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Social Enterprise: Blending Business with Social Justice Whats Possible


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Title: Social Enterprise: Blending Business with Social Justice Whats Possible

Social Enterprise Blending Business with Social
Justice Whats Possible?
Edward T. Jackson
  • Prepared for the Faculty of Business, University
    of Victoria, Victoria, October 21, 2005

Social Enterprise
Blending Business with Social Justice Whats
  • The Short Answer Not everything, but a lot!
  • The Long Answer
  • Social enterprise takes many forms, and produces
    a wide range of goods and services
  • The benefits of social enterprise include
  • enhanced livelihoods and employability for
    marginalized groups
  • production of reasonable-cost, good-quality,
    socially useful and environmentally sustainable
    goods and services
  • direct governance by local communities, either
    place-based or interest-based
  • creative mobilization of diverse public and
    private resources to advance social justice and
    economic opportunity
  • Business schools and governments have discovered
    social enterprise and are promoting it in
    increasingly robust fashion

Social Enterprise
Blending Business with Social Justice Whats
  • But, starting and growing a social enterprise
    especially, balancing the social, environmental
    and commercial objectives is hard work
  • Well-trained and well-supported managers of
    social enterprises are in short supply
  • Social enterprises can complement, but not
  • social policy
  • regional policy
  • trade unions
  • political activism
  • political parties

The Social Enterprise Zone

Private Sector
Civil Society
Social Enterprise Any business that seriously
seeks to achieve social or environmental as well
as commercial objectives
Types of Social Enterprise
Body Shop Ben Jerrys
200 M Sales
Newmans Own
100 M Sales
Aarong Crafts (BRAC)
Gariba Development Associates (GDA)
Oxfam-HK Second-Hand Shops
Horn Afrik Radio
100 K Sales
The Democracy Arc
Capital Markets for Social Enterprise
  • Governments
  • Development Agencies
  • Foundations
  • Corporations
  • Governments
  • Regional Agencies

Loans / Equity
  • Community Futures
  • Community Loan Funds
  • Credit Unions
  • Social Venture Capital
  • Banks
  • Credit Unions
  • Business Development Bank
  • Regional Agencies
  • Labour Funds
  • Banks
  • Credit Unions
  • Targeted Pension Investments
  • Regional Agencies
  • Labour Funds

Case Study - REST
Case Study Newmans Own
  • We were a joke in 1982, but the joke has given
    away 150 million so far so we are a very
    practical joke. (Paul Newman)
  • Reading Paul Newman and A.E. Hotchner,
    Shameless Exploitation in Pursuit of the Common

Social Enterprise the Business School Response
  • Harvard Business School Social Enterprise
  • SE the contributions of any individual or
    organization can make toward social improvement,
    regardless of its legal form (non-profit,
    private, or public sector) based on the belief
    that these organizations individually and
    collaboratively can generate significant social
  • Achievements since 1993
  • Established an SE tenure-track position
  • Engaged over 40 faculty members in SE research
    and teaching
  • Produced 164 cases and 25 working papers
  • Courses on SE added to the curriculum
  • enabled HBS to take a leadership role in
    positioning social enterprise as a vital
    intellectual discipline and critical factor in
    the global business equation

Social Enterprise Governments Response
  • The European Union
  • SE The social economy, or third system, includes
    cooperatives, mutual societies, associations and
    foundations. The enterprises in the social
    economy privilege social objectives over capital,
    operate under democratic control of voluntary
    members, promote solidarity, are independent of
    government, and distribute surpluses for
    public-interest or member objectives.
  • European Employment Strategy Regional
    development agencies promote entrepreneurship by
    the social economy to
  • increase employability and enhance integration of
    disadvantaged groups into the labour market,
    including immigrants, women, youth, the disabled
    and others
  • Build local social capital
  • Convert and legalize the informal economy

Social Enterprise Governments Response
  • United Kingdom
  • SE a business with primarily social objectives
    whose surpluses are principally reinvested for
    that purpose in the business or in the community,
    rather than being driven by the need to maximize
    profit for shareholders and owners.
  • Three Key Outcomes Promoted by the Department of
    Trade and Industry
  • Create an enabling environment (coordinate
    government activities, address legal and
    regulatory issues, lever public procurement)
  • Make social enterprises better businesses
    (provide business support and training provide
    finance and funding)
  • Establish the value of social enterprise
    (establish the knowledge base, celebrate
    achievement, build confidence through performance
    and standards)

Social Enterprise Governments Response
  • Canada
  • SE Social economy enterprises are run like
    businesses, producing goods and services fro the
    market economy, but they manage their operations
    and redirect their surplus in pursuit of social
    and community goals. Includes non-profit and
    cooperative enterprises.
  • Appointed Parliamentary Secretary for the Social
    Economy Hon. Eleni Bakopanos
  • National Roundtable appointed and convened
  • Budget 2004 provided funds via regional
    development agencies (Western Diversification,
    FEDNOR, CED-Quebec and ACOA) for
  • Capacity Building 17M over two years
  • Financing 100M over five years (05/06 10/11)
  • SSHRC 15M over five years (05/06-10/11)

Ten Limits and Contradictions of Social Enterprise
  • Businesses can fail, jobs and services can be
  • Surpluses can be small, negative or unreliable
  • Local markets offer limited growth opportunities
  • Partnerships with government, especially
    contract-based relationships, can be asymmetrical
    and create dependency
  • Social enterprises may not provide universal
    coverage of their services
  • Balancing the need for business expertise on
    boards with the principle of democracy is very

Ten Limits and Contradictions of Social Enterprise
  • The private sector can claim unfair competition
    by social enterprises
  • The political left is concerned that social
    enterprise can displace unionized, government
    services, thereby providing cover for
  • Movement leaders seek to mainstream social
    enterprise and CED but yet retain its autonomy
  • Social enterprise leaders are in short supply!

