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INDEV 308: Introduction to Social
      Entrepreneurship

                    Class 8: Managing for Social Impact

                                 Monday, June 27, 2011

Instructors:
Norm Tasevski (norm@socialentrepreneurship.ca)
Karim Harji (karim@socialentrepreneurship.ca)
                                                          1
© Norm Tasevski & Karim Harji
© Norm Tasevski & Karim Harji




Agenda

•    Rockefeller Foundation
•    Managing for Social Impact
•    Preparing your investment pitches
•    Next Week




                                                             3
Managing for Social Impact…




                              4
© Norm Tasevski & Karim Harji


Two Main Responsibilities as a Manager of a
Social Enterprise…



              Achieving financial goals




     Achieving social goals



                                                              5
© Norm Tasevski & Karim Harji




                    6
© Norm Tasevski & Karim Harji




Achieving Financial Goals
Key Concepts
•  Focus on your mission
•  Know when to say “no”
•  Build a business independent of yourself
•  Test (prototype) often, and fail fast

The Market or the Mission? (Brinckenhoff)
•  The market is always right
•  The market is not always right for you
•  The mission should be your organization’s ultimate
   goal

                                                                  7
Achieving Social Goals…




                          8
© Norm Tasevski & Karim Harji

Achieving Social Goals
Remember…how is social entrepreneurship
different?!




                               Resourcefulness




 Motivation



                Innovation
                                                      Risk Taking




                                                                     9
© Norm Tasevski & Karim Harji




Achieving Social Goals!
1.  Identify your social goals
   –  Theory of Change (defining your social value)
   –  Embed them within/across your operations


2.  Measure the social value created
   –  How do you measure your goals?
   –  Address the common challenges in measurement


3.  Communicate your impact
   –  Know what to say and who your audience is
   –  Be creative around your message



                                                                        10
© Norm Tasevski & Karim Harji




Step 1: ID Your Social Goals!


•  What Social Benefit are you creating?



•  How do you decide?




                                                             11
© Norm Tasevski & Karim Harji




                  12
© Norm Tasevski & Karim Harji


   Remember what motivates The Social/
   Environmental Entrepreneur?
“…it was an   epiphanal experience…”                  “I heard the same story again and again.
                  Ray Anderson, Interface Carpets
                                                          Someone had experienced an
                                                    intense kind of pain that branded
                                                     them in some way. They said, ‘I had’ to do
                                                    this.   There was nothing else
                                                                       I could do.”
                                                    Jody Jensen, Ashoka




   “I was teaching in one of the universities
      while the country was suffering from a
       severe famine. People were dying of
              hunger, and   I felt very
 helpless. As an economist, I had
 no tool in my toolbox to fix that                    “…that made a real        impression on
                            kind of situation.”                                                   me…”
Mohammed Yunus, Grameen Bank                                   Jeff Skoll, eBay, Skoll Foundation, etc.
© Norm Tasevski & Karim Harji




The Management Challenge




•  To ensure that the motivations of other people in
   your organization align with your personal
   motivations (as a founder or manager)
© Norm Tasevski & Karim Harji


Theory of Change
TurnAround Couriers!
Goals	
  




                                                    Methods	
  




                                                                                                             Metrics	
  
        Hire	
  couriers	
  and	
  office	
                     Recruit	
  youth	
  from	
                               Youth	
  are	
  able	
  to	
  get	
  
        administra2ve	
  staff	
                               youth	
  shelters	
  and	
                               out	
  of	
  shelter	
  system	
  
        from	
  disadvantaged	
                               youth	
  serving	
  agencies	
                           and	
  into	
  independent	
  
        youth	
  popula2on	
                                  across	
  Toronto	
                                      housing	
  
