Social Enterprise for Nonprofits - Getting Started

1. Social Enterprise for Nonprofits - Getting Started NTEN Webinar, October 8, 2009

2. Agenda • Overview of Social Enterprise, structures, types • Getting started in Social Enterprise • Funding sources & options • View from the field • Available resources • Open Q&A

3. What is Social Enterprise? “An organization or venture that achieves its primary social or environmental mission using business methods” -Social Enterprise Alliance

4. Why launch a social enterprise? • Sustainability • Improve social return on investment (SROI) • Cultural transformation • Leverage new funding sources

5. Sample Social Enterprises in Nonprofit Tech space

6. Legal Structures • Nonprofit • For profit • Hybrid (i.e., L3C) See: Effective Social Enterprise — A Menu of Legal Structures

7. A New Era for Social Enterprise • Increased Federal investments -Office of Social Innovation -Office of Entrepreneurship & Innovation • Greater foundation interest • New models (L3C, B Corp, etc.) • Economic crisis causing greater NPO interest

8. What is Social Enterprise? Definition: businesses owned and operated by nonprofit organizations Social Enterprise Socially Minded Revenue Generating = + © REDF – Please do not distribute without prior permission from REDF

9. Mission-motivation Profit-motivation Social Programs Enterprise Activities $ Enterprise Activities Social Programs + Enterprise Activities Social Programs Social enterprises vary depending on an agency’s Earned Income/Social Enterprise Strategies Mission-Centric Social Enterprise Mission-Related Social Enterprise Non-MissionRelated Social Enterprise • Primary purpose is mission advancement • Integration between social programs and business activities • Provides revenue for nonprofit operations and mission-related activities • Often expands mission to achieve greater social impact • Not related or intended to advance mission • Profit/funding potential is primary purpose Source: Virtue Ventures, Social Enterprise Typology, Kim Alter © REDF – Please do not distribute without prior permission from REDF

10. Why is planning for a social enterprise different than for a small business? The desired outcome of for-profit business is already known: to make a profit $ Returns Set up Business Business Plan The desired outcomes of a social enterprise are not obvious and so the goals need to be established first $ Returns Business Plan Set up Business Set social and financial goals Select business idea based on goals Social impact

11. The entire process from planning to launch requires significant time and agency capacity Define goals Assess organization Develop venture criteria Pre-feasibility study Feasibility study Business plan Execution • Why is your organization 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 of social enterprise viability • Thorough business planning for social enterprise development • Making it happen Social enterprise pilot 6 months 6 months 3 mo. 1 year Timing (illustrative) © REDF – Please do not distribute without prior permission from REDF

12. Why is it important to set goals? • Ensure agreement between stakeholders • Gain agreement from staff with different roles, the board and any other stakeholders on the objectives of the enterprise • Select a business idea and guide the business planning • Business ideas can be evaluated objectively using the enterprise criteria • Guide business operations • Clear social and financial goals help the enterprise manager make operational decisions • Evaluate whether the enterprise is successful • Tracking financial and social metrics against initial goals shows whether the enterprise is fulfilling stakeholders’ expectations

13. CHANGE AGENT PRODUCTIONS “A Youth Led Social Enterprise committed to providing the best products and services in Digital Movie Making, Graphics, Web Design, Technology Set Up, Consulting, and Training, Conference AV, Youth Development Training…….”

14. Our Journey • Two Years in operation / born out of the YMCA Youth Institute. • Have done over $400,000 in business over the past 2 years. • Employed over 140 youth in various projects. • Served over 51 clients over the past two years. • High Client Satisfaction Rate. • High Youth Intern Skill Development • Five Fulll Time Staff • Positive Growth Strategy / Marketing • High Client Recommendation Rates • Business Plan Model • Plan for Growth

15. Challenges • External Economic Forces • Sustainability without Grant Funding • Defining Social Enterprise Model within an existing non-profit traditional framework • Change thinking / monetize services • Nurture Growth at All Levels • Culture Shift • Balance • Marketing

16. The Future • Manage Growth without Grant Funding • Price Services by Industry Standards • Strategic Marketing • Staff Growth Potential • Replication / Franchising • Diverse Funding Streams • Long Term Projects • Stay Honest to Youth Driven Mission

17. Types of SE Funding

18. Key SE Funders

19. Attracting Investment

20. Resources • Social Enterprise Alliance • Rootcause Business Planning Guide for Ses • Business Plan Pro Social Enterprise Edition • Social Return on Investment (SROI) • Effective Social Enterprise — A Menu of Legal Structures • ZeroDivide Community Investment Resources • Social Enterprise Books

21. Thanks from… • Bob Cabeza, Change Agent Productions bob.cabeza@lbymca.org • Laura Efurd, ZeroDivide laura@zerodivide.org • Samra Haider, REDF shaider@redf.org • Paul Lamb, Man on a Mission Consulting paul@manonamission.biz NOW GO OUT AND CHANGE THE FACE OF NONPROFITS AND HOW THEY IMPACT THE WORLD!!!