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					Social Enterprise 101
Presenter: Cynthia Gair, Director, Portfolio and Field Advancement, REDF
Preparer: Jill Zeldin, Farber Intern, REDF

Welcome & Introductions

What is REDF?
• • Created in 1997 as The Roberts Enterprise Development Fund A high engagement grantmaker that provides guidance, leadership and investment to a portfolio of nonprofit social enterprises, changing the lives of people who face poverty, homelessness, mental illness and other barriers to employment.

•

Our work accomplishes three things – We help people move out of poverty; – We increase the organizational ability of nonprofit social enterprises to provide sustainable, long-term solutions to chronic poverty and homelessness; and
– We introduce new ideas and innovative methods that enrich the nonprofit community as a whole.

•

In all areas of our work, we are deeply committed to measuring the results of our efforts

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Welcome & Introductions

Our experience with social enterprise
• We have funded and provided assistance to 35 enterprises that represent the following industries:

•
• • •

Professional landscaping
Production and assembly Clerical and office services Catering, cafés and restaurants

• • •
• • • •

Janitorial / Cleaning services Bicycle shop Apparel screen printing and embroidery
Ballpark concessions Bakery

Our enterprises have employed over 3,000 individuals since 1998 75% still employed 2 years after hire

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Social Enterprise 101 Agenda

This Session’s Plan
1. 2. 3. 4. Welcome and Introductions What is social enterprise? Why are nonprofits considering social enterprise? Developing earned income/social enterprise strategies to fit your organization

5. 6.

Applying the lessons REDF has learned Social enterprise planning process

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Social Enterprise 101 Agenda

1. 2. 3. 4. 5. 6.

Welcome and Introductions What is social enterprise? Why are nonprofits considering social enterprise? Developing earned income/social enterprise strategies to fit your organization Applying the lessons REDF has learned Social enterprise planning process

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What is Social Enterprise?: Evolution of Social Enterprise
Roots of Social Enterprise Recent history

Nonprofits employ income generation to support mission activities 1970s

Nonprofits adopt business-like approaches to achieve their missions and sustainability • Declining support from traditional, philanthropic, and government sources
Now

• Community Development Corporations (CDCs) gained popularity in the US

• Convergence of schools of thought: Mixing new and proven models and market-driven and social forces • Momentum around social enterprise and social entrepreneurship but still confusion over their meaning • Social enterprise / entrepreneurship catch on internationally and sector boundaries continue to be blurred • Popularity of cause-related marketing partnerships grows

• Fee-income provided 46% of total nonprofit revenue
1960s

US nonprofits began using enterprises to create jobs for disadvantaged • Increasing populations Girl Guide Cookies first baked and sold Shift from idea of charity as giving alms to means for creating lasting change In the UK, cooperatives funded socioeconomic agendas

1990s

1920s

competition for available funds

Late 1800s

Mid 1800s

• Disappointmen t with the ability of largescale government programs to solve social problems

1980s

• The two main schools of practice of social entrepreneurship formed:

•Social Innovation School by Bill Drayton who founded Ashoka •Social Enterprise School by Ed Skloot who assisted nonprofits in finding new streams of revenue

Source: Virtue Ventures, Social Enterprise Typology, Kim Alter, National Center for Charitable employment, The State of Nonprofit America, Lester Salamon, 2002, Professor J. Greg Dees; Center for Community Futures, 1999.

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What is Social Enterprise?: The question…

What is social enterprise?

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What is Social Enterprise?: The answer…

…And the answer is…

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What is Social Enterprise?: The answer

No single definition of social enterprise is uniformly accepted!

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What is Social Enterprise?: Social enterprise adoption

• As of 2001, nonprofits generated $48 billion in commercial revenue
• 47% of nonprofit organizations surveyed in a 2000 study1 operated an earned income venture, of which 5% had since discontinued their ventures

• 53% of nonprofits had never operated an earned-income venture • Still, a significant minority of nonprofits are engaged in more developed social enterprise management

Source: Cynthia W. Massarsky and Samantha L. Beinhacker, Yale School of Management - The Goldman Sachs Foundation, Partnership on Nonprofit Ventures, 2000; Lester Salamon, The State of Nonprofit America, 2002 1) 512 nonprofit organizations completed the survey

