea, and your business success. Always look to develop the community around your business; find those who support you, and cultivate that support to help with marketing, design, governance, product development, funding and other key elements to your social enterprise.
  6. Are you humble enough? This sounds paradoxical, as most think entrepreneurs need ego or supreme self-confidence to overcome challenges (and even failures). However, humility is important in social enterprise, as the business should not be about you. It should be about improving the lives of others. You may be recognized (and you may even crave recognition) for the idea and the launch of the business, but fundamentally, the business has to be bigger than you. In fact, if you review your answer to the first set of questions in this post, you’ll realize (I hope) that in order to find meaning in your daily work, you need to be working towards something bigger than you, you need to have a higher purpose for work.
  7. Can you roll up your sleeves and get dirty? Related to this humility is the fact that running a business on your own or within an organization might also require you to be figurehead, shipper, manager, and janitor all at the same time. The grim reality is that most businesses need more manual labour than celebrity spokespeople. If you feel that you’ve been working below your station when working for someone else, be prepared for a dose of humility as you lick your own stamps, prepare your own invoices, manage inventory levels, and take out the trash after you’ve given your great media interview.

So… Are you the One? Is 2016 your year to make work truly meaningful to you?

If the above list of questions leaves you feeling energized and excited then maybe you are destined for a career as a social entrepreneur. If so…identify the skills you may lack, and look for folks who have those skills to support you as you start your business planning and launch. If you need some market research, some advice, or just want to chat confidentially, of course you can contact me here at Social Delta for a free first time consultation.

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