While many in the social enterprise space often qualify themselves as ‘non-profit,’ these organizations should instead treat themselves as ‘for-purpose.’ These organizations should focus on their mission to create social good, while still treating themselves with the same commitment to rigor and discipline as the best for-profits.
Adam Braun
If you are a sailor, you invest time, money, and passion in your boat. You may even build a community around this recreational hobby. You do not expect repayment. At the end of each day, however, you get paid with that which is immeasurable and intangible. You are paid in the beauty of the open water, the glory of nature, perhaps the company of friends, and the wind in the sails.
Similarly, social enterprise is not about making money, or making a name for yourself, or building an empire. It is about creating a better, more peaceful, more sustainable, more just world. The investment pays dividends that have no financial currency, but are of tremendous value.
I’ve heard that sailboats are frequently described by owners as “a hole in the water into which you throw money.” Sadly, a social entrepreneur will likely lose more money than they will make as they conceive, design, launch and build their business. Most effective social enterprises are never sold for a profit, nor are they franchised into a stream of future income. In fact, the majority of social enterprises do not make a profit year over year, and when they do, their very existence compels them to reinvest in maximizing their social mission.
However, social entrepreneurs—I argue—should not be motivated by money; they have to be motivated by the social change that they deem is necessary.
I was once approached by a social enterprise leader, asking if I’d like to invest in their fair trade business. He flat out told me, “This is a terrible financial investment.” However, he said that it is an investment in the right way to do business, where co-operative farmers (who I will never meet) will be able to live a sustainable, healthy life, a life where their children will get an education and opportunity. The investment has indeed been a financial loss, but an exceptionally lucrative social decision. The social enterprise has continued to operate (in part) because of my capital, and they continue to help individuals in a sustainable, meaningful way. I put money into justice, and my recompense is enormous.
I meet a lot of people who believe that social enterprise is cool. Some even call it innovative and new. However, social enterprise is actually an old concept with a new name. Early business was never about profit. It existed to allow entrepreneurs to make a living, providing goods and services that are needed for a community: food, haircuts, building materials, and the like. Business can be designed to cover costs, including salaries, and provide value without maximizing profit.
As we work to build purposeful and meaningful businesses, we ought to banish the thought that social enterprise is going to be a way to retire wealthy. As with the investment in a sailboat, we might enjoy retirement happy, satisfied, and full of calm knowing that our sacrifices are worth every penny we put into it.
The long-term payment for the social entrepreneur is a social wealth that is far beyond riches.
Here is an interesting article that suggests that social enterprise is a perfect tool for the idealistic Millennial. Social Delta couldn’t agree more (although we also believe that it is a robust tool for anyone from any generation seeking sustainable social change…)
However, as Social Delta’s president noted as a comment in the article, the wonderful and infectious idealism of Millennials must be tempered by knowledge of what has gone before. There are very few truly new ideas. We have new tools like computers and the internet, we have access to massive amounts of information, but humans have been innovating for our entire history.
It can be observed that perhaps each generation believes that they possess something that the previous generation lacked. This is the folly of humankind. Even if this were true, knowing what has gone before us in social housing, sustainable agriculture, support of seniors, empowering a disenfranchised group, or even recycling will help to convert idealism into practical, sustainable change in our communities.
One change that is worth noting: this new access to information actually makes it easier to learn about the history of a movement, and idea or a business. Moreover, we don’t only have access to the past, we also have access to other communities’ experience all over the world. We in Canada can learn a lot from citizens in Europe, Asia, Africa, South America or elsewhere. Miraculously, we can find out about these concurrent efforts easily; however, we must look before we leap.
It would be dangerous to think that even the very concept of social enterprise is new. The term may be new, but social enterprise–commercial transactions designed to benefit the community–is one of the oldest forms of social change. It is possible to think that many businesses 100 years ago were social enterprises: they generated employment, provided needed goods and services, and operated for the benefit of the community. (think of the general store…it wasn’t created for profit, but it certainly created community value).
We must all remember that new terminology shouldn’t disguise old ideas and that new ideas are best informed by past action by innovators and idealists all over the globe.
