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Social Enterprise

Social Enterprise

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Social Enterprise

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  1. Social Enterprise Ashoka School For International Training

  2. Two Doors into Social Enterprise Program Strategy Financial Strategy

  3. Motivations for Starting an SE Massarsky, Cynthia and Samantha Beinhacker, 217 social enterprises, Partnership on Nonprofit Ventures, 2003

  4. Some Facts

  5. 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

  6. SE Impact on Organizations 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

  7. Profitability Inconclusive • 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Samantha Beinhacker, 519 nonprofits with 217 social enterprises, Pew Charitable Trusts, 2000 Bridgespan survey 2004, unpublished

  8. 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 Social Enterprise is a Hybrid Adapted from Gregory Dees; and Lee Davis and Nicole Etchart.

  9. Social Programs + Enterprise Activities Embedded Enterprise and social program are one and the same Enterprise created to accomplish mission

  10. Enterprise Social Programs Activities  Integrated Business activities overlap with social programs; synergies, shared costs and assets Enterprise created as a funding mechanism and to expand mission

  11. $ Social Enterprise Programs Activities Complimentary Social and business activities separate and may or may not be related to mission Enterprise created as a funding mechanism to support mission activities

  12. Mission Relevance Complimentary Embedded Unrelated Mission Centric Mission Related Unrelated Integrated

  13. Social Enterprise Operational Models

  14. Employment Model Market Social Enterprise Clients Product Social Impact Financial Sustainability Embedded

  15. Client Entrepreneur Model Market Social Enterprise Loans Product Financial Sustainability Social Impact Embedded

  16. Social Impact Organizational Support Model Subsidiary Clients Financial Sustainability Complimentary

  17. TOPLA TOPLA Market Intermediary Model Social Enterprise Market Clients Financial Sustainability Social Impact Embedded

  18. Service Subsidization Model Social Enterprise Clients Services Social Impact Financial Sustainability Market SocialImpact Integrated

  19. Fee-For-Service Model Services Clients Social Impact Social Enterprise Sustainability Embedded

  20. Social Enterprise Design

  21. 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

  22. Social Enterprise Design is Driven by Social Concern Rather than Financial or Market Opportunities The social problem IS the business opportunity

  23. Social Problem Food insecurity Deforestation Subsistence farming Limited economic opportunities Hunger Barriers to employment Social Enterprise Agricultural products store & bakery Ecotourism Natural products Tool Library & School Restaurant Landry, housecleaning, thrift, etc. Reduce social problems w/enterprise

  24. What is the problem???? Social problem or social market failure enterprise is trying to mitigate

  25. To Vision Unrelated Opportunity Social Enterprise Mission The Mission is the Anchor

  26. Social Market • “Beneficiaries” of impact • Client • Community • Environment • Public • Competitors • Role of subsidies in the market • Collaborators • Strategic alliances and partners

  27. Role of Client Client #4 Product $$ $ Product Client #2 Social      Client #1 Market Enterprise   Client #3

  28. Social Criteria

  29. 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

  30. Somers, Shaping the Balanced Scorecard for use in UK Social Enterprises, “Social Enterprise Journal”

  31. Somers, Shaping the Balanced Scorecard for use in UK Social Enterprises, “Social Enterprise Journal”

  32. Leverageble Assets • Tangible • People • Land • Money • Intangible • Reputation / Brand • Methodologies • Content • Relationships • Skills and expertise

  33. 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.

  34. Organizational Factors • Core competencies • Capacity • Human Resources • Financial • Stakeholder buy-in • Risk Profile • Preferences • Competitive advantages • Culture

  35. Market Forces • Market: size, growth and trends • Demand • Income potential • Industry dynamics • Competitive environment • Ease of entry (regulatory, legal, etc.)

  36. 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

  37. Profit For biz & program investment Social Subsidy Breakeven AFTER Social Costs Enterprise Revenue Subsidizes Social costs Breakeven Before Social Costs Investment Role of Revenue and Profit Years Enterprise Revenue Social Expense Business Expense

  38. 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

  39. Social Subsidies and ROI $$ Mission AccomplishmentBusiness Performance Job Hard Skills Soft Skills Insurance Heath Care Literacy

  40. 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?

  41. Scoring Opportunities