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What is Social Enterprise?: Evolving definitions

Original definitions
• “A revenue generating venture founded to create economic opportunities for very low income individuals, while simultaneously operating with reference to the financial bottom-line.” • Jed Emerson and Fay Twersky, 1996

Recent definitions
• “Double bottom-line businesses, social purpose enterprises, nonprofit business ventures and mission-based for-profit businesses. Social Enterprises typically pursue blended value returns that may embrace the subjugation of a certain amount of financial return or take on added risk in pursuit of social and/or environmental value creation.” • Jed Emerson, The Blended Value Map, 2004

• Any earned-income business or strategy undertaken by a nonprofit to generate revenue in support of its charitable mission. • Social Enterprise Alliance, before March 2006

• “An organization or venture that advances its social mission through entrepreneurial, earned income strategies.” • Social Enterprise Alliance, as of March 2006

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What is Social Enterprise?: Non-U.S. Definitions

Social enterprise definitions not only differ by time period, but they also vary by region of the world.
“…businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners. “ •British Government “The promotion and building of enterprises or organizations that create wealth with the intention of benefiting not just one person or family, but a defined constituency, sector or community, usually involving the public at large or the marginalized sectors of society.” •Asian Institute of Management (AIM), Philippines

“Business ventures operated by non-profits, whether they are societies, charities, or cooperatives.” •Enterprising Nonprofit, Canada

“Organisations with an explicit aim to benefit the community, initiated by a group of citizens and in which the material interest of capital investors is subject to limits. They place a high value on their independence and on economic risk-taking related to ongoing socio-economic activity.“ •European Research Network

“A social enterprise is simply a market-based venture for a social purpose.” •Social Enterprise Partnerships, Australia

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What is Social Enterprise?: Other Definitions

•“The myriad of entrepreneurial or 'self-financing' methods used by nonprofit organizations to generate some of their own income in support of their mission." •Nonprofit Enterprise and Selfsustainability Team (NESsT)

“Any organization, in any sector, that uses earned income strategies to pursue a double bottom line or a triple bottom line, either alone (as a social sector business) or as part of a mixed revenue stream that includes charitable contributions and public sector subsidies.” •The Institute for Social Entrepreneurs

“Social enterprise encompasses nonprofit and public enterprise management but also business leadership in the social sector through direct involvement and corporate social responsibility; cross-sector collaboration and the interdependence of the business, government, and social sectors; for-profit social purpose companies; socially focused private equity; high engagement philanthropy and social entrepreneurship.” •Harvard Business School, Social Enterprise Initiative

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What is Social Enterprise?: Common aspects of definitions

Key points of agreement among Social Enterprise definitions:

Social Enterprise

=

Socially-Minded

+

Revenuegenerating

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What is Social Enterprise?: Distinguishing elements

Key points of difference among Social Enterprise definitions:
Tax Status Objective
Not-for-profit For-profit

Mission-motive

Profit-motive

Purpose

As a programmatic tool

As a funding approach

To supplement profitgenerating activities and to achieve social returns

E.g., Provide economic opportunities

E.g., Fund social programs

E.g., Diversify revenue streams

Distribution of Profits

Profit not a primary goal

Profit cannot be directly distributed to individuals. Instead, profits are reinvested in nonprofit

Profit distributed to shareholders

Notes: 1) This slide represents the U.S. social enterprise landscape, including U.S. tax status and legalities of return and profit distribution.

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What is Social Enterprise?: Causes of confusion
Numerous approaches to combining social mission and revenue generation are not exactly synonymous with social enterprise. Mission-motive
Entrepreneurial Nonprofit
Nonprofit with Income Generating Activities Nonprofit Venture Nonprofit Enterprise Socially Responsible Business Corporate Social Responsibility (CSR)

Profit-motive

Terms related to but not synonymous with social enterprise

Community Interest Company Social Venture Social Entrepreneurship

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What is Social Enterprise?: Social enterprise definition for today’s session
In order to keep our discussion focused today, we will hone in on one particular definition of social enterprise. Mission-motive
Entrepreneurial Nonprofit
Nonprofit with Income Generating Activities Nonprofit Venture

Profit-motive

The

Nonprofit Enterprise social enterprise

definition we will use today:

