Social Business
And NGO Sustainability
ACGC Lunch and Learn
October 2013
Roland Vanderburg
Mutual Introductions
Name
Organization
Any
involvement with business
ownership and management
My background:
-involved in NGO development work for more than 25 years
-12 years of living and working in Latin America
-International Program Director with CAUSE Canada for 8 years
-economics degree from the University of Calgary
-Master’s Degree in development studies and microfinance from Eastern
University in Pennsylvania
-more than four years in Nicaragua with microfinance giant Opportunity
International
-involved in social business and microfinance with Momentum
-taught several classes at Ambrose University related to community
development, management and microfinance
Current Challenges for NGO
Sustainability
What are they in your experience?
Current Challenges for NGO Sustainability
 New
technical donor structures, policies
 New
philosophy of development among funders
(investment versus charity)
 For-profit
approach often preferred (trickle down)
 Changing
conditions on the field –higher rates of growth,
greater inequality, beneficiary transition from charity to
investment
 Donor
 Less
fatigue; donor awareness
commitment from donors (i.e. among young people)
Defining Social Business
What does this mean to you?
Defining Social Business
Type I: Mission driven (like NGO) with cost
recovery pricing for goods, services
-non-loss, non-dividend
-mission oriented activity
-long term ongoing sustainability
 Environmentally friendly; promotes justice
 May accept donations, investments, loans
 Contrast with broader social enterprise
definition
Defining Social Business
Type II:
For-profit business owned by
marginalized entrepreneurs
Examples of Social Businesses
In Alberta
 Thrift
stores (many examples)
 Catering (EthniCity Catering, CCN)
 Translation services (CIWA)
 Day homes (Sonshine Centre)
 Consulting services
 Classes (Green Calgary)
 Ten Thousand Villages
Examples of Social Businesses
Internationally

Microfinance (loans, savings, insurance, transfers)

Teaching, schools, colleges, institutes, curriculum

Retreat centre, guest house

Tree nursery

Roto-tiller rental

Mushroom production

High yield chickens

Consulting

Health clinics

Solar energy provider
Social Business
Benefits and Costs
What
are some social business
benefits?
What
are some social business
costs and risks?
Social Business
Benefits and Costs
Benefits:

Sustainability of programming with minimal donor/funder
dependency

Respects human dignity; asset based; local ownership

Furthers development goals and mission; based on local felt needs
Costs:

Need for supreme flexibility and market sensitivity

Need for investment capital, business expertise

Risks of financial losses due to internal or external factors
Social Business Pricing Strategies

Sliding scales – clients pay according to ability to pay

Cross-subsidization – clients who are more able help subsidize less able
clients

Lending: pay later; pay when able to pay; pay forward

Insurance plans – everyone pays premium, membership –service when
needed

Paid for: service costs are paid by third party; donor, government

Cost recovery pricing – no profit margin; all surplus reinvested, market
wages, minimize costs (while maintaining mission focus)

Combined pricing: clients pay for one service while receiving additional
services without explicit pricing ie integral microfinance

Very small, regular payments (daily or weekly) according to payment
capacity

Periodic payments based on household cash flow (payment capacity)

Joint buying and selling (cooperatives); and many more…
Preconditions for Success
 Open
to Business Approach –mindset, paradigm
(not anti-business)
 Understand market, marketing (PPPD),
effective demand
 Marketable goods, services
 Management capacity –including finance
Steps to launching a Social Business
 Define the mission -purpose; beneficiaries
 Define ownership
 Design and refine products, services
 Do the marketing plan (define clients, PPPD)
 Prepare a business plan (versus proposal)
 Define measurement of success (impact indicators,
sustainability)
 Raise capital –donations, investments
 Hire appropriate staff (HR policy), training
 Implement a promotions plan, production
Social Business Management
 Quality
control – including customer service
 Internal
controls – including cash management
 Monthly
reporting (financial and impact)
 Staff
training (technical, administrative, customer
service, financial)
 Operational
 Incentive
planning (SMART and SWOT)
based compensation
Next Steps:
 Exploration
and/or expansion of social
business activities
 In
Canada or overseas
 Consult
in writing with CRA
 Develop
concept plan
 Develop
business plan
 Access
 Build
investment funding
capacity for implementation
Available Support:
 No
cost, one page program assessment of
organizational potential for social business
development (initiation and/or expansion)
 Organizational
assessment for social
business readiness
 Business
Plan development
 Management
 Evaluation
activities
support
and monitoring of social business
Discussion
Comments;
share experiences
Questions
Concerns
Issues;
share goals
Feedback and Evaluation
Appendices:
CRA Guidelines
http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cps/cps-019-eng.html
“What is a Related Business?”
“Examples of fees earned in the context of charitable programs include rent in
low-income housing programs, university tuition fees, and museum admission.
Other examples of fully acceptable charitable programs are identified in
Registered Charities: Community Economic Development Programs. They include
micro-enterprise programs, "training businesses" (which provide on-the-job
training in vocational and life skills), and "social businesses" (which address the
needs of people with disabilities).”
Appendices:
Support Organizations and Resources

TRICO Charitable Foundation

Building Social Business, Muhammad Yunus, PublicAffairs,
New York, 2010

www.grameencreativelab.com

www.svx.ca (Social Venture Exchange, Ontario)
–impact investing
My Contact Information:
 Roland
Vanderburg
 Email: [email protected]
 Telephone: 403-264-8410
 Location: Lakeview, Calgary
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Social Business presentation in PPT