Charity? or Tax Exempt Business?

1. Charity? orTax Exempt Business? Getting Started on Social Enterprise Presented by Jean Block Social Enterprise Ventures, LLC Jean Block Consulting, Inc. socialenterpriseventures.com

2. Introducing Social Enterprise Ventures • Incorporated in 2006 • National training and consulting company • Led by Jean Block, Jean Block Consulting, Inc. socialenterpriseventures.com

3. What is Social Enterprise? • It is unrestrictedrenewable incomethat creates the path toward sustainability and enhances your mission. • It is generated through sales, payment for services or other business opportunities. • It should not replace fundraising – it is a new tool in your organizational tool kit. More Money = More Mission! socialenterpriseventures.com

4. Social Enterprise is NOT about turning your nonprofit into a business… • It’s about applying sound business principles to your tax-exempt business. socialenterpriseventures.com

5. Traditional Funding • Grants, special events, donations, sponsorships, underwriting, etc. • You work hard to get it, use it up and have to go back for more…the funnel effect! • Strings attached: grantors require reports to ensure you have met their funding requirements, donors at a special event want to have a good time, enjoy the food, etc. • Traditional funding is usually restricted in some way. socialenterpriseventures.com

6. Myths about Social Enterprise • Nonprofits can’t make a profit. You do now – you just aren’t paying taxes on it! • It’s a quick fix – We can do this tomorrow. • If we earn money, we will lose our nonprofit status – Nope. Not likely. • What if we have to pay federal tax? Well, what if? • *state sales taxes may apply, however. socialenterpriseventures.com

7. Why Consider Social Enterprise? The funding marketplace is changing: • Corporate giving directed toward investing for the long term rather than buying tables for one night. • Government funding diminishing and being redirected. • Donors tired of giving to organizations that operate with a poverty mentality. What does this change mean for you? • It means a shift to earned income instead of relying on a 'hand out." Nonprofit is a tax designation, not a business plan! socialenterpriseventures.com

8. Assessing Organizational Readiness • Board and Staff are willing to invest in change from charity-think to sustainability! • Board and Staff are open-minded. • Board and Staff create a dedicated team to learn social enterprise. • Board and Staff are willing to invest the time and dollar resources into learning social enterprise. socialenterpriseventures.com

9. Typical Outcomes • Fundamental and systemic changes in the way you manage your tax-exempt business. • A business plan for an earned income social enterprise venture. • Enhancement of current programs and services by providing value added benefits that create new income sources from new payer markets and customers. socialenterpriseventures.com

10. Burning Questions? socialenterpriseventures.com

11. How to Become a Successful Social Entrepreneur We have learned that seven basic skills are involved in the journey to become a successful social entrepreneur. socialenterpriseventures.com

12. The Seven Steps to Success • Step 1 – Organizational Focus • Step 2 – Assets and Opportunities • Step 3 – Market Research – The Customer(s) • Step 4 – Market Research – The Competition • Step 5 – Costing and Financing • Step 6 – Write the Sales Plan • Step 7 – Write the Business Plan socialenterpriseventures.com

13. Start With the Basics Step I - Organizational Focus • Mission, Vision and Core Values • Internal and External Forces • Mission and Dollar Goals • These are your benchmarks along the journey • Stakeholder Communication socialenterpriseventures.com

14. Build an Inventory of Assets Step 2 – Assets and Brainstorming • Core Competencies – What you do extremely well (e.g. your products and services). • Physical Assets – What you have that is underutilized. • Technical and Knowledge Assets – What you know (e.g. training). • Relationship Assets - Who you know that can help with social enterprise (e.g. people with influence). socialenterpriseventures.com

15. Set Objective Evaluation Criteria • Set parameters to evaluate potential earned income opportunities. • Narrow the field to serious potential opportunities. • Prevents WHO HOO! socialenterpriseventures.com

16. Brainstorm Opportunities Leverage Your Assets into Earned Income • Service Opportunity-Delivers a service to a current or new market. • A human service agency bundles current and new programs for seniors, selling to their adult children and caregivers. • Knowledge Opportunity- Delivers your knowledge to a current or new market. • An agency delivers financial literacy training to small businesses. socialenterpriseventures.com

17. Brainstorming… • Product Opportunity-Produces or delivers a tangible product. • A food bank expands its product line to include non-food items. • Employment Opportunity- Provides direct employment to current or future customers or clients. • An agency serving persons with disabilities expands its greenhouse program into the organic market. socialenterpriseventures.com