Socially Responsible Business

Businesses owned and operated Responsibility (CSR) Corporate Social by nonprofit organizations
Community Interest Company Social Venture Social Entrepreneurship

Terms related to but not synonymous with social enterprise

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What is Social Enterprise?: Earned-Income vs. Social Enterprise

What distinguishes a social enterprise from other earnedincome activities?
Revenue generated through some commercial endeavor

Earned-Income Activities

Social Enterprise

• Has a long-term vision and is managed for the indefinite future • Growth and revenue targets are set in a business or operational plan • Separate and distinct staff manage and oversee the activity

Source: Virtue Ventures, Social Enterprise Typology, Kim Alter

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What is Social Enterprise?: Types of social enterprise activities

As if the definition for social enterprise alone isn’t confusing enough, fee-for-service and income generating activities can be either social enterprise or solely earned-income!

Earned-Income Activities
Annual Dinner Charity Auction Fee-forService activity

Special Events

Income generating activity

Private sector partnerships Employment development enterprise

Social Enterprise

Source: Virtue Ventures, Social Enterprise Typology, Kim Alter

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What is Social Enterprise?

Summary of “What is Social Enterprise?”
• Nonprofits have long used income generation to support their mission activities • More recently, nonprofits have adopted business approaches to achieve their missions and achieve sustainability through social enterprise

• No single definition of social enterprise exists
• Social enterprise is considered an earned-income activity that is planned as a business, with distinct resources and a longterm vision

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Social Enterprise 101 Agenda

1. 2. 3. 4. 5. 6.

Welcome and Introductions What is social enterprise? Why are nonprofits considering social enterprise? Developing earned income/social enterprise strategies to fit your organization Applying the lessons REDF has learned Social enterprise planning process

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Why do nonprofits consider social enterprise? Summary

Why do nonprofits consider social enterprise?

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Why do nonprofits consider social enterprise? Summary

Why do nonprofits consider social enterprise?
Mission-motive Profit-motive

• To increase the reach of the mission
– To create jobs and training opportunities

• To create funding opportunities
– To generate revenue/profit – To diversify revenue streams

– To disseminate information – To educate the community
• To meet needs that the market does not meet on its own

– To create new donor interest (e.g., entrepreneurial community)

What risks might an organization operating a mission-motive social enterprise face?

What risks might an organization operating a profit-motive social enterprise face?

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Why do nonprofits consider social enterprise?: Program expansion success stories

Social Enterprise Success Stories: In Their Own Words
“They made me more confident about myself. Helped me to keep a job.” - CVE Employee

“I have knowledge of a new field and increased earning potential for when I get another job. The work environment is very supportive.”
- GGCI Employee

“This was my first job and it lead me to where I am now. I have the confidence and motivation to go somewhere where I can move up.” - Juma Employee “This is the first job I ever had, it keeps me out of trouble. Rubicon gave me a chance when no one else would.” - Rubicon Employee

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Why do nonprofits consider social enterprise?: Myths

Top Ten Myths about Social Enterprise
Myth #1
Starting a social enterprise requires minimal investment.

Myth #2
Myth #3

There’s nothing better than free retail space!

Our staff already has all the skills needed to run a social enterprise.

Myth #4
Myth #5

People will buy from us because we have such a great cause.

If it’s not working, we’ll know.
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Why do nonprofits consider social enterprise?: Myths

Top Ten Myths about Social Enterprise
Myth #6
Myth #7
We can scale this puppy, no problem!

This will solve our financial crisis and we’ll never have to fundraise again.

Myth #8

Nonprofits can’t make a profit.

Myth #9

Our program staff and enterprise staff will get along just fine.

Myth #10 Our board chair is totally behind us, that should be enough!
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Why do nonprofits consider social enterprise?

Summary of “Why do nonprofits consider social enterprise?”
• There are two main reasons an organization might pursue nonprofit enterprise:

• To further its social mission • To create funding opportunities
• Social enterprises can create successful outcomes, significantly improving the lives of those affected

• Be aware of the myths of creating a social enterprise. Social enterprises require significant planning and resources

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Social Enterprise 101 Agenda

1. 2. 3. 4. 5. 6.

