social delta

Consulting and support for social enterprise in Canada

Tag: social enterprise (page 2 of 3)

Help to support fair wages for global garbage pickers

One of Social Delta’s friends, Plastics For Change, has launched an Indiegogo campaign to raise money to launch their global platform to support a fair market economy for those on the globe who make a living collecting plastic from the world’s oceans and beaches.

The brain behind this concept is Andrew Almack,  and we’ve been working with Andrew for several months and have been amazed by his knowledge, drive, and commitment to this issue.  Social Delta has no doubt that this business will significantly improve the lives of thousands of individuals living in poverty, while simultaneously help to clean the world’s water of a  growing plastic menace.

Join Social Delta as a contributor to the Indiegogo campaign today, and learn more about how Plastics For Change is a force for good on our planet.

 

When is a medical innovation a social enterprise?

  • An effective device to decrease hearing loss in musicians or audiences.
  • A low-cost prosthetic limb to make mobility possible for millions unable to afford traditional technology.
  • A medical equipment business that makes it affordable to get a used wheelchair, bathroom lift or other medical aid.

These are all innovations that have led to improved health, especially for individuals in our community or around the world with a low income. But which among them is a social enterprise?

  • They all generate revenue through the sale of a product or service. As such, they are enterprises.
  • They all seek to improve health of individuals in our community. As such, they have a social mission.
  • They all require investment of time, resources and assets in order to bring their social benefit to market. As such, they have had to get grants, donations, loans or other forms of start-up capital.

If they walk like a duck, and sound like a duck, then surely they are a duck?

The first case is that of Ear Peace, a company that produces various simple earplugs that reduce decibel levels. It is a product that looks like a thousand others in the marketplace, but its salesman tells me that this private company exists to ensure that people’s hearing is protected. Their slogan sounds altruistic: “Hear Today. Hear Tomorrow.” They are available for about $12-20 a set online. Their website features logos of a variety of non-profit hearing loss agencies and associations. (inferring-but not expressly stating-some form of endorsement)

The second case is Legworks, a Toronto based company that calls itself a for-profit social enterprise. They have developed a low cost prosthetic limb to “help people walk again.” Mobility, they highlight, empowers amputees to more fully participate in society, work, and family life. They offer this technology to those in need “regardless of where they live or their ability to pay.” This social mission is to be achieved by creating a margin on sales in more wealthy markets in order to cover losses in other markets. They note that some 85-95% of the 10 million amputees worldwide do not have access to an affordable prosthetic device, and they recently won the Para PanAm accessibility tech pitch award.

The last case is now a historical case.  STRIDE was a medical aid facility operating in Ottawa, but it closed down because the free rent they enjoyed was lost, and in spite of the value they brought to their customers who paid on a “pay what you can” model, they were not able to generate sufficient revenue to pay for the rent increase. The inventory of medical aids were distributed to agencies across the city upon their closure. The business ran on largely volunteer labour, and dozens of agencies would refer clients to STRIDE to access medical aids needed after suffering an injury or contracting an illness.

All of these businesses could be considered a social enterprise based upon their stated mission. But are they social enterprises? One way to determine whether these are businesses with “a primary goal of achieving a social mission”  is to question where the money goes. Ear Peace appears to create profits for its owners.  Legworks might be profitable, it might not—only time will tell—but it has received financial support from publicly funded bodies and it is unclear where any future profits might go. STRIDE was certainly in the business of social benefit, but it was unable to remain in business without jeopardizing its social mission; this tragedy was precipitated because of a lack of a profit motive.

These businesses are but a few in a large array of those marketing medical improvements, breakthroughs and innovations.  As consumers and social enterprise supporters, we are challenged to determine which of those businesses are motivated by social mission and which simply create better health outcomes for a profit. This is the challenge of trying to define social enterprise. 

What we do know is that if each of these companies were to flourish and grow, then we would have a healthier society, and that is a good outcome regardless of the labels we might apply.

Make it easy for gift buyers to find your social enterprise

SEontario  invites any Ontario based Social Enterprise [SE] to tell them about their products and/or services available this holiday season.

All through the month of December the good folks at Social Enterprise Ontario will be updating their Social Enterprise Holiday Gifts page, tweeting, and sharing via their news section different offerings from great Ontario SE’s like yours.

Please fill out this online form  to let them know a little about your social enterprise and the products/services that you’d like highlighted.

