Social Enterprise 101 REDF Social Enterprise Start- Up Tool Kit

Transcription

1 Social Enterprise 101 REDF Social Enterprise Start- Up Tool Kit Emily Bolton, Enterprise Development Manager, REDF Jill Zeldin, Farber Intern, REDF

2 Overview 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 REDF 2

3 Social Enterprise 101 Table of contents 1. What is social enterprise? 2. How can you help a nonprofit to decide whether social enterprise is right for them? 3. How can you apply REDF s lessons learned? 4. What will your next steps be? REDF 3

4 What is Social Enterprise?: Common aspects of definitions Key points of agreement among Social Enterprise definitions: Social Enterprise = Socially-Minded + Revenuegenerating REDF 4

5 What is Social Enterprise?: Distinguishing elements Key points of difference among Social Enterprise definitions: Tax Status Not-for-profit For-profit Objective 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. REDF 5

6 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 Profit-motive Entrepreneurial Nonprofit Nonprofit with Income Generating Activities Nonprofit Venture Nonprofit Enterprise Socially Responsible Business Corporate Social Responsibility (CSR) Terms related to but not synonymous with social enterprise Community Interest Company Social Venture Social Entrepreneurship REDF 6

7 What is Social Enterprise?: Social enterprise definition for REDF In order to keep our discussion focused, we will hone in on one particular definition of social enterprise. Mission-motive Profit-motive Entrepreneurial Nonprofit Nonprofit with Income Generating Activities Nonprofit Venture The social Nonprofit enterprise Enterprise definition we use: Socially Responsible Business Businesses owned and operated by nonprofit organizations Corporate Social Responsibility (CSR) Community Interest Company Terms related to but not synonymous with social enterprise Social Venture Social Entrepreneurship REDF 7

8 Social Enterprise 101 Table of contents 1. What is social enterprise? 2. How can you help a nonprofit to decide whether social enterprise is right for them? 3. How can you apply REDF s lessons learned? 4. What will your next steps be? REDF 8

9 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? To meet needs that the market does not meet on its own? Is your primary goal to generate income? To generate revenue/profit? To diversify revenue streams? To create new donor interest (e.g., entrepreneurial community)? REDF 9

10 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 Is your organizational culture entrepreneurial and ready for change? Current assets Clients? Services? Employees? Intellectual capital? Physical assets? Outstanding liabilities? 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? Do you possess resources that would be relevant to a business venture? Does the organization possess experience that would transfer to managing a business? REDF 10

11 Social Enterprise 101 Table of contents 1. What is social enterprise? 2. How can you help a nonprofit to decide whether social enterprise is right for them? 3. How can you apply REDF s lessons learned? 4. What should your next steps be? REDF 11

12 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 REDF 12

13 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 REDF 13

14 Applying the lessons REDF has learned: Myths Top Ten Myths about Social Enterprise Myth #1 Starting a social enterprise requires minimal investment. Myth #2 There s nothing better than free retail space! Myth #3 Our staff already has all the skills needed to run a social enterprise. Myth #4 People will buy from us because we have such a great cause. Myth #5 If it s not working, we ll know. REDF 14

15 Applying the lessons REDF has learned: Myths Top Ten Myths about Social Enterprise Myth #6 We can scale this puppy, no problem! Myth #7 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! REDF 15

16 Social Enterprise 101 Table of contents 1. What is social enterprise? 2. How can you help a nonprofit to decide whether social enterprise is right for them? 3. How can you apply REDF s lessons learned? 4. What should your next steps be? REDF 16

17 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 Part 1 Strategic Planning (Discussed in this presentation) Part 2 Business Planning Part 3 Business Tracking 1 month 1 month 1 2 months 2 4 months 2 4 months 3 6 months 3 12 months Source: Center for Community Futures, REDF 17