Intermediaries Optimize Social Enterprise Success
  • Forms Community development corporation,
    non-profit umbrella, foundation, program, network
  • Functions Technical assistance (consulting,
    training, business planning, market studies)
    financing (grants, loans, equity) management
    support political support (promotion, lobbying,
    regulatory change)
  • Funding Foundation, corporate and government
    grants loans and other program-related
    investments contracts enterprise surplus asset
    appreciation private philanthropy donations and
    gifts volunteer time
  • Factors (of Intermediary Success) Leadership
    (skills, vision continuity, succession)
    structure (flexible, evolving) strategy (growth
    opportunities, backward and forward linkages,
    first-mover advantage) management human
    resources innovation replication and scaling
    up financing (diversification of revenues)

Case Study New Dawn Enterprises
Cape Breton Association for Co-op Development
New Dawn Enterprises (Non-Profit CDC)
  • Cape Care Services Ltd.
  • Home Care Services
  • Cape Breton Association for Housing Development
  • Real estate company for affordable housing
  • Highland Resources Ltd.
  • Private career college
  • New Dawn Guest Home Ltd.
  • 30-bed residential care facility
  • David Realties
  • Commercial landlord

Case Study Oxfam Hong Kong
Oxfam International - 12 Oxfams working in
110 countries
Funds 52M
Funds, Expertise 6M
Hong Kong and Chinese Donors
39M contribution
5M contribution
  • Special Events
  • Trailwalker Hike - 21M
  • Other events and appeals 18 M

Community Development and Capacity Building in
Oxfam Rice China Development Fund - 120,000
packets sold for 3M
  • Two Second-hand Stores
  • - 2M revenues
  • second-hand CDs
  • International crafts
  • 100 volunteers

Rural Women Knowing All - 200,000 copies
- Currency in Hong Kong Dollars - Reading
Case Study - BRAC
Case Study - Benetech
Jim Fruchterman, Founder
Beneficent Technologies (Non-Profit)
Bengineering Inc. (For-Profit)
  • Revenue from monthly subscriber fee plus grants
    for rollout
  • Revenue from server maintenance and
    administration, customizing software and training

Case Study Social Capital Partners
Bill Young/ Bealight Foundation
Social Capital Partners
Social Venture Portfolio
Sector and Policy Engagement
Research on SROI/ Evaluation
Grants, Loans, Equity
Renaissance, Montreal
Inner City Renovations, Winnipeg
Social Enterprise
Social Enterprise
  • 50 K grant and board involvement
  • 100K equity
  • 100K loan
  • Used to test new ideas in marketing,
    merchandizing and pricing
  • Investment Decision Steps
  • Concept Review
  • Business Plan Review
  • Due Diligence
  • Alignment and Deal structure
  • Investment and Ongoing Working Relationship
  • Monitoring and Reinvestment
  • Challenges
  • Dearth of great social entrepreneurs
  • Lack of sophisticated business models
  • Limited sources of social capital

Reading Sean VanDoorselaer, Venture Capital for
Social Enterprise, Making Waves, 15(3), 2004,
Corporate Social Responsibility through Social
  • Strategies
  • Grantmaking to SE/CED projects (Bell, RBC,
  • Venture philanthropy (e.g. Social Capital
  • Joint ventures (RBC-St. Christopher House,
  • Procurement from community/social enterprises
    (Suncor, Syncrude)
  • Opportunities
  • Multi-stakeholder exchanges corporations,
    governments, SE sector organizations
  • Replication and scaling on business-community
  • Incentives to do more and do it better awards,
    recognition, tax incentives
  • Research Questions
  • How can SEthroughCSR models be effectively
    sustained, replicated and scaled?

Innovation in Social Enterprise
  • Innovation Defined a change that creates a
    significant new dimension of non-profit
    performance (Drucker)
  • Key Elements
  • Knowledge management (explicit and tacit
    knowledge, ICTs)
  • Value-added production technology
  • Social entrepreneurship of the CED organization
    or other intermediary
  • Research Questions How does the innovation
    process really work in social enterprise, and how
    can it be enhanced?

Evaluation of Social Enterprise
  • Evaluation Defined Assessment of social,
    environmental and commercial results, lessons
    learned and accountability systems by key
  • Promising Methods
  • Return on Taxpayer Investment (ROTI)
    Input-output modeling of direct, indirect and
    induced effects of government-supported
  • Social Return on Investment (SROI) Method for
    assessing the social costs associated with the
    individual employees and the social enterprise
    itself (Social Capital Partners, REDF)
  • Enhanced Value-Added Statement (EVAS)
    Quantifies the value of social impacts and
    volunteer contributions of a non-profit or
    cooperative (Quarter et al)

Evaluation of Social Enterprise
  • Issues
  • Attribution Need to tell credible evaluation
    stories demonstrating results-chain linkages
  • How to mix stakeholder participation and outside
    experts in the evaluation process
  • Research Question
  • What methods are most effective in accurately and
    appropriately assessing the social, environmental
    and commercial results generated by social

Questions for Discussion
  • What current teaching and research activities at
    UVic, inside and outside the Faculty of Business,
    are related to social enterprise?
  • What further work could be done in teaching and
    research with respect to
  • Social enterprise in BC coastal communities?
  • Businesses driven by green technologies?
  • Social enterprise in the Asia-Pacific region?
  • What opportunities could be provided to Business
    students to engage with social enterprise,
    through field research, cooperative placements,
    case-study preparation or advisory-service
  • To what extent do possibilities exist for
    inter-Faculty cooperation on social enterprise?

Useful Websites