They officially launched the page on Monday, Dec. 1st, 2014.

Get your products and/or services listed on this gift giving directory as soon as possible, as the page will be updated and maintained all through the Holiday season.

If you are looking to buy gifts from social enterprises…be sure to follow @seontarioweb on Twitter, and visit the Social Enterprise Holiday Gifts page for gift ideas.

Social Enterprise: How to make your organization stronger

There are many obvious benefits for a non-profit organization seeking to launch a social enterprise: Unrestricted revenue. Sustainable mission-based programming. Less reliance on grant cycles, reporting and application processes. Building new partners or constituencies.

However, often unseen and frequently unsung, there is also a truly transformative benefit that is realized by organizations considering social enterprise: Social enterprise planning and operations allows an organization to “operate more like a business.” Indeed, the very discipline of considering a social enterprise helps an organization focus its efforts on maximizing social value creation.

But what does it mean to “operate more like a business?

First, it is important to note that conceiving, designing, launching or running a social enterprise does not subsume the organization’s social purpose, nor does it convert all decision making to be predicated on money or financial profitability. By definition, social enterprises exist with the primary purpose of improving the social fabric of our community; therefore a non-profit organization starting a (properly conceived) social enterprise should not jeopardize—but will actually strengthen—the organization’s social mission and create a culture of seeking to maximize social value creation.

I acknowledge that operating more “like a business” might sound wonderful to some, yet heretical to others. To address the perceived heresy, I offer the following list of the beneficial changes that might be expected within an organization considering social enterprise:

  1. Place a value on time. Business thinking quantifies return on investment, and time is an investment. The discipline of business planning helps to quantify and value the time of staff, board and volunteers.
  2. View organizational assets as capital. In a non-profit, the organization’s assets—social networks, human resources, intellectual property, cash reserves, experience, networks—are frequently undervalued and it is worthwhile to consider how these various forms of capital can generate revenue and social impact.
  3. Ensure peak performance. If social impact is seen as “profit” from various forms of capital, then the goal of maximizing social impact creates a rationale to reallocate various forms of capital from one initiative to another.
  4. Create and assess new ideas efficiently. Using a business planning process in the non-business activities of an organization creates a sound framework to filter brainstorming results through research, internal capacity, financial feasibility, strategic planning, funding vs. financing, and measurement lenses.
  5. Understand the cost structure. By allocating costs (and revenue sources) to the “business and non-business” operations requires a solid review of the budget, often illuminating activities that may need review or which are unsustainable.
  6. Make solid investment decisions. Strategic planning can follow a more business-like approach, from an analysis of internal and external strengths and weaknesses to how best to maximize the social return on investments of money, time and resources.
  7. Build dignity into the social mission. A business perspective challenges organizations to price products and services based upon cost, and market ability to pay, not based upon a presupposition that everything ought to be free.
  8. Stop the bleeding. When measurements are in place to document social effectiveness, it is far easier to know when to cancel programs, projects, or products if they are not maximizing capital to create social impact.
  9. Release unwanted inventory. If there are assets that are not being used efficiently to support the social mission, then a business discipline offers a clear rationale to reduce staff, sell a building, cancel a contract, sell an “in-kind” donation, etc.

Through these examples and others, I hope it is clear that “operating like a business” is not a dirty phrase, and does not turn a non-profit or a charity into an unfeeling, profit-driven organization. Social enterprise is a discipline, and that discipline includes tools and concepts that can (and in my experience will) directly benefit the operational and strategic choices made by the whole organization.

Social Enterprise 101: Launchpad or Prophylactic?

There are many courses, webinars and presentations that are available offering an “Introduction to Social Enterprise” for non profit, co-operative, or even entrepreneurs in the private sector. What is the value of these introductory courses? Should you register?

These educational offerings are typically geared for those who are considering starting a social enterprise. They are often marketed as the first step on the path of social entrepreneurship. You may have seen promotions from progressive foundations, business schools, social incubators, shared spaces, or non profit intermediaries. Many of these courses are inexpensive or even free—especially webinars, where the overhead costs are low.

In fact, I offer presentations and workshops ranging from 1 hour to 7 hours providing an introduction to social enterprise definitions, trends, opportunities, challenges and business development processes. I have organized and conducted these trainings with the hope that the many attendees of my sessions would walk away as foot soldiers in an informed army of social entrepreneurs and by sheer mission-driven will would start a tidal wave of social enterprises.

