Social Business
And NGO Sustainability
ACGC Lunch and Learn
October 2013
Roland Vanderburg
Mutual Introductions
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
-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
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
 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
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
Microfinance (loans, savings, insurance, transfers)
Teaching, schools, colleges, institutes, curriculum
Retreat centre, guest house
Tree nursery
Roto-tiller rental
Mushroom production
High yield chickens
Health clinics
Solar energy provider
Social Business
Benefits and Costs
are some social business
are some social business
costs and risks?
Social Business
Benefits and Costs
Sustainability of programming with minimal donor/funder
Respects human dignity; asset based; local ownership
Furthers development goals and mission; based on local felt needs
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
Lending: pay later; pay when able to pay; pay forward
Insurance plans – everyone pays premium, membership –service when
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
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,
 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
and monitoring of social business
share experiences
share goals
Feedback and Evaluation
CRA Guidelines
“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).”
Support Organizations and Resources
TRICO Charitable Foundation
Building Social Business, Muhammad Yunus, PublicAffairs,
New York, 2010
 (Social Venture Exchange, Ontario)
–impact investing
My Contact Information:
 Roland
 Email: [email protected]
 Telephone: 403-264-8410
 Location: Lakeview, Calgary

Social Business presentation in PPT