Social Entrepreneurship Topic 6

1. Dr Anis Amira Ab Rahman 2015

2. ~ Earned income refers to revenue generated by commercial exchange
of a product or service between a buyer and seller (Dess et al., 2002)
~ Earned income is distinct from grants and other charitable
donations.
~ An earned income strategy is any coherent plan of action that
generates earned income, even if that income does not cover all the
costs associated with producing it (Dess et al., 2002).
Dr Anis Amira Ab Rahman 2015

3.  Not an additional revenues to improve the financial
health of the social organisation. Earned income
strategies require financial stability for successful
execution
 It is not inherently stable. Your commercial
activities will not be immune to market forces just
because you are a non-profit
(Dess et al., 2002)
Dr Anis Amira Ab Rahman 2015

4.  It can help to diversify your funding base. Not
diverse sources of income but different sources of
income – not costly
 Build on some strength or assets of your
organisation
 Market discipline is healthy for your organisation
only when the market is well aligned with your
social mission
(Dess et al., 2002)
Dr Anis Amira Ab Rahman 2015

5. Getting paid for what you already do
Launching a new business venture
Building revenue relationship
Dr Anis Amira Ab Rahman 2015

6. o Find people who will pay you for it (common in health
care, education and art sectors)
o 3 options of charging fees:
Charging their primary beneficiaries-eye care
Charging an interested third party-clinic
Creating a hybrid pricing structure that collects
fees from both primary beneficiaries and third
parties- Green saver (Dess et al., 2002)
Dr Anis Amira Ab Rahman 2015

7. Factors influence the non-profit business venture:
Organisation’s competencies – competencies-
based ventures
Assets- asset-based ventures
Relationships - relationship-based ventures
Mission – mission-based ventures
Dr Anis Amira Ab Rahman 2015

8. Building revenue relationship
Non-profit/for-profit revenue relationships categories:
Cause-related marketing – sales trigger a payment to the
non-profit for seller
Joint ventures-collaboration to produce product by
capitalising on the strengths, assets and capabilities of each
Licensing- a partnership-sell right (logo) to corporation to
promote product
(Dess et al., 2002)
Dr Anis Amira Ab Rahman 2015

9. Case: running a homeless shelter for teens and have
decided to provide job training to your residents.
EIT: Charge fees to the corporate employers who
benefit from your training, placement, and retention
services
Dr Anis Amira Ab Rahman 2015

10.  Seek a government contract to provide training for teens who have
been in court system
 Start your own business that will serve as a training ground and as an
income generator at the same time
 Partner with establish brand to open a franchise that would provide
training and employment opportunities for your clients and income to
your agency
 Cut a deal with a credit card company that wants to use your
organisation’s good name and reputation to market its cards to socially
conscious people
(Dess et al., 2002)
Dr Anis Amira Ab Rahman 2015

11. FUNDING
Dr Anis Amira Ab Rahman 2015

12. Financing Options – Over The Social
Entrepreneurship “ Life Cycle”
Dr Anis Amira Ab Rahman 2015

13. Another Way To Think Of Financing
Options…
Dr Anis Amira Ab Rahman 2015

14. Aligning Supply And Demand…
Dr Anis Amira Ab Rahman 2015

15. Angels
Investment
Social venture
capital funds
Grants
Founder, family
and friend
Foundation/Trust
Level of
funding
Growth of social
enterprise
Bootstrip
ping
Dr Anis Amira Ab Rahman 2015

16. Founder, Family and Friends
 Use of saving, redundancy package, mortgage the
family home, continue in employment, personal network
of friends
Adv: security unlikely to be required
Disadv: can strain family relationships if repayments are
not made as expected
Dr Anis Amira Ab Rahman 2015

17. ~ Strapped for cash, look to other ways of acquiring the necessary
resources
~ Harrison et al. (2004:308) define bootstrapping as involving,
“imaginative and parsimonious strategies for marshalling and
gaining control of resources”
~ Two strategies:
using creative ways of acquiring finance without recourse to
banks or raising equity from traditional sources
 Minimising or eliminating the need for finance by securing
resources at little or no cost
Dr Anis Amira Ab Rahman 2015

18. Adv: spend wisely and learn to manage money efficiently
Disadv: typically takes a much longer time to grow a
company without an investment, which could mean that
you will not be earning any money for quite a while
Dr Anis Amira Ab Rahman 2015

19. A foundation is a legal categorization of non-profit
organisation that will typically either donate funds and
support to other organisation or provide source of funding
for its own charitable purpose
Adv: donors are able to make tax deductible donations
 Disadv: ongoing effort
Dr Anis Amira Ab Rahman 2015

20.  A grants is an amount of money given to an individual or
business for a specific project or purpose
 Grants are non-repayable funds disbursed by one party
 Get the grants funding through grant writing
Adv: do not have to pay back the grant or interest
 Disadv: lot of competition
Dr Anis Amira Ab Rahman 2015

21.  Business angels are high net-worth individuals seeking
capital and social gains over the life of their investment in
a company
Adv: investment based on business plan rather than
security
Disadv: Hands-on expertise may be seen as
interference in the business
Dr Anis Amira Ab Rahman 2015

22.  Form of venture capital investing that provides capital
to business deemed socially and environmentally
responsible
 Investor and social return
Adv: not normally involved in day to day running of
business
Disad: investors will want to sell on their stake in the
business at some point in the future to realise their
profit
Dr Anis Amira Ab Rahman 2015

23.  Ability to tell your stories in clear, simple and compelling
fashion
 The ability of the individuals undertaking project
 Who is giving your guidance, what resources and
experience you are drawing on
Dr Anis Amira Ab Rahman 2015

24.  Whether you can present a sound, realistic,
understandable business case
 That you have considered ways to mitigate risk to investor
 That you have multiple and sufficient sources of capital
 That you have mapped out all aspects of the business/
operations, and that they are getting the attention that they
need. Dr Anis Amira Ab Rahman 2015

25.  http://www.slideshare.net/soaim/resource-based-
view-of-firm?qid=65dd6d92-6ba4-4ff5-817d-
4b17b0db423e&v=default&b=&from_search=2
 http://www.slideshare.net/socialentrepreneurship/ent
r4800-class-9-managing-for-social-
impact?qid=407f9705-6939-4a42-82a1-
ecaacfe4cd50&v=default&b=&from_search=2
 http://www.slideshare.net/socialentrepreneurship/07-
entr-aps-1015-h-class-7-business-model-
considerations-for-social-enterprise?qid=ad96cbb9-
33e3-4b75-a965-
6f23d22dbbdc&v=qf1&b=&from_search=4
Dr Anis Amira Ab Rahman 2015