What constitutes “true” social enterprises?

Thousands of nonprofits that use the marketplace to accomplish their social goals call themselves social enterprises (SEs). Thousands of for-profit companies with social goals also use that term. Yet these two groups barely talk with each other. Why is that?

Benefit corporations and B Corps

Benefit corporations can make decisions based on impact on the community, the environment and workers – not just shareholder value. B Corps, a certification program, evaluates for-profit companies that take social responsibility seriously. B Corps undergo a rigorous assessment in areas such as governance, social and environmental impact. and employee practices.

You’d think that with such common characteristics, these movements would work together and learn from one another, right? Not at all. They operate as if there were a tall wall between them.

We say, Tear Down This Wall!

“True” Social Enterprises

The general perception among many nonprofit social enterpriser leaders is that B Corps and benefit corporations are not “true” social enterprises since social impact is not their primary purpose.

For example, Kevin Lynch, co-author of Mission, Inc., The Practitioner’s Guide To Social Enterprise and collaborator on Joining Vision and Action’s Mission, Inc. Basecamp social enterprise training, is worried that “the idea of social enterprise is now more associated with benefit corporations and B Corps than with the selfless, unsexy nonprofit social enterprise model in which impact is part of the DNA.” He added his concern that “the work of true social enterprises, that put real impact first, will be overshadowed and ignored.” Source: http://huff.to/29r1wsW.

Similarly, leaders and participants in the fast-growing B Corps movement generally assume that all nonprofits are dependent on grants and contributions, and are therefore ill-equipped to function in the marketplace.

What’s going on here? We decided to crowd-source this problem to the npEnterprise Forum (npE), the 10,000+ circulation, non-commercial, moderated online forum for all things SE.

It’s About Impact

Several people pointed out that what matters is impact, not structure.

“We should encourage people to focus on what binds us together,” said Hannah Pechan, “to keep our eyes on maximizing positive impact. Like most of life, it takes all kinds.”

Fernando Botelho indicated that “social problems or the damage being done to nature are indifferent to our intellectual limitations. If a small change in a large multinational prevents the dumping of 100 thousand tons of CO2, that is exactly as valuable as the same reduction being achieved by a specialized NGO dedicated entirely to that purpose.”

It’s About the People

Hildy Gottlieb says “it’s always about the people. When we start asking, ‘Who else cares about this?’ and begin engaging as people, we don’t have to work at the walls coming down. They come down on their own.”

Jerr Boschee took a philosophical approach to this question. “The philosopher Jacques Ellul once observed that we all get our hands dirty,” Boschee said. “the only question we should ask ourselves is just how dirty we want them to get.

“I’m willing to take the risk that some private sector social enterprises run off the rails in exchange for those that can scale more quickly and do more social good than they would if they were structured as nonprofits.”

In summary, we wonder if we should look more at the social impact each social enterprise has, rather than how “pure” they are at achieving it.

We say, Tear Down This Wall!

What do you think?

See how Joining Vision and Action’s social enterprise training and consulting services can help your business or nonprofit can tear down the wall.

Joining Vision and Action is dedicated to providing social enterprises, nonprofits and government agencies with the tools and resources they need to succeed, sustain and scale. We bring research and innovation to this work, which we call implementation science. This allows our team of experts to provide more effective and imaginative tools to increase community impact.

This post originally appeared at http://joiningvisionandaction.com/tear-down-this-wall-whats-a-true-social-enterprise/
 

The post Tear Down This Wall: What are “True” Social Enterprises? appeared first on Social Enterprise.

There are many theories why some social enterprises flourish while others languish. Is it leadership, business planning, funding, market or timing that makes a successful social enterprise?

Joining Vision and Action is dedicated to providing social enterprises, nonprofits and government agencies with the tools and resources they need to succeed, sustain and scale. We bring research and innovation to this work, which we call implementation science. This allows our team of experts to provide more effective and imaginative tools to increase community impact. 

So we took a deep dive into the research into what makes for a successful social enterprise. We studied what works and what doesn’t, to help practitioners, leaders and funders gain research-backed perspectives on the common ingredients for success.

This blog provides several highlights from that research. A full description of the characteristics that make successful social enterprises, references, and a worksheet to apply them to your situation, is available here.

Buy-in from existing organization

If you are starting a social enterprise as part of an existing nonprofit, the board, executive director and other management must agree that operating a social enterprise would be beneficial to the organization. In addition, there needs to be a ringleader/champion responsible for the coordination, support and expertise in the social enterprise. This person should possess both the skills necessary to run an enterprise and the passion to carry the idea through to reality.

