Building the Sector

Not a Silver Bullet BUT a Potential Major Contribution to the Solution

Keep in mind, social enterprise is not a silver bullet to solve the problems in society or to fund the non-profit sector. It isn’t easy to operate any business, yet alone one with a blended bottom line. It can take years before a business is stable and eventually makes a profit. And a dysfunctional organization will rarely succeed in the business world.

However, when placed in context of addressing the needs of the non-profit sector and issues in communities, social enterprise can be a major contributor.

Building Healthy Communities

A healthy community is a complex integration of multiple capitals and assets. Healthy communities aren’t just about economic capital, they also have cultural capital, environmental capital, social capital; they are inclusive and provide opportunities for all the members of the community. We all care about building healthy communities.

While the private sector and government are two legs of the healthy community model, the non-profit sector is the 3rd leg of that stool. Supporting social enterprise supports the non-profit sector to be successful and sustainable.  Social enterprise is another way, a means, to create social value. Social enterprise is a verb  that is defined and measured in how it contributes to building healthy communities.

If social enterprise is going to strive and grow, and become a more significant tool for the non-profit sector, then we need to nurture and encourage its success. The Social Enterprise Council of Canada (SECC:www.secouncil.ca) has outlined four key elements needed to build the capacity and the potential success of the social enterprise sector.

1. Enhance Enterprise Skills

Blending business operations with social outcomes in social enterprises requires a particular set of governance and management skills not common in the traditional separation of for-profit business skills and non-profit service skills. This emerging business model presents a challenge to the non-profit sector as it ventures into the business arena and to experienced business managers as they integrate social values in everyday operations. This gap in skills and experience requires the creation and funding for the appropriate and on-going learning opportunities for individuals and organizations along the entire social enterprise development path, from early learning through business planning and into operations. (See www.enterprisingnonprofits.ca.) Adding social enterprise at all levels of the educational sector curriculum in both social and business studies will enhance the future strength of the social enterprise management and governance skills.

2. Ensure Access to Capital and Investment

All businesses require access to financial capital; especially investment and patient capital at start up and points of growth in the business.  Social enterprises, by the nature of their predominantly non-share incorporation, have limited options beyond traditional grant models and straight forward loan arrangements. Grant income is not sustainable in the long term and loans are a cash flow problem and often an expensive avenue to raise capital at a start-up or growth stage. New forms of patient, investment-like, capital pools have to be developed, investor tax credits for social enterprise are needed and innovative share-based social enterprise incorporation models are required.

3. Expand Market Opportunities

Every purchase has a ripple effect and multiplier impacts, whether unintentional or intentional. Intentional purchasing can insure the greatest impact opportunities for social enterprise. The procurement policies and the purchasing practices of the three levels of government, non-profit organizations and the private sector need to maximize their buying from social enterprises. This requires marketing schemes, purchaser and supplier matching, and appropriate incentives to encourage participation in a changing supply chain management model. The options to practice social purchasing include targeted purchases, unbundling, supportive RFP criteria, and Community Benefit Amendments. (www.sepurchasing.ca)

 4. Promote and Demonstrate the Value of Social Enterprise

As described above there are many anecdotal stories about the success and impact of social enterprise supporting the mission and sustainability of non-profits across Canada. Enhancing the stories, we need to continue to express the significant contribution that social enterprise does make in our communities, as this recent research shows:

"This survey represents the first profile of social enterprises in BC and Alberta. Social enterprises work in communities to achieve training, income, social, cultural, and environmental missions. In 2009, the 140 social enterprises, which responded to the survey, generated at least $113 million in revenues, including at least $78 million in sales. They paid $63 million in wages and salaries to almost 4,500 people, of whom 2,700 were employed as part of the mission of the organization. They also trained 11,670 people, provided services to over 678,000, and involved 6,780 volunteers."

 "Social enterprises in Manitoba that responded to this survey exist for a variety of purposes:
• 30% of social enterprises indicated they provide employment development, training and placement support;
• 38% of social enterprises generate income for a non‐profit parent organization, thereby increasing its financial sustainability;
• 83% of social enterprises operate to fulfill a social mission;
• 68% of social enterprises operate to fulfill a cultural mission;
• 46% of social enterprises operate to fulfill an environmental mission."

- Dr. Peter Hall, Simon Fraser University and Dr. Peter Elson, Mount Royal University: Strength, Size, Scope: A Survey of Social Enterprises in Alberta and British Columbia. 

Source: http://www.enterprisingnonprofits.ca/resources/survey-social-enterprises-alberta-and-bc-report