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How Social Enterprising is Reshaping how Non-profits do Business


October 23, 2017
Monique McDaniels
Community, Family

Although the word combination “social enterprise” has many different definitions, practices illustrative of the concept vary widely and, in many ways, reflect the situation in which profit oriented social impact ventures are selected as the “solution” to eliminate or reduce deep needs or critical problems.

The environment, with manifest social problems (poverty, educational deficits, hunger, homelessness, low employment) and the way a given nonprofit organization translates its mission by prioritizing work, determines which ventures will be chosen. In the case of profit-making businesses, the social impact is usually self-evident but subordinate to the goal of making money e.g.  home health care agencies, affordable housing developers, environmental businesses, etc.  Business owners may not know they are operating a “social enterprise”.

Organizational, social and geographical environments come into play when leaders, entrepreneurs and business owners start to execute a plan that produces “profit” and, simultaneously, develops a clear vision that the profitable venture will also make a difference in the lives of someone other than the originator of the venture. This “double bottom line” is a major feature of the social enterprise.

The range of possibilities for a successful social enterprise, therefore, makes “specific definition” somewhat useless; so, we begin our exploration into this field with hypothetical examples of potential social ventures. The illustrations of these practices that follow, alternate between social ventures that might evolve out of the operations of nonprofit organizations and each of these is followed by hypothetical examples of a social enterprise that is encased within a profit-making business structure.

Nonprofit Example #1

Over a long operating history, a nonprofit organization has become exceptional in the delivery of services, and, achievement of critical outcomes in the segment of the population in their region wherein high low-birth rates of infants has been consistently higher than that of the larger population. Sufficient, evidenced based data confirms that the incidence of infant low birth rate is related to later deficiencies in a child’s development and to health costs beyond the norm. The exemplary work of the team is widely known among other practitioners, and the organization has become a magnet for other practitioners who seek solutions to the same problem in their area. Much of the help these experts have shared has typically been by allowing “site” visits for other professionals who are able to “shadow” members of the team. Although the organization has applied a fee to cover their time during these visits, they recognize that finding pathways to “package” and “deliver” their services on a wider scale could draw additional revenues to the organization, extend their “expertise more effectively to a wider audience”, and provide for longer term revenue sources from publications, training programs, user fees for their program “model” and other income possibilities.

 

 

Business Example #1

A medium sized construction company that operates in a geographic region with a lot of people who have not been able to develop skills for upscale job opportunities, is able to hire, on a regular basis,  semi-skilled workers as laborers on construction jobs. The company’s work, in concert with nonprofit affordable housing development corporations has given the owner a direct link to the limited stock of decent housing that is affordable to low to moderate income families—and he/she sees in these deficits, opportunities to expand employment for unemployed and hard to employ workers.  The owner is familiar with the work characteristics of this group of available employees after years of operation and sees an opportunity to grow his business using this labor pool. As an accompaniment to this growth plan, the owner collaborates with a nonprofit organization to add a training component for this group of workers; the cost of which is absorbed by the nonprofit and not the business.  This collaboration with the nonprofit exempt organization removes a major burden from his operations, and the increased efficiencies enable him to open permanent, livable wage jobs for these better equipped entry level personnel. (Note, this example could apply to practically any type of “service” company including heating and air, plumbers, exterminators, cleaning companies, etc.)

Nonprofit Example #2

A rural based, grassroots nonprofit organization has struggled to obtain funding to fulfill its mission to eradicate poverty in its tri-county region since its formation. After obtaining the results of a feasibility study conducted by an established firm, and funded by a foundation interested in rural development, the Board of Directors recognizes the potential of its greatest asset—rich soil—to become the foundation of a specialty farming business venture that could supply high demand herbs and produce to users within a 100 mile radius of their location. Potential markets would include “health food” grocery stores, regular grocery stores, individual households, corporate and university food services, etc. Moreover, the potential of seasonal and holiday products created from the various produce and byproducts of their production could become the foundation of markets beyond their local area. The Board of Directors commit to providing leadership to the organization toward achieving this vision.

Business Example #2

A profit-making farming business recognizes its potential to increase employment of people in the rural area where its farm operations exist by developing products that are marketable on the Internet. Up to this time, the family owned business has irregularly and seasonally hired people from this low-income area when work was available but had little connection to them when their labor was not required. Connections to merchants were the primary links the owners nurtured and maintained as these were the targets markets for the farm’s major products.  Despite this understandable and “outward” focus of the business owners, they recognize that improving the employability of low wage workers in their surroundings could significantly increase their growth potential and would also increase the number of local customers for their business.

Social enterprise is not a silver bullet, but it is a promising approach to fulfilling unmet needs and fostering genuinely “triple-bottom-line” organizations. It’s certainly not the only solution, but it is most definitely a solution.

  • For traditional non-profits, social enterprise can be a powerful complement to other activities when it advances the social mission and the financial sustainability of the organization.
  • For new start-ups – non-profits and for-profits – social enterprise gives entrepreneurs the ability to bake social impact and financial sustainability into the organization’s DNA from its outset.
  • For traditional businesses, social enterprise initiatives enable a company to integrate social impact into business operations and prioritize social goals alongside financial returns.

 

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