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Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
Social Enterpriseblendingbusinesswithsocialjustice
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Social Enterpriseblendingbusinesswithsocialjustice

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  • 1. Social Enterprise: Blending Business with Social Justice – What’s Possible? Prepared for the Faculty of Business, University of Victoria, Victoria, October 21, 2005 Edward T. Jackson
  • 2. Social Enterprise: <ul><li>The Short Answer: Not everything, but a lot ! </li></ul><ul><li>The Long Answer: </li></ul><ul><li>UPSIDE </li></ul><ul><ul><li>Social enterprise takes many forms, and produces a wide range of goods and services </li></ul></ul><ul><ul><li>The benefits of social enterprise include: </li></ul></ul><ul><ul><ul><li>enhanced livelihoods and employability for marginalized groups; </li></ul></ul></ul><ul><ul><ul><li>production of reasonable-cost, good-quality, socially useful and environmentally sustainable goods and services </li></ul></ul></ul><ul><ul><ul><li>direct governance by local communities, either place-based or interest-based </li></ul></ul></ul><ul><ul><ul><li>creative mobilization of diverse public and private resources to advance social justice and economic opportunity </li></ul></ul></ul><ul><ul><li>Business schools and governments have discovered social enterprise and are promoting it in increasingly robust fashion </li></ul></ul>Blending Business with Social Justice – What’s Possible?
  • 3. Social Enterprise: <ul><li>LIMITS </li></ul><ul><ul><li>But, starting and growing a social enterprise – especially, balancing the social, environmental and commercial objectives – is hard work </li></ul></ul><ul><ul><li>Well-trained and well-supported managers of social enterprises are in short supply </li></ul></ul><ul><ul><li>Social enterprises can complement, but not replace: </li></ul></ul><ul><ul><ul><li>social policy </li></ul></ul></ul><ul><ul><ul><li>regional policy </li></ul></ul></ul><ul><ul><ul><li>trade unions </li></ul></ul></ul><ul><ul><ul><li>political activism </li></ul></ul></ul><ul><ul><ul><li>political parties </li></ul></ul></ul>Blending Business with Social Justice – What’s Possible?
  • 4. The Social Enterprise “Zone” Private Sector Government Civil Society Social Enterprise: Any business that seriously seeks to achieve social or environmental as well as commercial objectives
  • 5. Types of Social Enterprise Newman’s Own LARGE SMALL FOR-PROFIT NON-PROFIT $100 M Sales $100 K Sales Aarong Crafts (BRAC) Oxfam-HK Second-Hand Shops Horn Afrik Radio Gariba Development Associates (GDA) The “ Democracy Arc” COOPERATIVE REST >$200 M Sales Body Shop Ben & Jerry’s
  • 6. Capital Markets for Social Enterprise <ul><li>Governments </li></ul><ul><li>Regional Agencies </li></ul>Grants Loans / Equity <ul><li>Governments </li></ul><ul><li>Development Agencies </li></ul><ul><li>Foundations </li></ul><ul><li>Corporations </li></ul><ul><li>Community Futures </li></ul><ul><li>Community Loan Funds </li></ul><ul><li>Credit Unions </li></ul><ul><li>Social Venture Capital </li></ul><ul><li>Banks </li></ul><ul><li>Credit Unions </li></ul><ul><li>Business Development Bank </li></ul><ul><li>Regional Agencies </li></ul><ul><li>Labour Funds </li></ul><ul><li>Banks </li></ul><ul><li>Credit Unions </li></ul><ul><li>Targeted Pension Investments </li></ul><ul><li>Regional Agencies </li></ul><ul><li>Labour Funds </li></ul>$1M $2M $3M $4M $5M $6M $7M 0 $50K $100K $250K $500K $10K $1M $2M $3M $4M $5M $6M $7M 0 $50K $100K $250K $500K $10K
  • 7. Case Study - REST Thai Volunteer Service (NGO) Responsible Ecological Social Tours - REST Community- Based Tourism <ul><li>North American and European Clients </li></ul><ul><li>Universities </li></ul><ul><li>Eco-Tours </li></ul><ul><li>Community Partners </li></ul><ul><li>Guests stay in villagers’ homes </li></ul><ul><li>Fishermen teach conservation </li></ul><ul><li>Cultural interactions; mutual respect </li></ul>Training and Consulting in Eco-Tourism <ul><li>Nonprofit business </li></ul><ul><li>Three employees </li></ul><ul><li>Environmental and anti-poverty projects/campaigns </li></ul>20% to community fund 60% of tour revenues to communities