Active and Fluid Business Plan

Having a “road map” to follow is essential to the success of an enterprise. Starting with a business model canvas helps you develop your hypothesis surrounding the main areas of your business. Once you have tested that hypothesis, a business plan is useful–as long as it is ACTIVE and constantly updated as you begin piloting your project. Successful social enterprises are able to strike a healthy balance between planning and practice.

Use of Data to Drive Decision-making

It is becoming increasingly important for social enterprises to demonstrate their impact; having accurate data available is critical for decision-making. Successful social enterprises have a “dashboard” to provide key stakeholders with the right data to inform good decision making. Once that information is in hand, it’s important that it actually gets put to use; organizations must be willing to self-correct if the data points in a new direction.

Specialized Niche/Competitive Advantage

Market demand is a major determinant to the success of any enterprise. If the product or service created is not meeting a need, the enterprise will not be financially profitable. The product or service must have a unique quality that separates it from competitors, as well as a strong identity that allows it to stand out in the marketplace.

Ability to Adapt to Change

The culture of a startup is constantly shifting as the organization grows. Furthermore, even established social enterprises must continuously change to adapt to the broader market. Learning how to manage organizational change is a key to longevity.

The research shows that these five characteristics are among the most important ones to focus on in developing or expanding a social enterprise.

Do you want to see your nonprofit develop its own source of unrestricted income? Are you starting a new business to change the world? Do you feel passionate about a cause but unsure how to make a sustainable impact?

Whether you’re part of an established organization or founding a startup, whether you’re representing a nonprofit or an LLC, the Mission, Inc. Basecamp will show you how to align people, planet and profit in the creation of a successful enterprise.

The Basecamp is an intensive five-day training, developed as a collaboration between JVA and the authors of Mission, Inc.: The Practitioner’s Guide to Social Enterprise. Combining engaging, interactive facilitation with practical, on-the-ground advice from experienced social enterprise leaders, the Mission, Inc. Basecamp will equip you with essential tools and strategies for success in your social enterprise. Held twice a year in Denver. To register, click here.

Rolfe Larson — Rolfe@JoiningVisionAndAction.com  JoiningVisionAndAction.com

The post Top 5 Traits of Successful Social Enterprises appeared first on Social Enterprise.

Competitions are all the rage in the social enterprise world. From New York to San Francisco, organizations seeking to nurture emerging social entrepreneurs have decided to go all in on the pitch session, offering the winners startup funds and technical assistance. Good idea, right?

Crowd Wisdom

We’re not so sure. Looking for second opinions, we crowd-sourced this question to the npEnterprise Forum (npE), an online social enterprise forum, founded in 2001 and distributed to more than 10,000 people around the world.

Here’s what the community told us:

Too much about winners and losers?

Winning a competition can be great rush of joy and resources for an emerging SE. But what about everyone who does not win? Are they “losers,” or just not as showy? “While these events are great opportunities for entrepreneurs to perfect their pitches and get quick and dirty input on their ventures, the focus on winners and losers in a fly-by manner is not always helpful,” noted Paul Lamb.

Undermines Innovation?

Kara Penn mentioned a recent FastCompany article she and Anjali Sastry wrote. “Those of us who study innovation know that everything hinges on the hard, sometimes tedious work of taking a promising idea and making it work — technically, legally, financially, culturally, ecologically.” The article continues, “Innovation is usually a lurching journey of discovery and problem-solving. As a result, it’s an iterative, often slow-moving process that requires patience and discipline.”

That rarely happens when all the focus is on that 5-minute pitch.

Collaboration Is Better!

Many of our subscribers voiced a preference for collaboration. Aaron E-J’s opinion is that “collaboration is a way better model for development (in most cases) then competition.  Whereas competition goes down to the bottom line – who can present the best instead of what actually is best – collaboration does not worry about what individual or company can dominate and instead focuses on what ideas, actions and products best suit a given need.”

Paul Lamb then suggested, “What might be more useful are collaboration events where social entrepreneurs, investors, experts, and others explore synergies and partnership opportunities.” He further notes, “In many of the SE classes I teach, entrepreneurs often discover commonalities and ways they can partner with and assist each other. In setting them up as competitors, this is much less likely to occur.”

Kevin Jones wrote in to say that “collaboration has a cost and startups sometimes or usually can’t afford it broadly but can afford it strategically as they drive toward their explicit milestones and deep goals.”

Hey, Don’t Give up on Competitions!

