Social Enterprise: The REAL Truth

Accuse me of false advertising if you will, but while I've got some very interesting data to share, the fact is the "real" truth isn't in yet about Social Enterprise. So bear with me for second before we get to the interesting data...

Like Social Media (and apologies to all the evangelists out there who will disagree) I'm not convinced that Social Enterprise is a panacea either in terms of profile, fundraising, or any other metric for charities or for-profit organizations.  I'm currently consulting with an organization that is testing the waters of Social Enterprise, and so far so good.  But it's a vanishingly small part of the organization, and since the organization is so small to begin with there are barely enough systems and processes in place for the Mission-driven parts, let alone some little projects that make just a little bit of money.

So clearly any organization considering starting Social Enterprise(s) needs to think critically about:

• Size and capacity (including systems and processes) of the organization
• The "opportunity cost" versus other initiatives
• Natural "fit" of the proposed Social Enterprise projects
• Skills and acumen required for success (lots of regular for-profit enterprises fail every year!)
• Whether the goal is profit, profile, Mission, experience for participants, or some blend thereof - just be clear about the desired outcome(s) so you know when you've succeeded!

Now on to the data.  The good folks at the Ontario Nonprofit Network shared their "Social Finance Census 2010" back in December.  The full Executive Summary can be found via a link on the page here.  I just saw it the other day and one chart jumped out at me.  Turns out that in this survey (not sure how random and scientific it was) over 50% of respondents reported 10% or more of their revenue was from Social Enterprise.  Interesting.  That is more than I would have guessed.  

So is Social Enterprise the way to riches for your charity?  Maybe not.  But as Governments and and the economy continue to whittle away support, perhaps a prudent, measured introduction into Social Enterprise is in order for your organization.  It certainly looks as if a lot of charities are already trying to find the real truth about Social Enterprise.

Many more social ventures for many more Charities?

Saturday's Globe and Mail newspaper in Toronto had an article discussing social enterprises (a.k.a. social ventures).  Examples ranged from a bakery that employs people "at the edges of society" to a group helping aboriginal carpenters get experience towards full-time work.  You can read the article at the Globe and Mail on Social Enterprises.

Let me state for the record that the concept of social enterprises is one that I support, and as a business-person I can certainly appreciate the benefits that can accrue to employees and the organization from a well run operation. What struck me about the article however was what was not covered in detail.

First, the article certainly mentions declining donations and government funding.  And it's clear this is already an impetus for charities to seek out new revenue streams.  But I'd hate for charities to see social enterprises (or any other "business model" that raises funds) as a saviour and charge into the fray unprepared.  While the article touches on "bumps along the way", business can (and sadly do) fail every day, and already overstretched charities are poorly equipped to try something as challenging as a start-up business. At least not without lots of expert advice or conversely very modest expectations...

But the article also mentions the 150+ social ventures that are in Toronto today, with "half of them [having been created] in the last 5 years".  So in addition to the risk mentioned above, we are already seeing a trend towards creating more social enterprises. I offer that with 80,000+ charities (and over 150,000 not-for-profits) in Canada we need to be seeking synergies, efficiencies, and ways to deliver on charitable "Mission" that don't create yet more new entities.  Maybe there's room in Toronto for thousands more new social enterprises, but what I'd really like to see is far fewer such a projects, and each one run by multiple charities in a collaborative fashion.

The overlap in charitable Missions and still growing numbers of charities combined with declining revenues is creating a perfect storm.  Charities that come together, spread the risk and cost among them, and cooperatively seek the support needed to launch a successful business, would be a model worth replicating across the country.  For my money that would be truly newsworthy!

Day of Reckoning?

Conversations after my last post made me think that perhaps I left too negative an impression. The societal, economic and "evolutionary" pressures converging on our multitude of charities will result in massive change.  I stand by my statement that a day of reckoning will come, particularly for the tens of thousands of charities, particularly smaller ones, that struggle to make ends meet every day.

But my sense is that smaller charities that are smart and innovative - and in particular well led charities of all sizes - will find a way to thrive.

First, after some meetings recently about Social Finance, I believe there are some wonderful and highly entrepreneurial ways we can meet this challenge.  This video at http://vimeo.com/8057258 covers the general outlines of Social Finance very well.

Simiarly, I've always been impressed by the work of organizations that encourage donors to think critically about their giving... To the degree giving from the heart and the head grows we may see greater innovation and social impact in the long term.  One good site for this sort of information is http://www.charityintelligence.ca/ 

A day of reckoning is looming, but it need not necessarily be one of disasterous proportions.