The reality is that I think I have scared many of them away.

The more I offer this sort of course, the more I end up focusing on many of the risks and challenges associated with conceiving, designing, launching and running a social enterprise. I believe strongly that every business should operate with a mandate to provide social wealth in the process of conducting business, yet I still find myself highlighting seemingly dark realities, such as:

  • It is hard to operate a business in a competitive marketplace.
  • The organization needs to be ready BEFORE strategic business design.
  • The business operation must align with—and not compete with—the social mission.
  • Customers are a new stakeholder group and must be considered alongside volunteers, operational partners, staff, beneficiary populations, donors, investors, and board members.
  • Financial (seed) capital to start a social enterprise is hard to find.
  • The reality is that an organization may invest 3-5 years before they see earned revenue.
  • How do you protect intellectual property when you want to share it to maximize social impact?
  • Non profit or collectively run organizations are frequently safe, risk averse places and this can be debilitating.
  • There are legal restrictions placed on charities operating businesses.
  • It is a myth that the businesses social value proposition will immediately guarantee sales.
  • Social impact measurement can be complex, yet is vital to design a social enterprise.

Yikes!

Rather than creating a comfortable nurturing space for organizations seeking to design or build a social enterprise, I paint a picture of the brutal reality: social enterprise is harder than it sounds when initially proposed as a strategic planning retreat, a board table, a coffee shop or at a kitchen table of idealistic changemakers.

I’ve now come to terms with the realization that if I share the honest and accurate details of the stumbling blocks faced by most social enterprises, then the very few that will emerge from these introductory presentations to elaborate on their business idea will truly have what it takes to run a business. They must be unflappable, resourceful, risk tolerant, collaborative, resilient, and passionate.

In fact, I suspect many “Social Enterprise 101” attendees will forget the detailed course content, and will end up learning it all again through their own experience.  Arguably, the value of the introduction course is not, therefore, to prepare a veritable “army” of social entrepreneurs; the value of the course is to stop the individuals and organizations who don’t have what is needed from spending time, resources and social capital on starting a social enterprise.

Perhaps one can say that a good introduction to social enterprise workshop is not a launchpad; it is more of a prophylactic that prevents the birth of enterprises that may not possess the necessary conditions for life.

Social Enterprise Advertising

I welcome any attempt by a social enterprise to advertise their products or services. When I was reading a recent copy of my community newspaper, I was delighted to see an article on Cigbins, a social enterprise started by three creative University of Ottawa students with whom I’ve worked. Their company collects used cigarette butts and recycles them into one of a number of useful products, such as insulation, thereby helping to clean up the scourge of litter while making something of value in the marketplace. The sale of the final product pays for the initial service. Moreover, the company has partnered with a local charity, Causeway Work Centre, to provide employment and training opportunities for individuals with mental health concerns.  This article, written by Michelle Nash at Metroland media, is a wonderful form of free advertising, although of course, getting articles written about your business is not always easy, or replicable.

Meanwhile, the Ottawa Carleton Association for People With Developmental Disabilities (OCAPDD) took a more direct approach. In the very same newspaper edition, they placed a 6.5″ X 5″ advertisement to sell the garlic that they grow on their farm near Bells Corners. I’ve attached a scan of their advertisement to endorse not only what they are doing, but how they are doing it.

silversprings0001

Who are the social entrepreneurs?

I was asked today to outline the personality types of the typical social entrepreneur. Of course, anyone can be a social entrepreneur, and any entrepreneur (whether social or not) has to have vision, passion, risk tolerance, and an idea for a product or service for which there is—or can be—a market demand.

However, based upon my experience working with social entrepreneurs from the co-op sector, non-profit sector and from the private sector (primarily solo-preneurs), I can reflect on some categories of social entrepreneurs. Do any of these sound like you?

The social worker. Not necessarily a social worker by training, but more broadly a person working for a social cause. This person is characterized by a social mission that is paramount in their life and/or career. They typically work in the public or non-profit sector (and very possibly within a charity) and common passions include one of the following: environment/sustainability, recreation/health, victims of abuse or violence, youth development, homelessness/poverty, or individuals facing social stigma or barriers to employment (mental health, developmental delays, criminal records, etc). They may have years of experience and knowledge about the depth of the social problem that they’ve been tackling. They may not have business experience, but their knowledge of what needs to change, and how it needs to be changed, is significant; they typically are motivated to learn as much about business as they can to address the cause they believe in.

