On Tuesday 2/26, through a program sponsored by Social Venture Partners of Boulder County, I had the pleasure of addressing over 100 leaders of Boulder County nonprofits on the benefits and challenges of social enterprise. As a practitioner of social enterprise – a business that integrates a social mission – I get the question all of the time – “how can my non profit create a business?” Some are seeking alternative revenue streams, some are seeking to bolster their mission, some, like Bridge House through our Ready to Work program, seek to do both. With this question consistently in my inbox, I have developed some of my own thoughts on Social Enterprise 101 to share with my fellow enthusiasts in the community.
Social Enterprise 101:
What is a social enterprise? This is the million dollar question as so many definitions exist. Most generally it is a business that integrates or supports a social mission. For social enterprise to work for your organization, you must pick the model that fits your organization’s goals and capacity.
Creating a viable business with social impact is no easy feat. Many organizations are interested in the possibility of running a venture to generate earned revenue and to fulfill its mission, but not many are aware of the realities of running a business. I always suggest organizations answer two questions –
First, which model of social enterprise fits your organization in terms of what you have to “sell”?
Second, what are the objectives for developing a social enterprise in relation to your organization’s goals and capacity?
Only then can you find the RIGHT IDEA.
Determining your model:
In my experience the most common types of social enterprises fall into 3 categories:
– Double bottom line
– Intellectual property/fee for service
– Purely revenue generating
Double Bottom line – distinct ventures that incorporate program activities whose success is measured by program outcomes and generated revenue.
• Ready to Work – A supplemental sanitation and landscaping service that provides transitional jobs for homeless men and women
• Pest at Rest – a pest control company that trains formerly homeless men in pest management and generates revenue to support The Doe Fund’s social service programs. http://www.pestatrest.com/
• Greyston Bakery – a bakery that exists to support economic development in the community. http://www.greystonbakery.com/
Intellectual Property – when a non-profit has a product or competency to sell that they have developed through their existing programs. Examples include curriculum or train-the-trainer services:
• World Savvy – a global education non-profit serving youth – adapts curriculum and consults for non-profits to support others seeking to integrate global awareness into their offerings. They also offer professional development to teachers. http://worldsavvy.org/
• Project Adventure – a wilderness education program that offers staff training for other profession-als in the field. http://www.pa.org/index.php
Purely Revenue-Generating – an earned revenue strategy is not necessarily mission-driven or brand aligned but rather developed to purely generate revenue. Examples include:
• Girl Scout cookies
• Churches selling steeple space for use as cell phone towers
Here are the questions you need to ask to select your model:
Double Bottom line – do you want your enterprise to incorporate your program? Are you looking to provide job training or work experience for your clients? Are you seeking to expand your program impact and generate revenue at the same time? Does your mission allow for this? If you decided to integrate a program component, how will you map out what that looks like? What will your priority be – mission/program or revenue?
Intellectual Property – do you have a product or service people want to buy? Is there something you do or produce already that is valuable that with the appropriate packaging and marketing can generate revenue? Perhaps a curriculum or product, such as artwork of the youth you serve, has value?
Purely Revenue Generating – Do you have extra space to rent out? Do you have an entrepreneur on staff or board who has a business idea that can benefit your venture? Do you have extra volunteer resources just waiting to be tapped? Have you identified a business gap in your local community?
Determining your goals:
The first step toward vetting your idea in the context of the model that you select is establishing your goals. This step is important to identify your priorities for moving forward.
Ask yourself these questions:
• What’s our goal – revenue or mission or both?
• What’s our model – where’s the fit?
• What’s our capacity – how will you execute?
The answers to these questions will guide your exploration of your model and help you find the RIGHT IDEA.
More food for thought:
Other things to consider are whether you intend to add an earned revenue component to your parent organization or develop a separate entity. Will you utilize existing staff and infrastructure or will you need new resources? Do you have a funder who is interested in a mission-driven enterprise? You must compare your goals to your current resources to determine your capacity to proceed.
You must vet your idea within the context of the community/market in which you operate to determine if your business will be viable. (E.g. Is there a need for a bakery in your community? Will other organizations pay for a train-the-trainer training? Have you identified a sound financial case for this enterprise?) Like any business you need a market and operational plan to effectively execute your business model.
Remember – an organization needs not only a viable idea but the RIGHT IDEA to fit its mission and goal for a social enterprise to be successful.