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Promoting Social Investment in Canadian Social Enterprises:  Successes and Challenges
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Promoting Social Investment in Canadian Social Enterprises: Successes and Challenges



Presentation by Kate Ruff of Charity Intelligence at the ANSER Annual Conference in Montreal on June 3, 2010. ...

Presentation by Kate Ruff of Charity Intelligence at the ANSER Annual Conference in Montreal on June 3, 2010.
The presentation reviews Ci’s 2009 analysis of Canadian social enterprises, focusing on successes and challenges, and briefly looks ahead to the 2010 analysis.



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Promoting Social Investment in Canadian Social Enterprises:  Successes and Challenges Promoting Social Investment in Canadian Social Enterprises: Successes and Challenges Presentation Transcript

  • Promoting Social Investment in Canadian Social Enterprises: Successes and challenges
    • Kate Ruff,
    • Social Enterprise Analyst
    • Charity Intelligence Canada
    • June 6, 2010
  • These are some descriptive statistics from our 2009 report. 435 charities + SEs were contacted. These 435 either were suggested to us by those working in our target sectors or self-selected into our process. Ci does not strive to analyze every Canadian charity. We do strive to cast a wide net so that the pool that we contact includes all those that are regarded by peers as excellent charities. 2009 Recommended Charities (including SEs) 435 charities contacted 103 charities submitted materials 97 in-depth analyses performed 32 charities recommended for 2009
  • Selected KPIs Ci is growing quickly. These are some of Ci’s KPIs, comparing 2009 with the first three quarters of 2010. Donations to Recommended Charities 2009 $50,896 2010 (Q3) $332,185 Clients 39 92 Charities analyzed – cumulative 122 213 Unique website hits – trailing 12 months 9,890 22,554 Ci operating costs – trailing 12 months $129,085 $179,493
  • Social Enterprise Ci started looking at hybrid organizations in 2009.
  • Identify SEs Initial list of: “anything that anybody had ever called a social enterprise” 1,161 SEs identified by end of research cycle. Screen for “serving Canadians in need” (Ci’s core mission) Environment, animal welfare, recreation, culture, heritage, arts, international. Screen for estimated low to moderate funding needs (fit with Ci’s clients) Housing Screen for established organizations (Ci chose to avoid start-up capital for start-up SEs) Not yet / not longer in operation Screen for mission-centric, integrated SEs (Business and social analysis combined into a single entity - to broaden beyond this Ci would have had to analyse the business, and the charities that the business distributes surplus to, and then address the question, ‘does the donor get more value for his/her donation by giving to the SE than s/he would giving directly to the recipient charity?’)) Thrift / resale, profit distribution Prioritize homelessness (Dovetail analysis with Ci’s other 2009 target sector.) Result 91 SEs run by 87 orgs invited to participate.
  • 91 Invited, 27 Participated No time 3 Not a social enterprise 3 Didn’t need money 3 No financials and/or no social metrics 4 Not operational 4 Interested, but never submitted 9 Did not want to be analysed 12 No response after e-mail + 3 calls 26
    • 27 Analysed
    • 240 item “data sheet”
    • 53 item qualitative “long notes”
    • 1hr structured interview with management
    • Looked for:
    • Transparency and accountability
    • SE must provide financial statements and some sort of report of social results; Ci accepts whatever the organization uses to assess and communicate its effectiveness.
    • Gross profit margin
    • Must be positive. Ci didn’t mind donors subsidizing salaries of trainees / employees from target population, but Ci didn’t want donors subsidizing the customer’s sandwich.
    • Compelling business model
    • Most new businesses fail; the added social bottom line makes success even harder.
    • Compelling Theory of Change
    • Clear links between the business chosen and the needs of the target population.
    • Demonstrated social results
    • Ci used a variety of metrics to assess this; varied by SE depending SEs’ goals and what they themselves tracked.
    • Strong management
    • Donations are unrestricted; donors are trusting management to make the best use of the funds.
    • Social leverage
    • Revenue donated : revenue earned.
  • 27 Analysed, 4 Recommended Theory of change (Choice of industry, unclear career progression) 7 Management (High turn over, vague SE strategy) 6 Screened (Mistakenly passed initial screen) 6 Irregular financials (Nothing dramatic; small errors that made it difficult for Ci to analyse the SE fairly.) 4