        Provide	
  transi2onal	
                              Provide	
  a	
  real	
  job,	
  not	
  a	
               Youth	
  meet	
  or	
  exceed	
  
        work	
  experience	
  to	
                            job	
  training	
  experience	
                          job	
  expecta2ons	
  
        enable	
  youth	
  to	
  develop	
  
                                                              Establish	
  a	
  suppor2ve	
                            TurnAround	
  helps	
  youth	
  
        employability	
  skills,	
  a	
  
                                                              management	
                                             secure	
  next	
  job	
  and	
  
        resume	
  and	
  a	
  support	
  
                                                              environment	
                                            establish	
  a	
  career	
  path	
  	
  
        network	
  
                                                              Assist	
  youth	
  with	
                                Youth	
  are	
  able	
  to	
  get	
  off	
  
        Enable	
  youth	
  to	
  access	
  
        the	
  	
                                             planning	
  and	
  making	
                              and	
  stay	
  off	
  
                                                              next	
  steps	
  regarding	
                             government	
  financial	
  
        mainstream	
  job	
  market	
  
                                                              housing	
  and	
                                         assistance	
  
        Enable	
  youth	
  to	
                               employment	
  	
  
        stabilize	
  life	
  situa2on,	
  
        begin	
  a	
  career	
  path	
  and	
  
        leave	
  the	
  shelter	
  system	
  	
  
© Norm Tasevski & Karim Harji


Embedding “Social” across the Business
Model




                                                      16
© Norm Tasevski & Karim Harji


Step 2: Measure the Social Value
Created!
Why Measure, and for Whom?
•  Management
   –  Performance management (meeting needs/
      objectives)
   –  Organizational sustainability, attract new investment
   –  Demonstrate the value created by organization
•  Social Investors (inc. funders)
   –  Impact of grants, mission alignment
   –  Accountability measures
   –  Assess organization value, relate to risk/return (of
      investment)
•  Government Programs/Policy
   –  Make the case for investment in organization/
      approach
   –  Accountability measures                                          17
© Norm Tasevski & Karim Harji




The Measurement Landscape!




                                                                                           18
        Source: Clark et al. (2003) “Double Bottom Line Project Report: Methods Catalog”
© Norm Tasevski & Karim Harji


Objectives, Approaches,
Application!




                                                                                            19
         Source: Clark et al. (2003) “Double Bottom Line Project Report: Methods Catalog”
© Norm Tasevski & Karim Harji




Why is Measurement Important?!

“Not everything that can be counted
counts, and not everything that counts
can be counted”




   “You can’t manage what you can’t
               measure”
                                                           20
© Norm Tasevski & Karim Harji




Challenges in Measurement!

•    Outputs vs. Outcomes
•    Attribution vs. Contribution
•    Qualitative vs. Quantitative
•    Prove vs. Improve
•    Rigour vs. feasibility

       “Metrics and evaluation are to development
      programs as autopsies are to health care: too late
       to help, intrusive, and often inconclusive.” (Trelsad)



                                                                      21
© Norm Tasevski & Karim Harji




A Note on SROI!
•  Discounted, monetized value of the
   social value that has been created,
   relative to the value of the investment.
•  Pioneered by Roberts Enterprise
   Development Fund (REDF) and Jed
   Emerson
•  Various uses for, and approaches to, SROI
•  Despite “hype” around SROI, it can be
   resource-intensive, and issues around
   feasibility, replication, reporting still
   remain.


                                                                 22
© Norm Tasevski & Karim Harji


 SROI Snapshot:
 TurnAround Couriers!
Overview	
  of	
  Target	
  Popula2on	
  (sample)	
                                Avg	
  Change	
  in	
  Societal	
  Contribu2on	
  	
  
• 38%	
  recruited	
  directly	
  from	
  shelters	
                                                       (Target	
  Employees):	
                   $9,391
• 23%	
  female	
                                                              Average	
  Number	
  of	
  Target	
  Employees:                                 10
• Average	
  age:	
  21	
  
                                                                                 Current	
  Year	
  Cost	
  Savings	
  to	
  Society:	
             $93,910
• 100%	
  unemployed	
  at	
  2me	
  of	
  hire	
  