I am pleased to offer Impact HUB Ottawa members free consultations on social enterprise once a week during the fall of 2017. I will be at HUB Ottawa, 123 Slater Street, 6th Floor on Tuesday mornings from 9:30 to 10:30. Check the events page each week in case there is a last minute change in timing.
Not a member of the HUB yet?
Consider the Experts in Residence program as one of the many benefits of being a member, and drop by the space to chat with the host to ask about their very reasonable co-working rates.
If you are at the HUB when I am there, and are interested in a chat about social enterprise, please feel free to come and find me if I’m not busy.
Jonathan
The Mental Health Commission of Canada (MHCC) is offering free online course coupons to social enterprises through the Social Enterprise Institute (SEI)
If you are a social enterprise that hires individuals with mental illness, take advantage of this coupon offer by completing the online request form. This coupon offer is available to social enterprises in Canada that employ people living with mental illness. There is no deadline to complete the online request form but there are a limited number of coupons available in each category. Coupons will be distributed on a first come first serve basis to eligible applicants.
The Social Enterprise Institute (SEI) was created to help anyone, regardless of location or economic ability, to set-up a social enterprise to address issues and causes they care about. SEI was also created to make learning easier to implement; to take the hassle out of learning new skills by delivering seamless, short, on-demand eLearning produced by industry professionals. Learn more about SEI at www.socialenterpriseinstitute.ca.
COMPLETE THE COUPON REQUEST FORM
SEI is one of the partners in the Social Enterprise Ecosystem project (S4ES). The S4ES project connects training, marketing, and impact measurement resources for social enterprises anywhere in Canada. The project is funded by the Mental Health Commission of Canada, the Government of Canada’s Social Development Partnerships Program, and the J.W. McConnell Family Foundation. Learn more about S4ES at www.s4es.ca.
As if to refute Shakespeare’s famous line, we all like to define things that are new to us. Scientists will define new stars, species or diseases. Social workers and teachers will define new approaches to learning and social improvement. Business people will define their brand, or a new trend in consumer behavior. Academics spend their entire careers reading about previously defined concepts and trying to invent new ideas and label them.
It comes as no surprise that many people who first hear the term social enterprise want a definition. This is why you’ll see a “definition” of social enterprise in the margin to the right of this post. For most, to understand the meaning of a term is the first step to embracing the idea. The words are familiar but are not fully understood as a pair. Is social enterprise a chatty workplace? Is it a new media term? Is it a collection of similar businesses? Amalgamating the known definitions of the two terms leads to many interpretations.
Social Enterprise, in essence, basically refers to a commercial activity with a primary goal of creating some sort of social benefit. However, this is not the only definition. There are many nuances and variations, including legal structures, ownership, profitability goals, success measurements, hiring practices, asset locks, target beneficiaries and a host of subjective qualifications depending on the personal perspective of the entrepreneur.
It is significant to note that even people who work as social entrepreneurs or as supports to social enterprise can’t agree on a definition. This is confusing for the newly initiated and leads to a great many people dismissing social enterprise as a fad, a new label on an old idea, or even an insidious effort to undermine the market economy, or the charitable sector. Without a definition, social enterprise runs the risk of being marginalized–possibly even shunned–by the establishment.
However, it is my belief that the fluidity of the definition, the nuances, and the many interpretations is actually what makes social enterprise so powerful as a tool for social change. In our modern world the silos of social structures—non profits, coops, government, business, clubs—have led us to myopic perspectives on how to provide value to society. In order to really start to address the social problems that are a result of the current structures, we need to look for more malleable, more dynamic, more intangible, and less defined tools. Social innovation requires new thinking to old problems and new hybrid approaches to put that new thinking into action.
It is no longer sufficient to simply “partner” with another sector actor to seek effective change. Partnership and collaboration are strong tools to bring different perspectives to a problem, but they are just the beginning. Social enterprise, in all of its many forms and definitions, is a structure that allows for many approaches and many perspectives to be used simultaneously. Social entrepreneurs can glean from the best practices of a diverse group: non profits, private businesses, public sector institutions, co-ops, voluntary associations, charities, community associations, etc.