Welcome and Introductions What is social enterprise? Why are nonprofits considering social enterprise? Developing earned income/social enterprise strategies to fit your organization Applying the lessons REDF has learned Social enterprise planning process

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Developing earned income/social enterprise strategies to fit your organization

Define goals

Assess the organization

Social Enterprise Strategy

• Is your primary goal mission or profit?

• Which current assets and capabilities can you leverage?

The answers to these key questions will drive your organization’s social enterprise strategy

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Developing earned income/social enterprise strategies to fit your organization

Why is your nonprofit considering social enterprise?

Mission-motive

Profit-motive

Is your primary goal to expand the mission?
• To increase the reach of the mission?

Is your primary goal to generate income?
• To generate revenue/profit?

• To diversify revenue streams? • To create new donor interest (e.g., entrepreneurial community)?

• To meet needs that the market does not meet on its own?

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Developing earned income/social enterprise strategies to fit your organization

Assess the Organization: Current assets and capabilities
• Organization • Core mission • History and leadership • Effectiveness of agency • Current assets • Clients? Services? Employees? Intellectual capital? Physical assets? • Outstanding liabilities?

Is your organizational culture entrepreneurial and ready for change?

Do you possess resources that would be relevant to a business venture?

• Capabilities • Do you already manage earned-income activities? • Do leaders possess business experience? • What "value" or competitive advantage could you bring to the market place?

Does the organization possess experience that would transfer to managing a business?
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Developing earned income/social enterprise strategies to fit your organization

Define goals

Assess the organization

Social Enterprise Strategy

• Is your primary goal mission or profit?

• Which current assets and capabilities can you leverage?

• Should you engage in social enterprise or other earned income activities?

• How integrated should your social enterprise be?
The answers to these key questions will drive your organization’s social enterprise strategy

• Which industries may work?
• Should you expand on your existing operations or start something completely new?

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Developing earned income/social enterprise strategies: Earned Income vs. Social Enterprise

Should your organization undertake social enterprise or should it consider other earned income activities instead?
Are your organization and its key stakeholders risk averse? Y N

Does your organization have the organizational capacity to start and run an enterprise? N Y

N

Will a separate business provide the best opportunity to meet your goal? (mission or profit)

Y

Earned-Income Activities

Social Enterprise
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Developing earned income/social enterprise strategies: Connection to Mission

The goals of your social enterprise can dictate how integrated the enterprise should be with your mission and social programs.

Mission-Unrelated

Mission-Related

MissionCentric

Source: Virtue Ventures, Social Enterprise Typology, Kim Alter

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Developing earned income/social enterprise strategies: Enterprise Integration

Social Enterprise Integration Options:
Mission-motive Profit-motive

Mission-Centric Social Enterprise
• The primary purpose of the enterprise is to advance the social mission
• Social programs and business activities have a significant effect on each other

Mission-Related Social Enterprise
• Provides funding for the nonprofit's operations and social mission activities
• Can expand the reach of the nonprofit’s mission to achieve greater social impact

Mission-Unrelated Social Enterprise
• Not related to or intended to advance the social mission
• Profit/funding potential is the primary purpose of the enterprise

Social Programs + Enterprise Activities
Source: Virtue Ventures, Social Enterprise Typology, Kim Alter

Social Programs Enterprise Activities

Social Programs

$ Enterprise Activities

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Developing earned income/social enterprise strategies: Mission-Related Option

Mission-Centric Social Enterprise
Social Programs + Enterprise Activities

Mission
• Lead the world in creative, effective applications of technology for unmet social needs

Organization
• World leader in reading machines for the blind • Affordable tools to individuals with reading disabilities • Benetech was founded in 2000

Social Enterprise
• A subscription service providing an online library of digital books for blind and low vision adults

• About 95% of Bookshare.org members are legally blind or dyslexic

Source: Virtue Ventures, Social Enterprise Typology, Kim Alter; benetech.org

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Developing earned income/social enterprise strategies: Mission-Related Option

Mission-Related Social Enterprise
Social Programs Enterprise Activities

Mission
• To create opportunities for groundbreaking new art works

Organization
• A New York museum that features a large permanent collection and fine changing exhibitions of contemporary and modern American Art • Supports American artists at every stage of their careers • Founded in 1931

Social Enterprise
• The Whitney Museum operates both an in house and online museum store, including such items as jewelry, books, CDs, tshirts and posters

• Proceeds from merchandise sold through the Whitney Museum of American Art benefit the Museum and its programs

Source: Virtue Ventures, Social Enterprise Typology, Kim Alter; whitney.org

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Developing earned income/social enterprise strategies: Mission-Unrelated Option

Mission-Unrelated Social Enterprise
Social Programs $ Enterprise Activities

Mission
• To lift the spirits and enhance the quality of life of children living with cancer and to do whatever we can to make their lives (and their smiles) a little brighter!