  • 8. Case Study – Newman’s Own <ul><li>“ We were a joke in 1982, but the joke has given away $150 million so far – so we are a very practical joke.” (Paul Newman) </li></ul><ul><li>Reading: Paul Newman and A.E. Hotchner, Shameless Exploitation in Pursuit of the Common Good </li></ul>Paul Newman A.E. Hotchner Newman’s Own (S Corporation) Committee to Encourage Corporate Philanthropy Partnerships Newman’s Own Organics Salad Dressing, Spaghetti Sauce, Popcorn <ul><li>Paul Newman, </li></ul><ul><li>Co-Chair </li></ul><ul><li>100 member CEOs </li></ul><ul><li>$100 M in sales (2002) </li></ul><ul><li>80 products, 13 factories in US </li></ul><ul><li>After-tax profits of $12 M, distributed in full to over 200 charities in the arts, affordable housing, children, disaster relief, education, hunger relief, environment </li></ul><ul><li>McDonald’s </li></ul><ul><li>Give Something Back (Bay Area) </li></ul><ul><li>America’s Second Harvest (hunger) </li></ul><ul><li>Care 2 make a Difference (environment) </li></ul><ul><li>Oprah’s Angel Network </li></ul>donations, publicity
  • 9. Social Enterprise: the Business School Response <ul><li>Harvard Business School – Social Enterprise Initiative </li></ul><ul><ul><li>SE: “the contributions of any individual or organization can make toward social improvement, regardless of its legal form (non-profit, private, or public sector) based on the belief that these organizations individually and collaboratively can generate significant social value.” </li></ul></ul><ul><ul><li>Achievements since 1993: </li></ul></ul><ul><ul><ul><li>Established an SE tenure-track position </li></ul></ul></ul><ul><ul><ul><li>Engaged over 40 faculty members in SE research and teaching </li></ul></ul></ul><ul><ul><ul><li>Produced 164 cases and 25 working papers </li></ul></ul></ul><ul><ul><ul><li>Courses on SE added to the curriculum </li></ul></ul></ul><ul><ul><ul><li>“ enabled HBS to take a leadership role in positioning social enterprise as a vital intellectual discipline and critical factor in the global business equation” </li></ul></ul></ul>
  • 10. Social Enterprise: Government’s Response <ul><li>The European Union </li></ul><ul><li>SE: The social economy, or third system, includes cooperatives, mutual societies, associations and foundations. The enterprises in the social economy privilege social objectives over capital, operate under democratic control of voluntary members, promote solidarity, are independent of government, and distribute surpluses for public-interest or member objectives. </li></ul><ul><li>European Employment Strategy: Regional development agencies promote entrepreneurship by the social economy to: </li></ul><ul><ul><ul><li>increase employability and enhance integration of disadvantaged groups into the labour market, including immigrants, women, youth, the disabled and others </li></ul></ul></ul><ul><ul><ul><li>Build local social capital </li></ul></ul></ul><ul><ul><ul><li>Convert and legalize the informal economy </li></ul></ul></ul>Reading: eurada.org; aries.eu.int
  • 11. Social Enterprise: Government’s Response <ul><li>United Kingdom </li></ul><ul><ul><li>SE: “a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximize profit for shareholders and owners.” </li></ul></ul><ul><li>Three Key Outcomes Promoted by the Department of Trade and Industry </li></ul><ul><ul><li>Create an enabling environment (coordinate government activities, address legal and regulatory issues, lever public procurement) </li></ul></ul><ul><ul><li>Make social enterprises better businesses (provide business support and training; provide finance and funding) </li></ul></ul><ul><ul><li>Establish the value of social enterprise (establish the knowledge base, celebrate achievement, build confidence through performance and standards) </li></ul></ul>Reading: dti.gov.uk