Hannah Pechan, Director at Social Enterprise Alliance-Nashville, counters “there’s a place for both competition and collaboration. Running a competition is a time-finite project. In contrast, fostering continued collaboration is an ongoing commitment. I agree that collaboration is important as there is, of course, more work to be done than just a single winner can accomplish.” She adds: “It’s not an either/or approach, it’s a both/and, in which competitions help to spur on a few very needed winners (and I would argue, the movement as a whole) and collaboration works to raise the tide and create more widespread progress.”

Paul Lamb gets the final word: “I’m not advocating that we get rid of competitions altogether, but that we look at other creative ways to bring our community together and help lift each other up.”

————————–
Adam Brock and Rolfe Larson are Denver-based social enterprise advisors for Joining Vision And Action (formerly JVA Consulting). They help organizations achieve greater impact and financial sustainability, typically through market research, feasibility studies and business plans. Their new suite of affordable SE consulting products is called the Social Enterprise Navigator series.  

The post Do Competitions Help or Hinder Social Enterprises? appeared first on Social Enterprise.

The particular question posted by Jean Hardy Robinson was about a small history museum in a thriving tourist community that has never charged admission, operates a small gift shop, and maintains a robust membership program.  However, the comments below could apply to any small museum.

Start Low

There was strong concurrence that collecting something from visitors is a good idea.  “Start low,” recommends Tom Aageson, from Creative Startups, who has extensive museum experience.  “You can always go up slowly…hard to start high and come down.  Be a bargain compared to other entertainment options in town…build up the experience so the value is seen as very high..the experience must always be changing, unique and mission focused…there may additional earned income opportunities.”

Dennis Berry, who was the board chair for a local history museum for several years, also recommends charging a “modest admission fee, free to members.”  He notes: “I don’t think a small fee will drive away visitors, so you may as well do it. That said, the fee isn’t going to save the budget, either. What’s needed is a combination of things — including gift shop, local government support, grants, and rigorous control of expenses — to make it all work.”

Suggestion Donation Box

Several other subscribers recommended a “suggested” donation rather than an admission fee.  Susan Ruderman, who has a credential in museum studies, recommends “starting with a ‘Suggested Donation of $XX’ rather than a firm charge.”  She further suggests: “Monitor it for a year and evaluate effects on both attendance and bottom line dollars as well as conversions to membership and then decide from there whether to continue as is, or institute a firm admission price, or go back to free for all.”

Donation Schedule Suggestion

The post Admission Fees for Small Museums? appeared first on Social Enterprise.

With President Obama’s recent State of the Union address, this seems to be a good time to assess the State of Social Enterprise (SE). We decided to crowd-source this one primarily through the npEnterprise Forum (npE), the 10,000+ circulation, non-commercial, moderated online forum for all things SE.

Structure As Strategy, Not Moral Choice

Back in the day, socially-minded people formed nonprofits while entrepreneurial-minded people founded for-profits. Today, “there’s a continuum of options between pure-play charity and pure-play business,” commented Jim Fruchterman. For more, see Jim’s favorite essay on this: “For Love or Lucre” in the Stanford Social Innovation Review. Not surprisingly, millennials are driving this trend, since they often “care more about results than what kind of organization something is,” commented Hildy Gottlieb.

More Mergers

One way to have more impact is to get married. Hannah Pechan reported an uptick in SE mergers in Nashville in 2015, and Tom McLaughlin noted that a similar trend is evolving nationally in the nonprofit sector.  Tom also commented: “I suspect we are on the verge of consolidations in most areas of the country, although it will take a while to peak in different geographies. Strong cultural and demographic factors are behind a lot of this.”

Impact Investing Is The Talk, But Does It Really Walk?

Impact investing will continue to expand in 2016, with more financial institutions, foundations and high-net-worth individuals investing in companies based on impact. That’s great, but many of us feel it’s missing something. Jan Cohen points out that while many SEs can often get funds for hard start-up costs such as equipment, most struggle to “get the funds they need for consulting and start-up salaries,” even with a good business plan.

Kevin Lynch notes in the Huffington Post that the impact of impact investing may be an illusion. When push comes to shove, will Goldman Sachs really choose impact over financial return? And will this illusion deter philanthropic investments? He writes: “a philanthropic dollar in a nonprofit SE produces an internal financial return that can be recycled again and again to multiply impact. An impact investment dollar demands an eventual exit for itself … regardless of whether any true impact was created in the first place.”

We All Need To Confront Racism

Lessons from Ferguson and Black Lives Matter are not only for the police and government to worry about. Suzanne Smith points out that with “communities across the country being confronted with racism and discrimination,” all of us working on social issues need to confront racial justice issues within our own organizations. Here’s her blog on this topic, which includes practical steps for things like purchasing, hiring and programming.