Organization
• Make kids feel better about their appearance, provide fun camp experiences, help kids keep in touch with loved ones, provide gifts for hospital stays, and help families get much needed financial support. • Programs are need-driven and free of charge

Social Enterprise
• HoneyBaked Ham chose Childhood Leukemia Foundation to be their national charity partner

• HoneyBaked Ham and CLF introduced the Hope Tote, a soft-sided cooler
• For every $15 tote the stores sold, $5 was donated to the Childhood Leukemia Foundation

• CLF was founded in 1992

Source: Virtue Ventures, Social Enterprise Typology, Kim Alter; clf4kids.org; ; www.nonprofitlicensing.com; www.causemarketingforum.com

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Developing earned income/social enterprise strategies: Discussion of Options

• Mission-Centric: For the first example regarding Benetech, the organization that provides affordable technology tools to serve unmet social needs: • If the organization had been solely focused on profit, what service might Benetech have commercialized instead?

• What other enterprise might you have suggested to reach the mission of Benetech?
• Mission-Related: For the second example, the Whitney Museum: • How might the museum have created a social enterprise that more closely related to the mission? That generated more profit?

• Mission-Unrelated: For the third example, Save the Children which licensed artwork for the primary purpose of fundraising:
• What risks does Save the Children face in licensing artwork? • Which category might a charitable organization’s thrift store fall into? • To think about: Based on your organization’s goals for social enterprise, which social enterprise integration option makes the most sense for you?
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Developing earned income/social enterprise strategies: Which Industry?

Which types of industries might work well with which missions? Types of Nonprofit Organizations Types of Industries
Advocacy
Alternative Trade and Development Arts, Culture and Humanities Blindness and Vision Impairment

Homelessness
Housing

Agriculture/Farming
Clerical Services

Landscaping/Grounds Maintenance
Light Manufacturing

Human Services
Hunger and Poverty International

Clerical Services
Construction Consulting and Training Education and Training Employee Assistance Program

Packaging/Distribution Print/Copy Services

Children and Youth
Community / Economic Development Counseling Disaster Relief

Management and Technical Assistance
Mental Health Services

Property Management
Publishing Recycling

Other Social Services
Philanthropy / Grant making Rehabilitative Services Religious

Restaurant/Café/ Catering Retail
Sales / Product Vendor

Heavy Manufacturing
Home Healthcare Housing Rehabilitation Information Technology Janitorial/Cleaning Services

Education and Research
Elderly Employment Training

Sports/Recreation
Substance Abuse Women

Staffing Service
Strategic Alliances Theater / Musical

Environmental and Animals
Health Services

Thrift Store
Wholesale

Source: Community Wealth Ventures, Social Enterprise Alliance Directory of Social Enterprises

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Developing earned income/social enterprise strategies: Which Industry?

Which industries might leverage the assets of a Health Services agency? Types of Nonprofit Organizations Types of Industries
Advocacy
Alternative Trade and Development Arts, Culture and Humanities Blindness and Vision Impairment

Homelessness
Housing

Agriculture/Farming
Clerical Services

Landscaping/Grounds Maintenance
Light Manufacturing

Human Services
Hunger and Poverty International

Clerical Services
Construction Consulting and Training Education and Training Employee Assistance Program

Packaging/Distribution Print/Copy Services

Children and Youth
Community / Economic Development Counseling Disaster Relief

Management and Technical Assistance
Mental Health Services

Property Management
Publishing Recycling

Other Social Services
Philanthropy / Grant making Rehabilitative Services Religious

Restaurant/Café/ Catering Retail
Sales / Product Vendor

Heavy Manufacturing
Home Healthcare Housing Rehabilitation Information Technology Janitorial/Cleaning Services

Education and Research
Elderly Employment Training

Sports/Recreation
Substance Abuse Women

Staffing Service
Strategic Alliances Theater / Musical

Environmental and Animals
Health Services

Thrift Store
Wholesale

Source: Community Wealth Ventures, Social Enterprise Alliance Directory of Social Enterprises

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Developing earned income/social enterprise strategies: Which Industry?