• 54%	
  receiving	
  social	
  assistance	
  at	
  hire	
                      Cumula2ve	
  Cost	
  Savings	
  (prior	
  to	
  Y5):              $191,170
• 54%	
  been	
  involved	
  with	
  jus2ce	
  system	
                                          Total	
  Cost	
  Savings	
  to	
  Date:          $285,080
• 54%	
  did	
  not	
  complete	
  high	
  school	
  
                                                                                  Cumula2ve	
  Societal	
  Payback	
  Period:                     1.8	
  	
  years
	
                                                                                                              Cumula2ve	
  SROI:                      285%	
  	
  	
  	
  
Sustainable	
  Livelihood	
  Outcomes	
  (sample)	
  
                                                                             Note:	
  ini2al	
  SCP	
  investment	
  =	
  $100,000	
  
• 89	
  	
  youth	
  in	
  total	
  have	
  been	
  hired	
  over	
  5	
  
  years	
  
                                                                              Employment	
  Outcomes	
  (sample)	
  
• 100%	
  target	
  popula2on	
  recruited	
  from	
  
  shelters	
  able	
  to	
  get	
  out	
  of	
  shelter	
  system	
           • Increased	
  target/non-­‐target	
  staff	
  ra2o	
  to	
  83%	
  	
  
  and	
  secure	
  independent	
  housing	
  within	
  6	
                    • 69%	
  con2nue	
  to	
  work	
  at	
  TAC	
  (9)	
  
  months	
  of	
  employment	
  at	
  TAC	
  
                                                                           • 15%	
  moved	
  onto	
  mainstream	
  employment	
  in	
  
• 85%	
  who	
  relied	
  on	
  income	
  support	
  through	
   window	
  cleaning	
  industry	
  (2)	
  
  social	
  assistance	
  at	
  2me	
  of	
  hire	
  able	
  to	
  get	
  
  off	
  and	
  stay	
  off	
  	
                                            • 8%	
  went	
  on	
  to	
  post	
  secondary	
  educa2on	
  (1)	
  
                                                                                                                                                                    23
© Norm Tasevski & Karim Harji


Acumen Fund: social performance
measurement in the investment process!
•  Due Diligence
   –  Literature review: state of practice
   –  Estimate # of people served over the life of the investment
   –  Assess how delivery of those “outputs” compare (more or less
      favorably) to the “best alternative charitable option”
•  During Deal Structuring
   –  Conversations on how to think about performance management
      over the life of the investment, not just “mandatory reports”
•  Post-Investment
   –  Quarterly reporting – performance, capacity, strengths/weaknesses
   –  Semi-annual “forced ranking” across portfolio against investment
      criteria - financial sustainability, social impact at scale, breakthrough
      insights, and high-quality leadership - as well as actual performance
      to date and the investment’s potential for impact in the future
•  Closed Investments
   –  Short “exit memo” looking at results generated, financial return, and
      lessons learned
                                                                                     24
© Norm Tasevski & Karim Harji


Simple Measures for Social Enterprise:
Lessons from the Acumen Fund!
•  Culture matters far more than systems
   –  Tolerance for / learning from failure
•  If you build systems, start with a pencil and paper
   –  Start simple; technology is an enabler not the solution
•  Think on the margin
   –  Performance is always relative to what you had been doing
      before (past), to what your competition did over the same
      time period (peers), and to what you should have done
      (projections)
•  Count outputs and then worry about outcomes
   –  “the conclusions you can draw from these outputs may not be
      made with scientific rigor, but they can inform businesslike
      decisions and raise important policy questions”
•  Don’t confuse information with judgment
   –  Balance qualitative and quantitative
   –  Use informed judgment, hold oneself accountable (to them)             25
© Norm Tasevski & Karim Harji


Step 3: Communicating Your
Social Impact!




                  How?




