Leadership For Good
photo credit: ilco
Nonprofit organizations exist and maintain their 501(c)(3) tax exempt status for fulfilling missions that address a societal ill or gap and not generate a profit for shareholders.
A social enterprise (great definition on wikipedia) generates a profit to address a societal ill or gap. Toms shoes is one of the finest examples — a privately owned business that provides shoes to children in poor and developing countries — buy a pair, give a pair.
For decades nonprofit leaders have been pushing corporations to embrace “corporate responsibility” which essentially was loosely defined as “donate to us to improve your community image”. A growing trend and a very possible future is those same responsible corporations adopting social and community driven missions as their own, addressing the societal issue, having an impact and (pause for effect) generate revenue and goodwill while doing it. Work once solely reserved for nonprofit organizations is being consumed by a growing population of social entrepreneurs inside and outside of corporations.
Are social enterprises the result of nonprofit ineffectiveness?
I no longer have to donate to the Sierra Club because I purchased hiking boots from a company that funds its own earth friendly awareness programs that are more aligned with my support interests like the impact-free hiking trail development program in my community.
Re-frame, re-purpose or potentially be replaced? It would be wise for nonprofit organizations to adopt some of the qualities of social enterprises.
Social enterprises are purposefully nimble, agile, and quick.
Social enterprises embrace innovation.
Social enterprises develop programs or businesses that fund themselves with revenue streams.
Social enterprises clearly communicate their “why”.
Social enterprises immediately live their vision, some nonprofits spend months writing their vision.
Social enterprises succeed on simplicity, nonprofit organizations create their own complexity.
Social enterprises attract funding and foundation support with their market–based strategies.
Leaders are constantly reminded of the differences in the upcoming generational workforce and their need to connect with a mission and making a difference on their terms — how are we going to attract them? More importantly, how are we going to retain them? For their entire lives they been told to “pursue your passion”, it may behoove leaders to actually let them. Established nonprofits can be cumbersome, awkward, slow and unwelcoming to new or different ideas. Open the doors of opportunity within your organization or more than likely a social enterprise will open it without you.
Two great resources on social enterprises:
Connect
Interesting post with lots of food for thought (and disagreement). Unfortunately I don’t have time right now to share my ideas, but I’ll be back.
Thanks for starting what really SHOULD be an interesting dialogue.
Thanks so much Peter, look forward to it.
[...] This post was mentioned on Twitter by Sea-Fever Consulting, Weekly Leader and Kayla R. Wherry. Mike Cassidy said: New Post: Why Nonprofits Should Fear Social Enterprise http://goo.gl/fb/sFJ7P #leadership #nonprofit #nonprofit [...]
I found this short post very interesting and enlightening. I never thought of it like this. Thanks for the read!
~Sheiloh Shane
http://www.leadershippath.tumbrl.
Many thanks Sheiloh and many thanks for the leadership you do every day on our behalf.
Mike,
My one big thought is what about the organizations that are embracing the idea and value of social enterprise?!
The organization that I work for is a non profit organization that also has a social enterprise that funds 23% of our total annual budget. Not only does this allow my organization to continue to meet its mission of helping homeless and at risk individuals find jobs, but it creates a sustainable avenue of funding. You can check it out at http://www.thecaraprogram.org
Just thought I would share. There are a lot of examples where other organizations are being successful and being efficient and innovative in incorporating social enterprises into their operations.
Debra
Debra,
That is fantastic! I think a nonprofit that creates its own social enterprise initiatives is far ahead of the curve and should serve as a model. Thank you so much for sharing, it means a lot to see the creativity and innovation, and even more when we share it.
Debra,
I have a favor to ask. Would you be willing to write a blog post on the program and how it works for your organization? You insight would be invaluable.
Mike,
I think a blog post about The Cara Program’s use of social enterprises is a great idea! I am in the process of speaking to a colleague who is more closely tied to the operations of Cleanslate, TCP’s social enterprise, to write something up (he will be able to lend a great perspective on this!). Please feel free to get in touch with me ! -Debra
I agree with Debra.