Which industries might leverage the assets of a Community Development agency ?

Types of Nonprofit Organizations
Advocacy
Alternative Trade and Development Arts, Culture and Humanities Blindness and Vision Impairment

Types of Industries
Agriculture/Farming
Clerical Services

Homelessness
Housing

Landscaping/Grounds Maintenance
Light Manufacturing

Human Services
Hunger and Poverty International

Clerical Services
Construction Consulting and Training Education and Training Employee Assistance Program

Packaging/Distribution Print/Copy Services

Children and Youth
Community / Economic Development Counseling Disaster Relief

Management and Technical Assistance
Mental Health Services

Property Management
Publishing Recycling

Other Social Services
Philanthropy / Grant making Rehabilitative Services Religious

Restaurant/Café/ Catering Retail
Sales / Product Vendor

Heavy Manufacturing
Home Healthcare Housing Rehabilitation Information Technology Janitorial/Cleaning Services

Education and Research
Elderly Employment Training

Sports/Recreation
Substance Abuse Women

Staffing Service
Strategic Alliances Theater / Musical

Environmental and Animals
Health Services

Thrift Store
Wholesale

Source: Community Wealth Ventures, Social Enterprise Alliance Directory of Social Enterprises

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Developing earned income/social enterprise strategies: Expand or Start New?

Two options exist for nonprofits starting social enterprises or earned income ventures

Expand what you already do

Start something new

• Commercialize something your organization already does

• E.g., Create a fee for service model with your existing programs

• Create a new commercial product or service for existing customer base
• E.g., Direct beneficiaries (who can afford to) pay for new product or service

• Develop a new aspect of something your organization already does • Leverage existing assets • Cause related marketing • Existing service to new population
Source: Kellogg School of Management

• Do something totally new – a new product or service for a new customer base! • Buy a business
• Start a new business

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Developing earned income/social enterprise strategies to fit your organization

Summary of “Developing earned income/social enterprise strategies to fit your organization”

Define goals

Assess the organization

Social Enterprise Strategy

• Mission or profit?

• Current assets and capabilities?

• Should you engage in social enterprise or other earned income activities? • How integrated should your social enterprise be? • Which industries may work? • Should you expand on your existing operations or start something completely new?

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Social Enterprise 101 Agenda

1. 2. 3. 4. 5. 6.

Welcome and Introductions What is social enterprise? Why are nonprofits considering social enterprise? Developing earned income/social enterprise strategies to fit your organization Applying the lessons REDF has learned Social enterprise planning process

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Applying the lessons REDF has learned: Critical Success Factors

REDF’s Lessons Learned: Critical Social Enterprise Success Factors
• Strong entrepreneurial team
• Supportive and engaged board of directors • Fit with overall goals and needs • Comprehensive planning progress • Compelling and genuine market opportunity • Unique competitive edge • Financial controls and tools for planning • Long-term and adequate financing • Commitment to sound business practice • Metrics to assess economic and social impact
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Applying the lessons REDF has learned: Unique Challenges (and Rewards!)

REDF’s Lessons Learned: Unique Challenges (and Opportunities!) in Social Enterprise

• Need to balance dual (social and financial) missions • Organizational structure complicates decisionmaking/authority
• Enterprise management staff need to possess a broader set of skills • Importance and scope of training • Additional social costs • Different funding sources • Social mission outcomes tracking and reporting

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Applying the lessons REDF has learned: Case Study 1

Organization: YouthOrg
Mission: To assist youth in developing their skills and transitioning to college. Description of organization: A small, 30-year-old youth-focused organization with a wellrunning set of programs, including college and career prep, and a track record of results. Current situation: Agency is seeking ways to expand the mission. Agency has solid funding. Key stakeholder viewpoints: A board member runs several electronics plants and believes the agency should take advantage of some light assembly work that could be directed toward the social enterprise. The founder, also a board member, is skeptical of this idea. You: E.D. for over 8 years. You feel ready to take on something new.  What is the appropriate social enterprise strategy for the agency?  What process do you employ to ensure the right decision is made?