The Epiphanist.  This is not a real word, of course, but this describes the person who, for whatever reason, has a moment in their life when they realize that they need to help others. (ie an epiphany) Perhaps they’ve been diagnosed or survived a disease or accident, maybe they met someone whose story or experience touched them, maybe they read a news article or a non-fiction book, or perhaps they heard a TED Talk or social media plea, or maybe they saw something unjust that struck them into action. The Epiphanist can be any age, and is strongly motivated to use whatever they know or have to make a difference. They have a professional network, but their peers and contacts may not always be sympathetic to their “new” cause. They may also have to initially learn about organizations and networks that are already active in this new field of endeavor, but they are typically willing to partner and learn from those with the experience of the Social Worker (above).

The Seeker is the one who wants to change the world, but initially didn’t know where to start. They might have read about social enterprise or seen a social enterprise in action and immediately felt that this is the career for them. They then set about methodically to learn more about business operations, and to confirm the cause for which they plan to work and make connections. They typically are young and may have come to social enterprise from their disillusionment with community, the economy, or their own career or educational path so far.  Initially, The Seeker may lack business experience (and occasionally distrusts business generally), be impatient, and have a limited professional network. However, The Seeker feels they must do something important, tangible, and purposeful and is commonly quite driven to learn more, or even will take risks to test their business idea as soon as possible.  They grow into the role of social entrepreneur out of that need for purpose.

The Serial Social Entrepreneur has started and run a social business and now wants to apply their experience to a new cause. These folks are rare in Canada as the number of successful social enterprises is limited.  The Serial Social Entrepreneur is an expert in the process of building a social enterprise. They understand—through experience—the technical aspects of social business development such as market research, branding, pricing, retail operations, social metrics, partnership, and/or social finance options. They are able to transfer their business skills from one cause to another cause. They are passionate about social change, and they are aware that social change is complex and interrelated and they often have large and active professional networks.

The Maverick is the guy in high school who never spoke, but then created a mobility aid that made it possible to move a wheelchair up the front stairs. These are the inventors, the outliers, possibly the unsung geniuses of our time. They are sometimes reclusive, sometimes wildly gregarious, but often unpredictable and commonly irreverent. Mavericks make great (social) entrepreneurs, because they are “just crazy enough to try something new” without worrying about how it will affect their social status.  Some even cultivate a sort of unique personality (Richard Branson?) which becomes an element of their “brand.” Mavericks can be any age, and are typically able to think of new ways of solving old problems. They occasionally struggle with collaboration and partnership, but they are the idea generators who then work diligently to bring their social innovation to life.

There are, of course, no rules about who can be a successful social entrepreneur, but in my experience social entrepreneurs are people who care about building a better society, and who see the selling of goods and/or services as a tool to support that goal. Social entrepreneurs can come from any sector, any socio-economic background, any cultural heritage, aged teen to elder. They possess an unscripted mix of idealism, pragmatism, flexibility and diligence. However, they are each very unique, and they are not as easily categorized as I have suggested in this post.

Free downloadable resources now available

Social Delta has just made several resources available to be downloaded for free.

Do you know your entrepreneurial strengths and weaknesses? What sort of incorporation is right for your social business? What information might be included in a social enterprise business plan?

Visit our Downloadable Resources page to answer these questions and more.

Can Non Profits intentionally make profits?

Non profit organizations do not have the benefit of issuing tax receipts for donations, unless they are registered charities. This means that non profits running a social enterprise are at a significant disadvantage if they are trying to access funding from donors, philanthropists, foundations and many government programs. For many (non-charity) NPO’s, earned revenue is almost a necessity in order to fund their social, cultural, environmental or recreational programs.

The question is  whether a non profit organization can run their business so as to intentionally make a profit?

The answer up until now has been a resounding no. Many non profits believe that so long as they re-invest any profits (that is to say the excess of revenue over expenses) in the social mission, then they are OK. However, the CRA does not believe that this so-called “destination of profits test” is a sufficient argument. Indeed, the Canada Revenue Agency in their February 2014 Non-Profit Organization Risk Identification Project Report states: “It is the CRA’s position that a NPO can earn profits, but the profits should be incidental and arise from activities that are undertaken to meet the organization’s non-profit objectives. The earning of profit cannot be or become a purpose of the organization, even if the profit is earned to fund non-profit objectives.”