                                               26
© Norm Tasevski & Karim Harji




Social cost
•  SCP: 5 factors that have an impact on
   profitability in a “purpose built” social
   enterprise
   –  The inherent business capacity of the social
      enterprise
   –  The complexity of the business
   –  The size and nature of the employment
      barriers of the people being hired
   –  The skills/training gap which is the
      difference between the skills of the people
      being hired and the skills required to make
      the business successful
   –  The degree of emphasis on the social
      mission in the day to day decision making
      process                                                          27
© Norm Tasevski & Karim Harji




                  28
Break




        29
Your Investment Pitches…




                           30
© Norm Tasevski & Karim Harji




Elements Important to the “Social Investor”

•  Overview and mission             •  Business model
•  Management and                   •  Competitive advantage
   Advisors                         •  Collaboration/
•  Problem                             partnerships
   –  social issue being            •  Marketing and Sales
      addressed
                                    •  Financial projections
•  Size of the problem
                                    •  Financial requirements
   –  how big is the social issue
•  Solution
   –  Here’s how it works…
•  Value proposition
   –  Inc. social benefit

                                                                       31
© Norm Tasevski & Karim Harji




Elements Important to the Angel Investor

•  Overview and mission         •    Business model
•  Management and               •    Marketing and sales
   Advisors                     •    Financial projections
•  Customer problem             •    Financing requirements
•  Market opportunity/size
•  Solution
   –  Inc. social issue being
      addressed
•  Value Proposition
•  Competitive advantage
•  Where the solution fits


                                                                      32

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INDEV308 Class 8 - Managing for Social Impact