  • 12. Social Enterprise: Government’s Response <ul><li>Canada </li></ul><ul><li>SE: “Social economy enterprises are run like businesses, producing goods and services fro the market economy, but they manage their operations and redirect their surplus in pursuit of social and community goals.” Includes non-profit and cooperative enterprises. </li></ul><ul><li>Appointed Parliamentary Secretary for the Social Economy – Hon. Eleni Bakopanos </li></ul><ul><ul><li>National Roundtable appointed and convened </li></ul></ul><ul><ul><li>Budget 2004 provided funds via regional development agencies (Western Diversification, FEDNOR, CED-Quebec and ACOA) for: </li></ul></ul><ul><ul><ul><li>Capacity Building: $17M over two years (05/06-06/07) </li></ul></ul></ul><ul><ul><ul><li>Financing: $100M over five years (05/06 – 10/11) </li></ul></ul></ul><ul><ul><ul><li>SSHRC : $15M over five years (05/06-10/11) </li></ul></ul></ul>
  • 13. Ten Limits and Contradictions of Social Enterprise <ul><li>Businesses can fail, jobs and services can be lost </li></ul><ul><li>Surpluses can be small, negative or unreliable </li></ul><ul><li>Local markets offer limited growth opportunities </li></ul><ul><li>Partnerships with government, especially contract-based relationships, can be asymmetrical and create dependency </li></ul><ul><li>Social enterprises may not provide universal coverage of their services </li></ul><ul><li>Balancing the need for business expertise on boards with the principle of democracy is very difficult </li></ul>
  • 14. Ten Limits and Contradictions of Social Enterprise <ul><li>The private sector can claim “unfair competition” by social enterprises </li></ul><ul><li>The political left is concerned that social enterprise can displace unionized, government services, thereby providing cover for neo-liberalism </li></ul><ul><li>Movement leaders seek to mainstream social enterprise and CED but yet retain its autonomy </li></ul><ul><li>Social enterprise leaders are in short supply! </li></ul>
  • 15. Intermediaries Optimize Social Enterprise Success <ul><li>Forms: Community development corporation, non-profit umbrella, foundation, program, network </li></ul><ul><li>Functions: Technical assistance (consulting, training, business planning, market studies); financing (grants, loans, equity); management support; political support (promotion, lobbying, regulatory change) </li></ul><ul><li>Funding: Foundation, corporate and government grants; loans and other program-related investments; contracts; enterprise surplus; asset appreciation; private philanthropy; donations and gifts; volunteer time </li></ul><ul><li>Factors (of Intermediary Success): Leadership (skills, vision continuity, succession); structure (flexible, evolving); strategy (growth opportunities, backward and forward linkages, first-mover advantage); management; human resources; innovation; replication and scaling up; financing (diversification of revenues); accountability </li></ul>
  • 16. Case Study – New Dawn Enterprises Cape Breton Association for Co-op Development New Dawn Enterprises (Non-Profit CDC) <ul><li>Cape Care Services Ltd. </li></ul><ul><li>Home Care Services </li></ul><ul><li>Cape Breton Association for Housing Development </li></ul><ul><li>Real estate company for affordable housing </li></ul><ul><li>Highland Resources Ltd. </li></ul><ul><li>Private career college </li></ul><ul><li>New Dawn Guest Home Ltd. </li></ul><ul><li>30-bed residential care facility </li></ul><ul><li>David Realties </li></ul><ul><li>Commercial landlord </li></ul>1973 Reading: newdawn.ca <ul><li>Credo </li></ul><ul><li>Business processes outsourcer </li></ul><ul><li>Sydney Senior Care Home Living Ltd </li></ul><ul><li>37-bed program </li></ul><ul><li>Pine Tree Park Estates </li></ul><ul><li>revitalized military base </li></ul><ul><li>Corporate Partnerships </li></ul><ul><li>Home Depot </li></ul>Government Grants/Contracts <ul><li>New Dawn Holdings </li></ul><ul><li>Investment Firm </li></ul><ul><li>BCA Holdings </li></ul><ul><li>Venture Fund (Equity, Loans) </li></ul>
  • 17. Case Study – Oxfam Hong Kong Oxfam International - 12 Oxfams working in 110 countries Hong Kong and Chinese Donors <ul><li>Special Events </li></ul><ul><li>Trailwalker Hike - $21M </li></ul><ul><li>Other events and appeals $18 M </li></ul>Community Development and Capacity Building in China Oxfam Rice China Development Fund - 120,000 packets sold for $3M $5M contribution <ul><li>Two Second-hand Stores </li></ul><ul><li>- $2M revenues </li></ul><ul><li>second-hand CDs </li></ul><ul><li>International crafts </li></ul><ul><li>100 volunteers </li></ul>Funds, Expertise $6M Funds $52M “ Rural Women Knowing All” - 200,000 copies - Currency in Hong Kong Dollars - Reading: Oxfam.org.hk $39M contribution Oxfam Hong Kong - $112 M Budget Project Funds