To paraphrase: if a non profit organization intentionally makes a profit year over year, even if that profit is reinvested in the organization’s mission,  they run the risk of losing their tax exemption.

Social Delta recommends the research work of the BC Centre for Social Enterprise, as they’ve written several position papers on this policy issue and others relevant to social enterprise operations run by non profits.

 

The Value of Ideation

“What business should we operate?”

Is your organization thinking about launching an enterprise?  Jonathan Wade explains the importance of ideation in pursuing that goal – and shares some of the challenges and benefits every enterprising non-profit can expect.

For non-profit organizations, there is a growing sense of urgency in seeking necessary resources to deliver on their social mission. Funding is diminishing, or is becoming increasingly focused on specific areas of funder interest. Donors seek lean organizations and relatively rapid results, yet social service provision is labour intensive, and change takes time.

It is not surprising that Ottawa’s Centre for Innovative Social Enterprise Development (www.cised.ca) receives regular calls from non-profit professionals asking for help starting a business to offset lost funding. The problem is that successful businesses rarely succeed because the entrepreneur needs money. In fact, as anyone who had started a business can tell you, launching a business typically requires more money (investment) than it initially makes…often generating one to three years of operational losses.

This reality is understandably disappointing for cash-strapped organizations.

Let the ideation begin

However, starting a social enterprise from within a non-profit is an excellent way to diversify revenue, provided that expectations are managed. In fact, the process of conceiving of a business idea—referred to asideation—is itself a very beneficial endeavor for most non-profits (and charities) as it allows them to look critically at what they do and how they do it while considering market demand for products and services they might create.

There are several ways to determine what sort of social enterprise your non-profit might consider:

1. What are you good at, and can it be commercialized?
2. What does the market need, and do you have (or can you assemble) the knowledge, skills, and inputs required to meet that demand?
3. Can you take over an existing business that is in keeping with your mission?
The second approach to ideation is pure entrepreneurship. If you understand the market, and you can fill a consumer need, that becomes your business. However, non-profits typically need to commission suitable market research and then divert limited resources to create the required product or service. This has a high opportunity cost, and many say that you can’t “learn” entrepreneurship.

Similarly, taking over an existing business requires a strong knowledge of business operations and business valuation, as well as access to financing to acquire an existing business.

Building a social enterprise on existing strengths within a non-profit corporation, in my experience, is the most effective ideation approach; it guarantees an alignment between the organization’s social mission and its business activities and it doesn’t require learning a whole new skill-set or investing in new resources.
For example, if your organization offers computer training to women in crisis, then you can offer fee-for-service computer training to a broader audience to generate revenues to underwrite your social mission. Similarly, if your social service programming generates artworks, then selling those artworks—indeed a by-product of the programming—is relatively easy and does not immediately raise concerns about mission drift.

The challenges of commercializing

Commercializing existing assets—intellectual, social, financial, or human capital—can be a challenge for non-profits. For one, the organization may lack the skill and resources to bring these assets to market. Second, there may be no buyer for the skill, product or services in which your non-profit excels. Third, an organization must ensure that selling of skills, networks, intellectual property, or programs doesn’t adversely affect the current programming goals. Fourth, the very concept that people, networks, programs and buildings are “assets” that can be “used” to generate revenue can rub non-profit professionals the wrong way.

Each of these challenges can be addressed, of course, and the process of addressing them is what brings new value to a non-profit board, staff, volunteer and beneficiary community. Acquiring new skill-sets is possible but one needs to be carefully budgeted and planned. A well-done feasibility study will identify not only if there is a buyer for your product/service, but also whether that business idea will enhance social outcomes.

A good business plan ensures that the launch of any revenue generating activity will support, not compete with, social value creation. Similarly, if the “assets” of the organization are understood as being investments in a better social outcome, then the language becomes less inflammatory.

Many believe that what makes an entrepreneur is the ability to see challenges as opportunities. Perhaps loss of funding offers the opportunity to rethink how best to maximize a social mission. The ideation process for non-profit staff and governors is a concrete way of categorizing challenges in the market and in the organization and building a sustainable, revenue generating, social value-creating solution to those challenges. Indeed, the process of ideation actually strengthens the capacity and resolve of an organization with a social mission.


This article originally appeared February 24, 2014 in See Change Magazine online.

Older posts Newer posts

© 2017 social delta

Theme by Anders NorenUp ↑