As if to punctuate the value of a vague definition of social enterprise, the Harvard Business School’s Social Enterprise Initiative’s mission, “applies innovative business practices and managerial disciplines to drive sustained, high-impact social change…[while we] engage with the nonprofit, for-profit, and public sectors to generate and share resources, tools, and knowledge.”
The challenge of no clear definition is that our laws, our financial services and our social support networks remain somewhat confused by social enterprise. Interpretation of the term’s meaning leaves us wondering: does a social enterprise run on grants or through investment? Does it require volunteers or paid staff? Are they taxed or not? Must they incorporate or be informal? Are they out to make financial gains or generate social value? The answer is that social enterprise can do all of these things…sometimes all at the same time.
Confusing? At first yes, perhaps. However, if we embrace the concept of social enterprise rather than a strict definition, then we may indeed see innovative solutions that will improve our society for generations to come.
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)
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.
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.
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.
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Is what I’m doing actually a social enterprise?
In the last decade, many more people working to create social change in Canada have been calling themselves social entrepreneurs. The phrase is no longer a mystery for most, as programs in social enterprise spring up at universities and colleges, social innovation incubation spaces proliferate across the country, and young leaders are increasingly looking to create meaningful work for themselves.
However, not all efforts to improve the human condition are social enterprises. Literally, an enterprise can be defined as any “project or undertaking, typically one that is difficult or requires effort” (as in the enterprise of training for a marathon). A social enterprise, under this definition, could be construed as involving any effort that has a social purpose. But, in fact, a social enterprise is not simply any social movement or activity.
There are a multitude of definitions of the term “social enterprise” in countries and markets across the world. All of them include the principle that an enterprise is a business that, at the very least, includes a transaction of value in which a customer pays cash for a good or service in a marketplace.
And then there’s the matter of social value. Here’s the thing: if you are creating social value but not selling anything, you are effectively operating a charity.
If you are creating limited social value (or social value as a happy by-product) through the sale of your product or service, you are a business – a regular, traditional business.
But, if you are in business primarily to create social value through the sale of a good or service, then—and only then—are you a social enterprise.
To be clear, there is nothing wrong with being a charity or a business. However, it is the direct, concerted effort to use a financial transaction to maximize social improvement that characterizes and differentiates a social enterprise.
Improving livelihoods, communities, culture and well-being is not only the responsibility of one type of actor. Governments, non-profits and charities, co-operatives, businesses and the informal sector (families, clubs, collectives, collaboratives, etc.) can all contribute to making our world a better place. One actor is not implicitly better or worse than another at making that contribution; how they operate dictates how much of a contribution they make.
However, social enterprise is a way of conducting business in which creating social value is a primary goal. It is a tool for social change that can pay for itself through earned revenues. This sustaining revenue offers an alternative to charity, voluntarism or tax-funded activities. It is a unique mechanism for which it is expected that the revenue-generating operations will always be seeking to improve the world around us.
To be clear, in Canada today there is very little benefit to calling yourself a social enterprise. There is no tax relief, no designated employment programs and limited start-up capital. Even grant opportunities are far more related to the form of incorporation and the prescribed outcomes than to the label “social enterprise.” In fact, there is no way to legally define an entity as a social enterprise in Canada.
Nonetheless – and perhaps as a result— many people are calling their project, program, or idea a social enterprise, which is actually making the term increasingly meaningless for policy makers, funders, employees, or even the purchasing public.
So, if you still want to call your work a social enterprise (in spite of lack of clear benefits currently) ask yourself the following four questions:
If you answered yes to all these questions, then you are a social enterprise. If you didn’t, then you may be doing fantastic work or providing a service that can prove both important and beneficial, but you are not a social enterprise.
This article was co-written by Jonathan Wade and Elisa Birnbaum.
Jonathan Wade is the principal at Social Delta and Elisa Birnbaum is writer and publisher who has recorded the advancement and achievements of social entrepreneurs in Canada both online (at SEE Change Magazine) and in print (her first book, In the Business of Change, will be published in May)