Members of the Social Enterprise Alliance are doing just this kind of thing every day. We run two successful social enterprises at Pine Street Inn in Boston. Revenue from these enterprises pay the costs of our job training programs. Participants in the training programs also work in the social enterprises thereby gaining valuable work experience and knowledge they can use in resumes and during job interviews. As the businesses have grown we’ve been able to add more training slots.
Granted SE isn’t for every organization and there are certainly risks involved. But for many organizations it’s a model that pays real dividends in terms of mission delivery — and any opportunity to diversify funding sources is worth consideration, in my opinion.
Anne Wunderli
http://www.pinestreetinn.org
http://www.se-alliance.org
http://www.sea-mass.org
Excellent thought provoking post. Thank you for sharing it. I have added your site in my reader I look forward to reading many more.
Thanks so much. You’re organization is inspiring, love your mission.
I get the point of your article, but I don’t think you have to pit social enterprise and nonprofits against each other. They aren’t mutually exclusive. I think businesses like Toms are more a corporate evolution than anything. At the end of the day Toms is still out to make money. I guess the main difference is that social enterprise creates a good for sale with a social benefit as a byproduct, whereas a nonprofit’s social benefit is the product. This is definitely a longer discussion, I just wanted to voice that as a young nonprofit I have no fear of social enterprise because I see it as different and complimentary. I would love to talk with you, Mike, more or anyone else, here is my email address:
joey@thepositivechangeproject.org
and I would love anyone’s input on what we are doing:
http://thepositivechangeproject.org/
Great article though, it’s an important thing to compare and think about.
Joey,
Thanks for taking the time to read the post and comment – truly means a lot. Fortunately, I could not agree with you more. I visited the positive change project site and love it and what you’re doing there is profound work.
One key aspect of your comment is “as a young nonprofit” — you get it, know it, live it. What I am seeing as a trend is the large, immobile, inflexible orgs don’t see or take the opportunity to adapt or innovate. We all compete for philanthropic dollars and in the past it was “who I always give to” and is now evolving into the best story and most impact.
As I wrote, if my large, institutionalized org provided shoes to children in developing countries — I literally may have just been wiped out by Tom’s.
Thanks for joining in the discussion, you’ll find I like to ask the questions without answers like: what happens if cancer is cured? Should the orgs position now? Where will that funding go?
I’ll head over to your blog and check in often, again I love what your doing at http://thepositivechangeproject.org/
Many organizations, profit and non-profit, end up as victims to “Steiger’s Law”:
“People
involved in a structure spend more time and energy maintaining that structure than in
working toward its goals.” I can think of quite a few “name brand” NPO’s that fit this description.Since a social enterprise is focused on making a profit, it’s easy to see if there’s an ROI on being socially conscious, even if it’s just “goodwill” and “good public image”, it can be tracked. I don’t see for-profit organizations continuing to be socially conscious if it ends up causing them to lose money.
Right on Tim. Thanks for sharing Steiger’s Law, something for me to study. Is there an ROI for having NFL players wear pink this month? I’d say yes — I see female fans sporting the pink uniform replica jerseys in appreciate of the NFL’s acknowledgement to breast cancer awareness. I agree — if the bottom line is endangered social initiatives will likely cease. Thanks for checking in.
I am quickly browsing your site because your post titled OktoberBreast can across my computer. I then saw this post and I liked your message. I was going to tell you that we are the registered owners of the mark OktoberBreast and OctoberBreast. Both are registered with the united states patent and trademark office.
I think we could share a few thoughts. You can sort of get an idea of what our company is doing on facebook/boobsonthemove or you can visit our very outdated website to understand our roots.
We are a mission driven (or as you call it Social Enterprise) for profit following this new business model you describe above. If you are interested in speaking… please reach out. We are launching our new site next month. It’s interactive, there is passive income for us but mainly we are a licensing company with several trademarks related to Breast Cancer. Wish I had more time to read your posts.
Melissa McGhee
co-founder – Boobs on the Move
melissa@boobsonthemove.org