  • 1. INDEV 308: Introduction to Social Entrepreneurship Class 8: Managing for Social Impact Monday, June 27, 2011 Instructors: Norm Tasevski (norm@socialentrepreneurship.ca) Karim Harji (karim@socialentrepreneurship.ca) 1
  • 2. © Norm Tasevski & Karim Harji
  • 3. © Norm Tasevski & Karim Harji Agenda •  Rockefeller Foundation •  Managing for Social Impact •  Preparing your investment pitches •  Next Week 3
  • 4. Managing for Social Impact… 4
  • 5. © Norm Tasevski & Karim Harji Two Main Responsibilities as a Manager of a Social Enterprise… Achieving financial goals Achieving social goals 5
  • 6. © Norm Tasevski & Karim Harji 6
  • 7. © Norm Tasevski & Karim Harji Achieving Financial Goals Key Concepts •  Focus on your mission •  Know when to say “no” •  Build a business independent of yourself •  Test (prototype) often, and fail fast The Market or the Mission? (Brinckenhoff) •  The market is always right •  The market is not always right for you •  The mission should be your organization’s ultimate goal 7
  • 9. © Norm Tasevski & Karim Harji Achieving Social Goals Remember…how is social entrepreneurship different?! Resourcefulness Motivation Innovation Risk Taking 9
  • 10. © Norm Tasevski & Karim Harji Achieving Social Goals! 1.  Identify your social goals –  Theory of Change (defining your social value) –  Embed them within/across your operations 2.  Measure the social value created –  How do you measure your goals? –  Address the common challenges in measurement 3.  Communicate your impact –  Know what to say and who your audience is –  Be creative around your message 10
  • 11. © Norm Tasevski & Karim Harji Step 1: ID Your Social Goals! •  What Social Benefit are you creating? •  How do you decide? 11
  • 12. © Norm Tasevski & Karim Harji 12
  • 13. © Norm Tasevski & Karim Harji Remember what motivates The Social/ Environmental Entrepreneur? “…it was an epiphanal experience…” “I heard the same story again and again. Ray Anderson, Interface Carpets Someone had experienced an intense kind of pain that branded them in some way. They said, ‘I had’ to do this. There was nothing else I could do.” Jody Jensen, Ashoka “I was teaching in one of the universities while the country was suffering from a severe famine. People were dying of hunger, and I felt very helpless. As an economist, I had no tool in my toolbox to fix that “…that made a real impression on kind of situation.” me…” Mohammed Yunus, Grameen Bank Jeff Skoll, eBay, Skoll Foundation, etc.
  • 14. © Norm Tasevski & Karim Harji The Management Challenge •  To ensure that the motivations of other people in your organization align with your personal motivations (as a founder or manager)
  • 15. © Norm Tasevski & Karim Harji Theory of Change TurnAround Couriers! Goals   Methods   Metrics   Hire  couriers  and  office   Recruit  youth  from   Youth  are  able  to  get   administra2ve  staff   youth  shelters  and   out  of  shelter  system   from  disadvantaged   youth  serving  agencies   and  into  independent   youth  popula2on   across  Toronto   housing   Provide  transi2onal   Provide  a  real  job,  not  a   Youth  meet  or  exceed   work  experience  to   job  training  experience   job  expecta2ons   enable  youth  to  develop   Establish  a  suppor2ve   TurnAround  helps  youth   employability  skills,  a   management   secure  next  job  and   resume  and  a  support   environment   establish  a  career  path     network   Assist  youth  with   Youth  are  able  to  get  off   Enable  youth  to  access   the     planning  and  making   and  stay  off   next  steps  regarding   government  financial   mainstream  job  market   housing  and   assistance   Enable  youth  to   employment     stabilize  life  situa2on,   begin  a  career  path  and   leave  the  shelter  system    
  • 16. © Norm Tasevski & Karim Harji Embedding “Social” across the Business Model 16
  • 17. © Norm Tasevski & Karim Harji Step 2: Measure the Social Value Created! Why Measure, and for Whom? •  Management –  Performance management (meeting needs/ objectives) –  Organizational sustainability, attract new investment –  Demonstrate the value created by organization •  Social Investors (inc. funders) –  Impact of grants, mission alignment –  Accountability measures –  Assess organization value, relate to risk/return (of investment) •  Government Programs/Policy –  Make the case for investment in organization/ approach –  Accountability measures 17
  • 18. © Norm Tasevski & Karim Harji The Measurement Landscape! 18 Source: Clark et al. (2003) “Double Bottom Line Project Report: Methods Catalog”
  • 19. © Norm Tasevski & Karim Harji Objectives, Approaches, Application! 19 Source: Clark et al. (2003) “Double Bottom Line Project Report: Methods Catalog”
  • 20. © Norm Tasevski & Karim Harji Why is Measurement Important?! “Not everything that can be counted counts, and not everything that counts can be counted” “You can’t manage what you can’t measure” 20
  • 21. © Norm Tasevski & Karim Harji Challenges in Measurement! •  Outputs vs. Outcomes •  Attribution vs. Contribution •  Qualitative vs. Quantitative •  Prove vs. Improve •  Rigour vs. feasibility “Metrics and evaluation are to development programs as autopsies are to health care: too late to help, intrusive, and often inconclusive.” (Trelsad) 21
