Two-tier business model in financing your social mission

1. Two-tier business model in financing your social mission Peter MészárosManaging Director3lobit (voluntary association)Bratislava, Slovakia • “Strengthening the Sustainability of Community-based Development through Social Entrepreneurship” • 4. 12. 2009 | Bratislava, Slovakia | Regional Workshop

2. Who we are The “base” organization Voluntary association Social Mission and Overall Objective …improve the quality of life of disadvantaged (disabled) populations: children, adolescents and adults with autistic spectrum disorder, and their families. Goal …strengthen the self –service , social and work skills of disabled in order to increase the degree of their autonomy and the prospects for social inclusion. Activities …provide select therapeutic and social services (Psychiatry treatment , Biofeedback, Snoezelen, Sense Integration Therapy /SIT/…)

3. How do we finance our mission?…raise funds, generate income Build the “fund base” (non-market resources) • Donations(grants, 2% income tax assignation, etc.) • Individuals • Companies • Private foundations • European and state grant money and subsidies Built the “income base” (market resources) • Own income-generating activities • Inherent/intrinsic mission – related activities (books, events) • Commercial and/or trading activities (entrepreneurial)(mission related or non-mission related)

4. Commercial markets and the NGO…becoming a commercially enterprising nonprofit A. Is it (legally) intended for an NGO to take up this position? • The law (indeed) does “allow” for an NGO to engage in a commercial and/or trading activity /based on the appropriate trade certificate/ • The law as well does “allow” for an NGO to establish commercial companies and/or to enter or buy stake in the existing ones B. Is it well equipped to compete & cope? • Is it accepted by the business community? • Does it have access to loans? • To what extent is it liable in case anything goes wrong? • Can it accommodate the V.A.T. registered customers?

5. How we understand the “two-tier” Not-for-profit organization Non-profit organization

6. The second tier Limited liability company aimed at • profit maximization • mutual and public benefit …a story of a social enterprise

7. What to take into account… • How do we allow for the seed capital without compromising our mission? How/where do we raise such? • Do our people have skills to run commercial activities? Can we reset our mind from the habit of ‘raising’ the money to ‘making’ the money? • How do we balance out our profit maximization goal with our mutual and public benefit mission? • Who supports whom (the NGO vs. Ltd) and for how long? • To what extent do we ask for more favorable conditions for our public benefit Ltd before we run into the ‘unfair competition’ zone?

8. Where does the inspiration come from… Look at the examples of successful social enterprises of work integration nature: • Pack-IT Group / Great Britain/ Wales / Cardiff • Basta Arbetskooperativ / Sweden / Nykvarn • McSence Group / Scotland / Mayfield • Integra Slovakia / Slovakia/ Bratislava • BAN and Bicycle / Austria/ Graz

9. Recommendations to policy makers(how can the government assist us) • Allow your NGOs to engage in commercial activities and know why • Treat a social business the same way you would treat a commercial one. If you want to favor the social one, focus on taxes (not exactly the case of a WISE). • Step out of a narrow understanding of social enterprising to only serve work integration function

10. Thank you for your attention Peter Mészáros 3lobit (ngo) Bratislava, Slovakia +421-908-581 560 meszaros@3lobit.sk www.3lobit.sk