  • 18. Case Study - BRAC <ul><li>BRAC (Non-Profit) </li></ul><ul><li>Largest NGO in World </li></ul>BRAC Bangladesh <ul><li>Microcredit for Women </li></ul><ul><li>$1M to 11,000 women </li></ul><ul><li>Microcredit for Women </li></ul><ul><li>$300 M to 4M members </li></ul><ul><li>28,000 staff </li></ul><ul><li>Primary Schools </li></ul><ul><li>34,000 schools </li></ul>Key Features: Critical self-examination, experimentation, opportunism, scalable knowledge <ul><li>Health Programs </li></ul><ul><li>21,000 community Health workers </li></ul>BRAC Afghanistan <ul><li>Aarong (‘Village Fair’) </li></ul><ul><li>Major arts and craft retailer in Bangladesh </li></ul><ul><li>Exports to Europe </li></ul>BRAC University <ul><li>Program Support Enterprises </li></ul><ul><li>Poultry farms, feed mills, prawn hatcheries, fish hatcheries, silk reeling centres, tree nurseries, bull station, salt factory </li></ul>Vegetable Export Business
  • 19. Case Study - Benetech Jim Fruchterman, Founder Beneficent Technologies (Non-Profit) Bengineering Inc. (For-Profit) <ul><li>Revenue from monthly subscriber fee plus grants for rollout </li></ul><ul><li>Revenue from server maintenance and administration, customizing software and training </li></ul>Reading: Benetech.org Benetech Beneficent Inc. (Non-Profit) <ul><li>Bookshare.org </li></ul><ul><li>online library of 10,000 books in audio/Braille </li></ul><ul><li>Martus </li></ul><ul><li>web-enabled tools for human-rights workers to manage information on human-rights abuses </li></ul>Social Enterprise “ If the unit of service for a social enterprise is a piece of information or a technology product, as opposed to an hour of human time, then the possibility of going to scale is greatly enhanced.” Jim Fruchterman Social Enterprise <ul><li>Grants </li></ul><ul><li>Governments </li></ul><ul><li>Foundations </li></ul><ul><li>MacArthur </li></ul><ul><li>Soros, Skoll) </li></ul><ul><li>Corporations </li></ul><ul><li>Share leadership, space, financing </li></ul><ul><li>Social venture funds to bring inventions/ or technology to market </li></ul>
  • 20. Case Study – Social Capital Partners Social Capital Partners Social Venture Portfolio Renaissance, Montreal Inner City Renovations, Winnipeg Social Enterprise <ul><li>Investment Decision Steps </li></ul><ul><li>Concept Review </li></ul><ul><li>Business Plan Review </li></ul><ul><li>Due Diligence </li></ul><ul><li>Alignment and Deal structure </li></ul><ul><li>Investment and Ongoing Working Relationship </li></ul><ul><li>Monitoring and Reinvestment </li></ul>Social Enterprise Research on SROI/ Evaluation Bill Young/ Bealight Foundation Sector and Policy Engagement <ul><li>$100K equity </li></ul><ul><li>$100K loan </li></ul><ul><li>Used to test new ideas in marketing, merchandizing and pricing </li></ul><ul><li>$50 K grant and board involvement </li></ul>Grants, Loans, Equity Reading: Sean VanDoorselaer, “Venture Capital for Social Enterprise,” Making Waves , 15(3), 2004, 10-13 <ul><li>Challenges </li></ul><ul><li>“ Dearth of great social entrepreneurs” </li></ul><ul><li>Lack of sophisticated business models </li></ul><ul><li>Limited sources of social capital </li></ul>
  • 21. Corporate Social Responsibility through Social Enterprise <ul><li>Strategies: </li></ul><ul><ul><li>Grantmaking to SE/CED projects (Bell, RBC, Cooperators) </li></ul></ul><ul><ul><li>Venture philanthropy (e.g. Social Capital Partners) </li></ul></ul><ul><ul><li>Joint ventures (RBC-St. Christopher House, Dupont-McGill) </li></ul></ul><ul><ul><li>Procurement from community/social enterprises (Suncor, Syncrude) </li></ul></ul><ul><li>Opportunities: </li></ul><ul><ul><li>Multi-stakeholder exchanges: corporations, governments, SE sector organizations </li></ul></ul><ul><ul><li>Replication and scaling on business-community partnerships </li></ul></ul><ul><ul><li>Incentives to do more and do it better: awards, recognition, tax incentives </li></ul></ul><ul><li>Research Questions: </li></ul><ul><ul><li>How can SE–through–CSR models be effectively sustained, replicated and scaled? </li></ul></ul>