  • 22. © Norm Tasevski & Karim Harji A Note on SROI! •  Discounted, monetized value of the social value that has been created, relative to the value of the investment. •  Pioneered by Roberts Enterprise Development Fund (REDF) and Jed Emerson •  Various uses for, and approaches to, SROI •  Despite “hype” around SROI, it can be resource-intensive, and issues around feasibility, replication, reporting still remain. 22
  • 23. © Norm Tasevski & Karim Harji SROI Snapshot: TurnAround Couriers! Overview  of  Target  Popula2on  (sample)   Avg  Change  in  Societal  Contribu2on     • 38%  recruited  directly  from  shelters   (Target  Employees):   $9,391 • 23%  female   Average  Number  of  Target  Employees: 10 • Average  age:  21   Current  Year  Cost  Savings  to  Society:   $93,910 • 100%  unemployed  at  2me  of  hire   • 54%  receiving  social  assistance  at  hire   Cumula2ve  Cost  Savings  (prior  to  Y5): $191,170 • 54%  been  involved  with  jus2ce  system   Total  Cost  Savings  to  Date: $285,080 • 54%  did  not  complete  high  school   Cumula2ve  Societal  Payback  Period: 1.8    years   Cumula2ve  SROI: 285%         Sustainable  Livelihood  Outcomes  (sample)   Note:  ini2al  SCP  investment  =  $100,000   • 89    youth  in  total  have  been  hired  over  5   years   Employment  Outcomes  (sample)   • 100%  target  popula2on  recruited  from   shelters  able  to  get  out  of  shelter  system   • Increased  target/non-­‐target  staff  ra2o  to  83%     and  secure  independent  housing  within  6   • 69%  con2nue  to  work  at  TAC  (9)   months  of  employment  at  TAC   • 15%  moved  onto  mainstream  employment  in   • 85%  who  relied  on  income  support  through   window  cleaning  industry  (2)   social  assistance  at  2me  of  hire  able  to  get   off  and  stay  off     • 8%  went  on  to  post  secondary  educa2on  (1)   23
  • 24. © Norm Tasevski & Karim Harji Acumen Fund: social performance measurement in the investment process! •  Due Diligence –  Literature review: state of practice –  Estimate # of people served over the life of the investment –  Assess how delivery of those “outputs” compare (more or less favorably) to the “best alternative charitable option” •  During Deal Structuring –  Conversations on how to think about performance management over the life of the investment, not just “mandatory reports” •  Post-Investment –  Quarterly reporting – performance, capacity, strengths/weaknesses –  Semi-annual “forced ranking” across portfolio against investment criteria - financial sustainability, social impact at scale, breakthrough insights, and high-quality leadership - as well as actual performance to date and the investment’s potential for impact in the future •  Closed Investments –  Short “exit memo” looking at results generated, financial return, and lessons learned 24
  • 25. © Norm Tasevski & Karim Harji Simple Measures for Social Enterprise: Lessons from the Acumen Fund! •  Culture matters far more than systems –  Tolerance for / learning from failure •  If you build systems, start with a pencil and paper –  Start simple; technology is an enabler not the solution •  Think on the margin –  Performance is always relative to what you had been doing before (past), to what your competition did over the same time period (peers), and to what you should have done (projections) •  Count outputs and then worry about outcomes –  “the conclusions you can draw from these outputs may not be made with scientific rigor, but they can inform businesslike decisions and raise important policy questions” •  Don’t confuse information with judgment –  Balance qualitative and quantitative –  Use informed judgment, hold oneself accountable (to them) 25
  • 26. © Norm Tasevski & Karim Harji Step 3: Communicating Your Social Impact! How? 26
  • 27. © Norm Tasevski & Karim Harji Social cost •  SCP: 5 factors that have an impact on profitability in a “purpose built” social enterprise –  The inherent business capacity of the social enterprise –  The complexity of the business –  The size and nature of the employment barriers of the people being hired –  The skills/training gap which is the difference between the skills of the people being hired and the skills required to make the business successful –  The degree of emphasis on the social mission in the day to day decision making process 27
  • 28. © Norm Tasevski & Karim Harji 28
  • 29. Break 29
  • 31. © Norm Tasevski & Karim Harji Elements Important to the “Social Investor” •  Overview and mission •  Business model •  Management and •  Competitive advantage Advisors •  Collaboration/ •  Problem partnerships –  social issue being •  Marketing and Sales addressed •  Financial projections •  Size of the problem •  Financial requirements –  how big is the social issue •  Solution –  Here’s how it works… •  Value proposition –  Inc. social benefit 31
  • 32. © Norm Tasevski & Karim Harji Elements Important to the Angel Investor •  Overview and mission •  Business model •  Management and •  Marketing and sales Advisors •  Financial projections •  Customer problem •  Financing requirements •  Market opportunity/size •  Solution –  Inc. social issue being addressed •  Value Proposition •  Competitive advantage •  Where the solution fits 32