  • Metrics “ What metrics do you use to assess Social Enterprises” Ci is humble about our metrics. We gather a lot of data, we use that data to help us ask penetrating questions during the management interview and to think precisely about the SEs. There is no single metric, no algorithm that determines which SEs get recommended. The analysis relies heavily on both quantitative and qualitative information. Our analysis is robust enough to identify outstanding from ‘not outstanding’. We feel confident that anyone looking at the same set of SEs would identify the exact same set of outstanding SEs. We do not score or rate charities or social enterprises. Ci uses analysts to make careful, studied, nuanced comparisons. At Ci, we spend a lot of time on metrics, but we do not rely solely on metrics. Ci does not rely on a spreadsheet or an algorithm to generate an answer. Metrics are necessary and insufficient. The metrics that Ci looks most carefully at are published in the 2009 Recommended Charities; download a copy at http://www.charityintelligence.ca/
  • Successes and Challenges
  • Successes
    • Donations were received from 17 people
    • Total of $96,962 to the recommended social enterprises.
    • Donations ranged from $92,000 to $20
    • Media coverage of recommended SEs
    • Continued interest from Ci clients
    “ This is such a cool organization. Without Ci, I never would have heard about it ” Ci client. “ I don’t have the words but am overwhelmed with gratitude. These donors would never have heard of us if it were not for the work you do and the commitment you have for this meaningful work. Lives will be changed as a result.  Thank-you Ci! ”    -Dion Oxford, Gateway Linens  Ci Recommended Social Enterprise 2009 .
    • Misfit between Ci, Ci investor (supply) and funding opportunities (demand). Blended value investing in social enterprises exists:
        • for international aid or green enterprises; Ci focuses on Canadians in need
        • for large social investors, through what is essentially private placements; Ci serves smaller investors
        • for start-up, to establish the social business; Ci wanted to see some track-record.
    • For 2010, Ci is analysing community investment funds in search of opportunities for everyday Canadian donors to participate in social investing serving Canadians.
    • Disproportionately few for-profit organizations (social-purpose businesses) were analysed.
      • Some of the lists of SEs excluded for-profit organizations.
      • Our name “Charity Intelligence” may have caused some social purpose businesses to self-select out.
      • Ci required audited financial statements which some small, privately held, social-purpose businesses did not have or were unwilling to share.
      • Ci’s own internal thinking on if / how Ci could present investment opportunities in social purpose businesses to our clients evolved as our research progressed.
    • In 2010, Ci will continue to focus on charities, but include social purpose businesses that self-select in.
  • Challenges
    • Unit of analysis inconsistent; many SEs were projects of larger charities.
      • Analysis of audited financials was of limited use for SEs that were projects of charities; SEs accounting was integrated with charity further complicating analysis.
      • Management interviews held with both Charity management and SE management.
    • In 2010, SEs are required to submit SE-specific financial statements; they do not need to have been audited. Management interviews will only be held with manager of SE. Projects of a charity will only be recommended if the parent charity is also being recommended.
  • At Ci, our goal is to put excellent opportunities in front of social investors, so that results, more than marketing budgets, drive how much capital funding an organization receives. We seek to be flexible to offer a broad range of funding opportunities - across different sectors of social impact and different types of funding from donations to equity and loans. If you know of a charity, social enterprise, or community investment fund that you think is outstanding, please refer them to us! If you run a charity, social enterprise or community investment fund that you think is outstanding, please contact us!
  • Kate Ruff Social Enterprise Analyst [email_address] Charity Intelligence Canada 416.363.1555 405 – 30 Church Street Toronto, ON M5E 1S7 www.charityintelligence.ca Charitable registration number 80340 7956 RR0001 Note: this presentation was modified June 12, 2010, to work as a stand-alone document and to respond to comments that came up in question period. Further questions, comments, suggestions and critiques are welcome!