  • 22. Innovation in Social Enterprise <ul><li>Innovation Defined: “a change that creates a significant new dimension of non-profit performance” (Drucker) </li></ul><ul><li>Key Elements: </li></ul><ul><ul><li>Knowledge management (explicit and tacit knowledge, ICTs) </li></ul></ul><ul><ul><li>Value-added production technology </li></ul></ul><ul><ul><li>Social entrepreneurship of the CED organization or other intermediary </li></ul></ul><ul><li>Research Questions: How does the innovation process really work in social enterprise, and how can it be enhanced? </li></ul>
  • 23. Evaluation of Social Enterprise <ul><li>Evaluation Defined: Assessment of social, environmental and commercial results, lessons learned and accountability systems by key stakeholders. </li></ul><ul><li>Promising Methods: </li></ul><ul><ul><li>Return on Taxpayer Investment (ROTI) – Input-output modeling of direct, indirect and induced effects of government-supported interventions </li></ul></ul><ul><ul><li>Social Return on Investment (SROI) – Method for assessing the social costs associated with the individual employees and the social enterprise itself (Social Capital Partners, REDF) </li></ul></ul><ul><ul><li>Enhanced Value-Added Statement (EVAS) – Quantifies the value of social impacts and volunteer contributions of a non-profit or cooperative (Quarter et al) </li></ul></ul>
  • 24. Evaluation of Social Enterprise <ul><li>Issues: </li></ul><ul><ul><li>Attribution: Need to tell credible evaluation stories demonstrating results-chain linkages </li></ul></ul><ul><ul><li>How to mix stakeholder participation and outside experts in the evaluation process </li></ul></ul><ul><li>Research Question: </li></ul><ul><ul><li>What methods are most effective in accurately and appropriately assessing the social, environmental and commercial results generated by social enterprises? </li></ul></ul>
  • 25. Questions for Discussion <ul><li>What current teaching and research activities at UVic, inside and outside the Faculty of Business, are related to social enterprise? </li></ul><ul><li>What further work could be done in teaching and research with respect to: </li></ul><ul><ul><ul><li>Social enterprise in BC coastal communities? </li></ul></ul></ul><ul><ul><ul><li>Businesses driven by green technologies? </li></ul></ul></ul><ul><ul><ul><li>Social enterprise in the Asia-Pacific region? </li></ul></ul></ul><ul><li>What opportunities could be provided to Business students to engage with social enterprise, through field research, cooperative placements, case-study preparation or advisory-service delivery? </li></ul><ul><li>To what extent do possibilities exist for inter-Faculty cooperation on social enterprise? </li></ul>
  • 26. Useful Websites vibrantcommunities.ca Vibrant Communities Project (15 Canadian cities, including Victoria) vancity.com VanCity Credit Union skollfoundation.org Skoll Foundation (grantmaking to social entrepreneurs) ssireview.com Stanford Social Innovation Review socialcapitalpartners.ca Social Capital Partners (social venture capital) nesst.org NESsT (NGO self-financing in Central Europe and Latin America) cedworks.com Making Waves (Canadian CED newsletter) ulg.ac.be/ciriec International Center of Research and Information on the Public, Social and Cooperative Economy, Belgium istr.org International Society for Third Sector Research inaise.org International Association of Investors in the Social Economy hbs.edu/social enterprise Harvard Business School – Initiative on Social Enterprise civicus.org Civicus (international NGO network) philanthropy.com Chronicle of Philanthropy carleton.ca/cedtap Community Economic Development Technical Assistance Program chantier.gc.ca Chantier de l’économie sociale ccednet-redec.ca Canadian Community Economic Development Network cbsr.ca Canadian Business for Social Responsibility blendedvalue.org Blended Value Project (tools for social return on investment) arnova.orgc Association for Research on Nonprofit Organizations and Voluntary Action allavida.org Alliance (magazine promoting philanthropy worldwide) accountability.org.uk Accountability: Institute of Social and Ethical Accountability

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