Mapping The Sector

A 2016 priority for the Social Enterprise Alliance is to develop a map and census of the SE sector, to provide greater clarity, cohesiveness and attention to the sector. That’s an excellent priority, one that will build on previous efforts to count noses. Back in the last century, Community Wealth Ventures developed a directory of nonprofits with business ventures. About five years ago, Pacific Community Ventures invited SEs in any sector to register in the Great Social Enterprise Census. More recently, RLA created the Social Impact App that provides access to 1000s of SEs online and on your phone. And finally, looking internationally, SEFORIS in Europe just finished interviewing more than 1000 directors of SEs from China, Russia and the EU. We’re looking forward to the advances that will come from SEA’s work in this area in 2016.

What do you think?

Please write to us with your suggestions and comments on where social enterprise is going, or should be going, in 2016. Send your thoughts to Rolfe@RolfeLarson.com and we’ll publish them in a future edition of the npEnterprise Forum!

————————
Janine Vanderburg and Rolfe Larson are Denver-based consultants who partner on social enterprise projects, and also serve together on the board of SEA’s Colorado chapter. They each have 30+ years experience helping organizations achieve greater impact and financial sustainability. Recently they launched a new suite of affordable SE consulting products called the Social Enterprise Navigator Series.

The post State of Social Enterprise 2016 (Crowd-sourced!) appeared first on Social Enterprise.

The Mathematica Jobs study gathered data from 282 workers in seven REDF-supported organizations, and compared them with 37 work-eligible individuals not hired by one those SEs. The research indicated that not only did these workers gain employment and thus greater economic self-sufficiency, they also achieved greater life stability, measured for example in terms of share of SE workers living in stable housing.  That percentage increased from 15 to 53 percent, a huge measure of success.

Net Benefit To Society

One way to assess impact in financial terms is to evaluate dollar benefits to society from hiring disadvantaged workers, in terms of reduced government payments, increased taxes paid, and financial benefits to the SE.  Put differently, what’s the social return from investing money  in these kinds of ventures?

This Jobs Study showed that for every dollar the SE spent, the net benefit to society was $2.23.  Roughly half of that was in the in the form of reduced government spending, the other half financial gain to the SE — which it can then re-invest in employing additional people.

Not all the results were so positive. While workers gained economic self-sufficiency and life stability as a result of working for an SE, they actually incurred a small financial loss compared to what they would have had if they’d kept their government payments and housing subsidies.  That said, their percentage of total income from government transfers decreased from 71% to 24%, a good thing for gaining greater self-sufficiency and to enable government can spend those resources on other individuals with greater needs.

Another finding was that smaller and newer SEs studied for this report did not appear to produce a positive net benefit to society, which underscores the need to take a longer term perspective on this issue.

These are excellent results, which, given the small sample size, suggest the need for additional research to expand our understanding of SE impact and inform future decision-making.

Thoughts?

Good luck!

The post Data: SEs improve self-sufficiency, stability appeared first on Social Enterprise.

But is profitability a reasonable goal for every social enterprise?

We don’t think so. While profitability is a worthy goal, there are many cases where that is not practical. Let’s take social enterprises that provide training and employment to people facing significant barriers to entering the workplace.  In almost every case, these ventures incur higher operating costs than a comparable business that does not provide employment to that population.

A recent article by REDF’s Nicole Simoneaux outlines some of the major reasons for this:

1. Social enterprises hire less skilled workers
2. Skill building is expensive
3. Supervisor ratios are higher
4. Turnover rates are higher (and that’s the point)
5. It’s expensive to remove roadblocks to employment
6. These workers need support to manage mental health and addiction issues.

None of these points should deter managers from seeking to cover as much of their operating cost as possible from revenues, thereby reducing need for fundraising and other support.  That said, we need to be realistic and let go of the impractical expectation that social enterprises are not successful unless they are profitable.  Success comes from social impact, from lives changed; financial performance measures the ability to achieve the greatest possible impact with the scarce resources that are available.  To quote Ms Simoneaux:

“Those of us working in the field shouldn’t perpetuate the belief that social enterprises need to be profitable from earned revenue alone in order to be considered sustainable.”

We agree.

Thoughts?

Good luck!

l;l;l

The post Does Success Require Profitability? appeared first on Social Enterprise.

The Privilege Economy

That naturally leads me to the recent essay Social Enterprise and Privilege Economy, by Kevin Lynch, CEO of the Social Enterprise Alliance. Those with privilege contribute to and benefit from the “Privilege Economy” every day of their lives.

