S o cial Entrepreneurship P r of. Clara Navarro Colomer

1. Social Entrepreneurship Prof. Clara Navarro Colomer Group C Alessandro Corio – Charles Van Haverbeke – Julian Muller Schwefe – Miti Sheth

2. Contents • Introduction • Task Description • General Overview • Analysis • Problem Solving • Supporting pointers • Implications • Alternatives • Sum Up

3. Introduction

4. TaskDescription € 350,000 The sum will be used for paying-off the refurbishment costs The € 350,000 can be ˝collected˝ either through fundraising or through cost savings The main costs for the refurbishment come from materials and labor Assumptions

5. General Overview Meet Capital Needs Cost Savings Fundraising NGO Support Involve Tenants Gov’tSupport Corp. Partn. Classic Loan Reduce LaborCosts

6. General Overview Meet Capital Needs Cost Savings Fundraising Challenge: Financial structure might become too risky (90% bank loan) and repayment too expensive Classic Loan

7. General Overview Meet Capital Needs Cost Savings Fundraising NGO Support Involve Tenants Gov’tSupport Corp. Partn. Classic Loan Reduce Labor Costs

8. General Overview Meet Capital Needs Cost Savings Challenge: Very hard to implement as many companies have few useful left-overs at the end of the year Corp. Partn.

9. General Overview Meet Capital Needs Cost Savings Fundraising NGO Support Involve Tenants Gov’t Support Corp. Partn. Classic Loan Reduce Labor Costs

10. General Overview Meet Capital Needs Cost Savings Fundraising Advantages: Amount of finance needed is reduced Government can provide finance promptly Incentives for government:cost reduction and creation of additional social value Gov’t Support Reduce Labor Costs

11. Analysis

12. Analysis Core Competencies Sostre Civic creates social value by: Providing affordable housing to people in need Bringing together people with different backgrounds

13. Analysis Beneficiaries Govern’t: Government benefits from an average €17,500 saving per unit. Also, the government would foster greater societal cohesion (one of governments’ goals) through its support to Sostre Civic Property Owners: House owners without the necessary financial resources to refurbish their property, can now have a renewed house which they can use or sell in the market in about 25 years Users People that used not to be able to afford a house, now they can. Also, some people, who were able to afford a house with big sacrifices, can now save more money and increase their life-standards

14. Government Analysis Even though there are other players that can benefit from SostreCivic‘s project (such as construction companies, firms, etc.), the government is the institutions that receives the most direct advantages. Also, the relatively low heterogeneity of such institution makes it more easier for Sostre Civic to involve it in the project.

15. Problem Solving

16. Problem Solving IntegratedApproach Using unexploited resources Mehgenerationen-Haus Concept Unexploited WORKFORCE resources

17. Problem Solving Mehgenerationen-Haus Mehgenerationen-Haus (Multi-generation housing) is a concept that has been developed by the German Government. People with different age, income, race, job, etc. live in the same dwelling. 30% of the tenants are low-income people that went for public housing solutions.This way of pooling capabilities is extremely efficient for all tenants, as everybody can benefit of the qualities of other tenants and feels a sense of belonging to a community as his skills/capabilities are needed. Often in these dwellings, many services (for example bricolage, watching children, ride to doctors) are handled internally.

18. Problem Solving Using unexploited workforce resources Given that labor is going to be one of the major expenditures, we need to find a way to reduce this cost Use of under-exploited resources which are going to shrink labor costs close to zero  use of inmates as work force. The workforce will be made of those prisoners that are involved in projects that help in re-entering the job market through work outside the fence programs. The government, then, will mainly help through the provision of cheap workforce.

19. Supporting Data

20. Supporting Data Total Direct Costs: € 686,230 MaterialCosts: € 480,361 LaborCosts: € 205,869 QualifiedWorkforce: € 21,215.2 Blue Collars: € 184,653.8

21. Supporting Data Using prisonersasworkforceisgoing to provideus with a costsavingof €185,000. Thismeansthat the moneythatwillhave to be phisicallyraised are: € 165,000. Residual Amount Thisamount of money can be provided by the localgovernment (in this case the government of Catalunya). The costsavingsthatSostreCivicisgoing to provide by the government with theseprojects are in facthigherthan the sum that the governmentwillhave to provide: € 210,000 > € 165,000. Also, the governmentwillhaveadditional benefits, asmentionedabove, through the promotion of better social integration.

22. Implications

23. Implications Sostre Civic Government Tenants Money of governmentstartsimplementationphase CostSavingsafterinitialinvestment Cheaphousing Enjoybenefits of a Mehrgenerationen- Haus community Attacks 2 socialissues of government at thesame time (housing,re-integration) Integrated Approach complements and slightlymodifySostreCivic‘smodel Experiencesocialinclusion

24. Alternatives

25. Social Venture Capitalism An alternative to raise the remaining € 165,000 would be to find social investors willing to invest in Sostre Civic. We actually tried to activate a new network of potential social investors for Sostre Civic, but we are still waiting for an answer.

26. Corporate Partnership Another alternative would be to further reduce the expenses for Sostre Civic, through reducing the costs for the materials This could be done buying leftovers from other construction companies. These companies would be willing to sell this material at prices lower than market average. Also, this would be particularly true if they sell this material for social enterprises as Sostre Civic in exchange of recognition for their socially valuable action. This would prove to be beneficial for Sostre Civic in terms of cost reduction and it would also be align to its environmentally friendly approach to refurbishing.

27. Corporate Partnership II In case Sostre Civic is interested also in offering furnished appartments, partnership agreements can be signed also with other companies/social enterprises that can offer products at lower costs. Examples can be for-profit companies such as IKEA, or social enterprises, such as RESEAT, that offer good quality products, made using environmentally friendly, processes at low costs

28. Summary

29. Conclusions • Oursolutionis a hybridbetweencost-savings and fundraising • In our first option, the governmentwill play a pivotalroleasitwillprovideus with workforceand finance • The introduction of the ‘multi-generation housing’conceptwillslightlychangeSostreCivic’s business model butwill help in getting the governmentinvolved • The solutionwe propose can be usedtogetherwith othertoolssuchaspartnershipswith otherNGOsor with otherfor profit enterprises.

30. General Recommendations • Reduce the initial amount required to its clients (€ 3,000)? Even though this functions as a long-term commitment, this kind of incentive can also be created through direct involvement of the tenants, peers or shared/partly ownership in the projects or similar approaches • Revise the rentterm? Is the feasibilitychecked of thisterm? Do houseownerswant to ‘rent’ theirproperty for 25 years= big opportunitycost