Fresno Economic Opportunities Commission. Developing a Social Enterprise Process

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1 Fresno Economic Opportunities Commission Developing a Social Enterprise Process California Community Economic Development Association Annual Conference May 8, 2014 Radisson LAX Gary Joseph Food Service/Transit Systems/Enterprise Officer 3100 W. Nielsen Ave. Fresno, CA [email protected] (559)

2 Agenda About Fresno EOC What is a Social Enterprise Can Non-Profits make a profit? Strategic Planning and the Financial Independence goal Desired outcomes of Social Enterprise Community needs and Agency Capacity Set the oversight on Social Enterprise Activities Document Social Enterprise Criteria Working through the process Developing the Business Plan Structuring the right entity Fresno EOC Social Enterprises

3 About Fresno EOC Private Non-Profit 501(c)3 Community Action Agency Vision Statement: As an Entrepreneurial Agency, we bridge the gap to self- sufficiency by providing opportunities and resources, as we initiate and partner in shared community efforts to improve the quality of life. Programs Education, Energy Services, Health, Youth and Young Adult, Nutrition and Social Enterprise

4 What is a Social Enterprise? Numerous definitions Social enterprises are businesses whose primary purpose is for common good. Social enterprise applies an entrepreneurial approach to addressing social issues and creating positive community change. Businesses that trade in order to achieve a social objective, reinvesting their profits in the business and in achieving their social mission. Social enterprise is the pursuit of opportunity without regard to resources currently controlled. Broadly encompasses ventures of non-profits, civicminded individuals, and forprofit businesses that can yield both financial and social returns.

5 What are the Common Themes? Social Enterprise is a business; it trades something It takes on an entrepreneurial approach It addresses social issues and achieves a social mission Reinvests profits back into the business and community Promotes positive community change Pursues business opportunities Uses new resources to sustain the business

6 Can Non-Profits Make a Profit? Despite how the name sounds, non-profits can and do sometimes make a profit. Non-Profit Corporations, unlike other forms of business, are not designed to make money for it s owners, partners, or shareholders. Non-Profits are formed to serve a government approved purpose, and are accorded special tax treatments as a result. Whether or not the profit a non-profit makes is taxed, is based on whether the profit was generated from activities that are related or unrelated to the non-profits purpose.

7 What led Fresno EOC to consider Social Enterprises Shrinking government funds Reduction in CSBG funding Downturn in Economy Enterprising staff eager to bring in new revenue streams

8 Strategic Planning and the Financial Independence goal Needs assessment Identify gaps in service Situation, Background, Assessment, Recommendation (S-Bar)Standardized Communication Forum. Strategic Goals Identified Job Readiness Education Health Culture Financial Independence Social Justice Financial Independence Expand and diversify revenues and generate greater financial freedom.

9 Desired outcomes of Social Enterprise Infuse a culture of entrepreneurship Buy-in from employees Clients become part of the solution Generate new streams of revenue Look for Enterprise opportunities Generate income for business Create profitable enterprise Must meet strict criteria and follow the process Increase discretionary funding Flexibility to respond creatively to economic and human need of community Create jobs and training opportunities Jobs resolve community and family issues

10 Recognize the need, Recognize the capacity Take inventory of assets, skills, and experience Realistic inventory of: o Personnel skills expertise, passion and energy o Intellectual capacity o Assets: buildings, space, tools, vehicles, etc. Survey and determine economic needs Interview stakeholders Involve community leaders Listen to program staff Assess job readiness and skills Train in those areas of opportunity Reevaluate if training is in the right areas. Redirect job training if necessary List agency passions Housing, Nutrition, Health, Substance Abuse, Gangs, Veterans, the Elderly, Youth Services, Neighborhood Revitalization, Education, Child Care, or Employment and Training, etc. Engage Board, stakeholders, staff, and community Understand community goals and how they align with your agencies' goals Determine the needs of the community

11 Setting the Oversight on Social Enterprise Activities Establish social enterprise oversight Develop Financial Independence Committee Discuss and list enterprise ideas, generate enthusiasm o Dinner Theatre o In-Home Care Service o Refurbish old computers o Establish a print shop o Develop Culinary school Schedule meetings Quarterly meetings Monthly meetings As necessary Establish ground rules of the meetings Time limitation All ideas are heard Committee may accept, reject, or send idea back for more work

12 Document Social Enterprise Criteria Must have a realistic chance of sustained profitability within a reasonable time frame Must have a positive social and community impact Must be aligned with Fresno EOC goals, values, priorities and vision Must balance risk, versus reward Must create jobs Must utilize existing resources wherever possible Must ensure the integrity of Fresno EOC s 501 (c)3 status

13 Establish a Process to Create an Enterprise Develop an enterprise idea Evaluate the idea to see if it fits the criteria Decide if it is sustainable Develop financial projection Decide who approves the venture How does the venture get started Develop a process to move the plan from idea to start-up

14 Fresno EOC Process Idea Developed Business Concept Paper submitted to Financial Independence Committee and vetted. Introduction, Purpose of Business, Description of Business, Social Benefit, Likelihood of Financial Success, Start-Up Costs, Estimated Revenues Financial Independence Committee Accepts Rejects Requires additional information or action Leadership Team Concept Paper Accepts Rejects Requires additional information or action. Financial Independence Committee develops and submits Business Plan Leadership Team Reviews Business Plan Accepts Rejects Requires additional information or action Planning and Evaluation Committee Business Plan Accept and moves to Board of Commissioners Rejects Requires additional information or action Board of Commissioners Business Plan Accepts Rejects Requires additional information or action Start-Up

15 Developing the Business Plan Executive Summary Agency Description Market Analysis Organization and Management Service or Product Line Financial Projections years 1-5 Marketing and Sales Operation and Logistics

16 Structuring the right entity Operate as a Program or division of Agency Consider Single-member limited liability company LLC Consider Non-Profit Subsidiary Consider For-Profit Subsidiary Consider Other Structure : LLC? Joint Venture? Co-op? Consult Legal Advisor