While those who don’t have that privilege — Kevin mentions young, black, uneducated, inner city, and there are many others — often find themselves on the wrong end of the economic scale, and, as we’ve seen in Ferguson, the wrong end of the law.

Kevin confesses that he participated in illegal activity for many years. However, being white, middle-class, suburban, healthy, his privilege protected him. He even had a “skirmish” with the law at age 20, but got off with just a hand slap. No zero-tolerance for him.

Nor for me. I have led a similarly privileged life. I could easily have served jail time for the various felonious things I did. Yet I got off easily, a skirmish here, hand slap there.  And just like Kevin, I picked up a good education, well-paid jobs, savings — all guided along with that invisible hand of privilege.

Invisible Capital

What does this have to do with social enterprise?

Kevin points out the flawed Myth of the Privilege Economy: that rewards go to those who work hard and persevere. Actually, to a large extent, rewards go to those with “Invisible Capital“:  your cultural skills, social skills, language skills, networks, how you talk, look, who you know.  Most of those are the result of your privilege, not your hard word.

This is what I would call the Privilege Economy’s Rulebook:

1. If you’ve got privilege, you get many opportunities to succeed.
2. If you don’t, you get zero tolerance.

Economic Justice Economy

In contrast, Kevin argues, social enterprise replaces that framework with one focused on economic justice. It shifts the metric for success from privilege to social enrichment. It aspires to create success outside the privileged class, to open up economic opportunity for the least privileged among us.

And it seeks to influence the larger mainstream economy, to demonstrate that total economic returns aren’t the only measure that matters. That it’s also important to evaluate who gets those returns. And to figure how to do things so that more of those returns, those opportunities, go to those with less privilege.

Social enterprises do that every day.

What do you think? How has privilege helped (or hindered) your path?

Good luck!

The post SE and the Privilege Economy appeared first on Social Enterprise.

My favorite book on this topic is Impact Investing: Transforming How We Make Money While Making A Difference, by Jed Emerson and Antony Bugg-Levine.  That said, here’s a very useful compilation of favorites from Ashtin Jones to read and keep handy on your bookshelf:

“Status of the Social Impact Investing Market: A Primer”

By Dr. Maximilian Martin (Impact Economy, June 2013, 13 pages)

“From Ideas to Practice, Pilots to Strategy: Practical Solutions and Actionable Insights on How to Do Impact Investing”
By Michael Drexler & Abigail Noble (World Economic Forum, December 2013, 60 pages)

“Evolution of an Impact Portfolio: From Implementation to Results”
By Justina Lai, Will Morgan, Joshua Newman, Raul Pomares (Sonen Capital, October 2013, 70 pages)

“Impact Investing 2.0: The Way Forward”
By Pacific Community Ventures, Impact Assets, and Duke’s Center for the Advancement of Social Entrepreneurship (41 pages)

“Priming the Pump: The Case for a Sector-Based Approach to Impact Investing”
By Matt Bannick and Paula Goldman (Omidyar Network, September 2012, 27 pages)

“From Blueprint to Scale: The Case for Philanthropy in Impact Investing”
By Harvey Koh, Ashish Karamchandani and Robert Katz (Monitor, April 2012, 64 pages)

Good luck!

The post “Best” Books on Impact Investing appeared first on Social Enterprise.

1. Be Political.  While 92% of Americans favor disclosure of genetically engineered ingredients in their food, objections from the powerful food industry are so strong that only through collective advocacy will this change.

2. Go Where Others Don’t. Whole Foods recently opened a store in downtown Detroit. Yes, Detroit, the last place many of us would think could support a Whole Foods outlet.  Where there hasn’t been a supermarket in 30 years.  Community support has been strong, and lessons learned will enable the company to open stories in other inner city communities.

3. Many Corporations Don’t Want to Harm the Environment.  They want  to acquire clean technology, which often times has positive long term financial impact, but don’t do so because investors demand short term results.  This would change if there were tax changes to allow for accelerated depreciation for green tech investments.

4. Unintended Classism [and Racism] Continues To Limit Economic Opportunity. Most managers lack sufficient perspective and understanding of people who come from working class and poor families to design policies that work for them. As a result, many hiring practices, including those intended to achieve diversity, often have the opposite result.

More of these insightful ideas can be found in the Forbes article here:

http://www.forbes.com/sites/devinthorpe/2014/04/28/14-ideas-that-will-surprise-or-inspire-you/

Good luck!

The post 14 Insightful Social Entrepreneur Ideas appeared first on Social Enterprise.