Agenda
What is SE?
Why SE?
The Development Path
The SEF
What is SE?
It is a sophisticated business model. It uses business
to meet social, environmental and/or economic
challenges.
It places these challenges at the centre of the business
model.
It strives for blended value.
It attaches profits to the challenge and not the investor
It is a long term strategy to self reliance.
I saw how the concept
of business could be
reformulated simply by
disconnecting investors
from the expectation of
financially gaining from
their investment.
Where SE Fits …
Charity
Non-Profit
Social
Enterprise
Social Purpose
Business
For-Profit
Business
Examples
www.socialenterprisefund.ca
Why SE?
Something is happening!!
What SE brings to the table
Trends in the operating environment
Risks are surprisingly similar to current risks
Its tested; it works
Ambition: direction, level and pace of ambition
Something is Happening:
Change is a foot!!
Net Impact is a global network of leaders who are changing the
world through business.
Mark Albion – co-founder – 2008 in Edmonton –
“something in the water – something has changed”
“
I believe that social
entrepreneurship will be the
driving force in the world over
the next 100 years, the single
biggest movement that’s
going to change the way we
live.
Jeff Skoll
”
Blurring boundaries: Interest in Doing Good
Charity
Non-Profit
Social
Enterprise
Social Purpose
Business
For-Profit
Business
35% of existing SEs were started in the last 2 years
(October 19, 2010 Globe and Mail)
What SE Brings to the Table
Trends
Changing demographics
Technology change
Changes in the role of government
Performance measurement
Conclusion
Big Change is imminent.
Risks are surprisingly similar
NFP
SE
Director
Director
Financial risk
Financial risk
Revenue risk
Revenue risk
Program risk
Business risk
Regulatory risk
Regulatory risk
Reputational risk
Reputational risk
HR risks
HR risks
Environmental risks
Environmental risks
Revenue Risk
So, the question is:
If we have been successful
managing a set of diverse and
significant risk,
why do we feel we will not be
successful at managing SE risks?
Answer: The 3 “Cs”
Culture:
“The journey from grant funded organization to a sales led SE can require a
massive change in org culture. It involves travelling a learning curve with a
right angle in it”
Competency:
Current competencies are not a good fit
Comfort:
As frustrating as things might be now, we know how to
operate in our box – we know the terrain - we know how
to managing our risks.
It’s tested; it works
Today
1956:
1895:
1844:
modern co-op
movement
founded
Goodwill
Industries
– 1st
thrift
store.
Mondragón
Corporación
Cooperativa.
The world’s
largest social
enterprise by
annual sales and
size of staff.
Ambition: Direction, level and pace
What degree of control do you have
over the direction and level of
ambition and over the pace with
which you achieve it?
Development Path
Organizational Readiness Assessment:
(Board decides, “This is a good fit; we are ready & committed”)
Development of Minimum Specifications :
(Board ratifies the criteria by which to evaluate
opportunities)
Generation of Many Business Ideas
Quick Assessment of 3 Ideas
Board approves the short list of ideas
that meet the minimum
specifications
Feasibility Assessment
of 1 Idea
Business
Plan
Board selects one idea for
market research & financial
feasibility
Board decides whether or not
to complete the plan and
prepare launch
Catalyst ; Entrepreneur
agent of
change;
steward
of org
resources
Risk Manager
Strategic
advisor
Owner
Partner
Leverager of
social and
financial
capital
Promoter
Fiduciary
Overseer
Balancer of social
and economic
interests
Does SE fit
with the
mission?
Do we have
the resources
to take this
on?
Is SE a cultural
fit?
What is the only way
to break even is by
hiring fewer
disadvantaged folks?
Who needs to owner
this?
If we succeed, we likely will
become less reliant on
government funding. Is this
a good thing?
How are we going to
balance social and
economic goals?
Are we prepared to
compete in the
market place?
What is the enterprise
cannot afford to pay a
“living wage”?
What might our
donors say and do?
How much debt are
we prepared to take
on?
How much equity are
we prepared to
contribute?
Participants
Board committee + advisors
Board;
SMT
SMT
Stakeholders
New Board
Stakeholders
Board
Committee
Board
Ready organizations are:
Stable:
mission, funders, clients, board, SMT
Resilient:
demonstrated
Financially Healthy:
key financial indicators, reserves,
deficits/surplus, growth, diversity, earned revenues
History of Achievement
Entrepreneurial
Cultural Shifts
Program
Charity trumps
economics
Public sector
Clients
Referrals
Top
Proposal writing
Grants
Operating statement
Shorter
Business
Balance of charity and
business
Market
Customers
Sales
Bottom
Business planning
Market generated
revenues
Balance sheet
Longer
Corporate Structure – Legal Considerations
Get legal advice
Know yourself!
Are you are society, a non-profit, a charity, a co-operative?
Have you read your articles of association and your by-laws?
What are the powers of the organization: are you able to
own assets, distribute income, borrow?
Remember the CRA
Eligibility
Non-profits, charities, social purpose cooperatives operating in Edmonton
Social entrepreneurs that agree to non-profit
format
What we Finance …
Social enterprise
Planning
Operating/working capital
Capital
Social and affordable housing
Planning
Land acquisition
Capital construction
Renovations
Acquisitions
Asset building/strengthening balance sheets
What we Assess…
Eligibility
Ability to execute
Resilient, stable, financial strength, track record
Business case
Feasible, sustainable, doable
Blended value
Exit strategy
Financial Products
Term loans
Patient capital
Terms and Conditions
Flexible – fit financing to need
Term
Interest rate
Fees
Security
Examples …
Social Enterprise – Local economy mission
Good Food Box
Capital and working capital financing
Term – 6 year
Interest – 5%
Repayments: Interest only for 1 year; blended
P and I for next 5 years
Examples …
Social Enterprise – Affordable space to arts
community
Capital and working capital financing
Term – 5 year
Interest – 4%
Repayments: Interest only for 1 year; blended
P and I for next 4 years
Examples …
Affordable housing: acquisition of supportive seniors
complex
Term - 1 year
Interest - 5%
Security - first mortgage
Status – Paid in full
Examples …
Balance sheet strengthening: acquisition of program
center
Term – Loan # 1 for 1 year; loan # 2 for 2 years
Interest – loan # 1 - 5%; loan # 2 – 6.5%
Security - first mortgage
Status – Paid in full
Development Services
Path to Loan Grants
Seminars
Portfolio
Clients - SE
Loans
• Furniture Recycling
Planning
Clients – Housing
Loans
Planning
Clients – Other
Loans
Planning
Where can I learn more?
www.socialenterprisefund.ca