Define goals

Assess the organization • Current assets and capabilities?

Social Enterprise Strategy
• Should you engage in social enterprise or other earned income activities? • How integrated should your social enterprise be?
• Which industries may work?

• Mission or profit?

• Should you expand on your existing operations or start something completely new? © REDF -- Please do not use without prior permission from REDF REDF 48

Applying the lessons REDF has learned: Case Study 2

Organization: SeniorOrg
Mission: To provide programs for seniors, including meals, housing and activity center Description of organization: Established in mid 60s. Program quality has improved with time. Current situation: Your largest donor has just informed you that he/she will be cutting back funding over the next two years. Key stakeholder viewpoints: A prominent board member and successful business person recommends social enterprise to make up for lost revenue. You: ED with MSW. You took the organization from $1M to $15M budget in 15 years.  What is the appropriate social enterprise strategy for the agency?  What process do you employ to ensure the right decision is made? Assess the organization

Define goals

Social Enterprise Strategy
• Should you engage in social enterprise or other earned income activities? • How integrated should your social enterprise be?

• Mission or profit?

• Current assets and capabilities?

• Which industries may work?
• Should you expand on your existing operations or start something completely new?
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Applying the lessons REDF has learned: How to think about social enterprise for YOUR nonprofit

Organization: _________________
Mission: ________________________________________________________________________ Description of YOUR organization: __________________________________________________ Current situation: _________________________________________________________________ ________________________________________________________________________________ Key stakeholder viewpoints: _______________________________________________________ You: __________________________________________________________________________  What is the appropriate social enterprise strategy for the agency?  What process do you employ to ensure the right decision is made?

Define goals

Assess the organization

Social Enterprise Strategy
• Should you engage in social enterprise or other earned income activities? • How integrated should your social enterprise be?

• Mission or profit?

• Current assets and capabilities?

• Which industries may work?
• Should you expand on your existing operations or start something completely new?
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Social Enterprise 101 Agenda

1. 2. 3. 4. 5. 6.

Welcome and Introductions What is social enterprise? Why are nonprofits considering social enterprise? Developing earned income/social enterprise strategies to fit your organization Applying the lessons REDF has learned Social enterprise planning process

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Social enterprise planning process

Define goals

Assess organization

Develop venture criteria

Prefeasibility study

Feasibility study

Business plan

Execution

• Why is your agency considering social enterprise?

• Is your agency ready for social enterprise?

• How will you screen different social enterprise options?

• Is your social enterprise feasible from a business standpoint?

• In depth analysis on social enterprise viability

• Thorough business planning for developing your social enterprise

• Make it happen

Discussed today

• 1 month

• 1 month

•1–2 months

•2–4 months

•2–4 months

• 3–6 months

• 3 – 12 months

Source: Center for Community Futures, 1999.

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Social enterprise planning process: Plan your next steps

So what are your next steps?
• What is your view of social enterprise? – If you are the one spearheading the process, determine your own objectives first, then seek input from other key stakeholders
• Involve the right people – Which key stakeholders should be included? • Educate the key stakeholders on social enterprise

• Determine what stakeholders' goals are and what your organization’s capacity is • Follow the social enterprise planning process

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Appendix: Going Deeper

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Applying the lessons REDF has learned: Words of wisdom

“If you like your staff, board, and clients the way they are, then don’t do this, because it will change everything.” - REDF Portfolio Executive Director
Caution: Consider how Social Enterprise can affect the rest of your organization

Distraction from mission
Donor cannibalization Inadequate resources Diversion of resource – Staff, Management, Money, Time

Cultural differences: create tension between program and enterprise staff
Conflicting stances among board

Cause of financial losses Risk of failure –Reputation and Morale REDF 55

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Why do nonprofits consider social enterprise?: REDF Success stories

Social Enterprise Success Stories: REDF Portfolio
• The REDF Portfolio has included 13 organizations.

• The REDF Portfolio has included a cumulative total of 3,074 enterprise employees.
• The majority of enterprise employee hires are AfricanAmerican, Latino/a and White. The proportion of racial/ethnic minority hires has been increasing since 2000. • Approximately threefourths of enterprise employee hires are younger than age 40.

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