18. Brainstorming… • Unrelated Venture Opportunity- Takes advantage of underutilized assets or develops an opportunity unrelated to your asset inventory. • An agency brings its vehicle donation program in house. socialenterpriseventures.com

19. Evaluate Opportunities • Rank and score the opportunities. • Use objective criteria. • Select those with highest initial potential to reach mission and dollar goals. • Begin Market Research & Feasibility. socialenterpriseventures.com

20. Market Research & Feasibility Step 3 - Venture Market Research Part 1 : The Customer(s) • Introduction to Market Research • Market Push vs. Market Pull • Market Trends • Target Market Planning • target markets • market size • buyers vs. users • buyer and user motivation • buyer and user profiles • features and benefits socialenterpriseventures.com

21. …a quote about research… “You were right regarding the idea vs. the results of the research. The market we thought was interested was not or already had the need taken care of. It's teaching us the value of research and continuing to dig deeper on our ideas. Most of all, it's showing us to follow where the research leads.” Zack Wilson, PR/Development High Plains Food Bank, Amarillo Texas socialenterpriseventures.com

22. Burning Questions? socialenterpriseventures.com

23. Competitive Analysis Step 4 - Venture Market Research Part 2: The Competition • Direct Competition • Indirect Competition • Competition’s strengths and weaknesses • Market Differentiation – How will you compete? socialenterpriseventures.com

24. Costing Analysis Step 5 - Costing, Financing and UBIT • Define costs - direct, indirect, variable, fixed, start up and recurring. • Break Even Point - Profit Margin. • Definition of UBIT – IRS Publication 598 • It is a trade or business, • It is regularly carried on, and • It is not substantially related to furthering the exempt purpose of your organization. • Get professional advice at this stage in the planning process. socialenterpriseventures.com

25. Sales Planning Step 6 - Elements in a Sales Plan • Customer Profiles • Competitive Advantage • Market Positioning • Distribution Methods • Pricing • Promotion socialenterpriseventures.com

26. Write a Business Plan Step 7 – Write the Business Plan • How does the venture support your mission? • What are mission and dollar goals for the venture? • Describe the target customers and end users. • What customer needs are addressed? • What will motivate customers to buy your venture? • Define your competition and your competitive advantage. • Pricing strategy. • Promotional strategy. • Start up costs. • Ongoing venture costs. • Annual financial projections. • Financing required. • Plan to repay financing. socialenterpriseventures.com

27. Burning Questions? socialenterpriseventures.com

28. Examples of Social Enterprise Existing Physical Assets • Rental program for the agency’s party supplies. • An agency serving persons with disabilities becomes a certified organic greenhouse business. • Remodel ineffective space, adds general support services and rents space to small businesses and other nonprofits. • Revamped thrift store to attract a higher-end market with special programs and services. • Commercial kitchen provides hospital meals. • Opens camp to corporate and private users. socialenterpriseventures.com

29. Examples of Social Enterprise Technical/Knowledge Assets • Opens training classes to other agencies and for profits. • Lead abatement training for contractors. • A food bank expands its product line to include non-food items. • A counseling agency develops continuing education credit programs for psychologists and counselors. • Training programs for small businesses. • Fee-for-service energy audits for private and commercial clients. socialenterpriseventures.com

30. Examples of Social Enterprise New Ventures • An agency takes over management of its car donation program, previously operated through an out-of-state for profit company. • An agency holds an on line auction in partnership with a for profit business. socialenterpriseventures.com

31. …and a quote… “ During these challenging times [we] had to face the hard truth that our regular funders are unable to fund at past levels - sometimes not at any level.  If it were not for our Give Hope a Ride vehicle donation program, [we] could not continue the excellent programs and services for our guest families.  The time and money our social enterprise team invested in training five years ago has certainly proved to be well worth it!" Eileen Casey Cook, CEO Casa Esperanza, Inc. & Casa Esperanza Foundation, Inc. socialenterpriseventures.com

32. Let’s Talk! How Can I Help You? www.socialenterpriseventures.com 505.899.1520 ean@socialenterpriseventures.com socialenterpriseventures.com

33. Thank you! Let’s Get Started on Building Your Organizational Capacity! socialenterpriseventures.com