2. We’re going to cover:
• Definition of social enterprise (SE)
• Why start one?
• Pitfalls / best practices
• Structural considerations
• The ‘third’ bottom line
• Example of a useful venture selection process
2
3. • not a legal expression in Canada
• no national or provincial social
enterprise act or regulation that defines
it or gives it legal form or structure
• not addressed in the federal Income Tax
Act
• …so for now, we create our own
definitions, which emerge from the
actual practices of social enterprise
practitioners!
3
4. Social enterprises are, for the most part, businesses
operated by non profits and charities to meet a need in
the marketplace that the traditional business sector
does not offer; and/or to provide training and
employment opportunities to the marginalized;
and/or to provide unencumbered income to
community-based groups, to achieve more of their
social / environmental visions with greater self-
determination.
4
5. • Many within the sector talk about the ‘triple bottom
line’.
• This is meant to reflect attention to economic, social,
and environmental imperatives.
• Sadly, the environmental aspect is often ignored.
• True ‘triple bottom line’ social enterprises are rare.
6. Is there room in the Canadian social enterprise
landscape for the intentional inclusion of business?
Folks from the private sector may act as:
...investors
...mentors
...partners
6
7. • Social enterprise is a business;
• The profits are used to fund the organization’s social
mission, or jobs are created (or training is provided) for
community members in need;
• A possible solution for long-term sustainability (not a
quick fix);
• Offers goods or services into the market place;
• Requires full Board and decision-maker buy-in.
7
8. • Create training / employment opportunities for
marginalized individuals;
• Offer a needed good or service;
• Lessen reliance on grants and government funding;
• Control the services that are offered to constituents,
instead of following funders’ mandates.
8
9. • Abbotsford Farm & Country Market
• InsideArt Cooperative
• Clayburn Village Community Society
9
10. • This curriculum was designed by the
Canadian Centre for Community Renewal
• Based on an earlier iteration that focuses
on Aboriginal community development
• A detailed workbook on the Development
Wheel, including helpful checklists, is
available!
• Building Community Wealth can be
uploaded at www.cedworks.com
10
11. Social enterprise tends to occur on 4
(concurrent) levels:
1. Organizational development
2. Enterprise development
3. Community participation and
strategic networking
4. Technical assistance
11
12. Social enterprise tends to occur in 4
phases:
1. Getting started
2. Building the base of SE development
3. Focusing the opportunities
4. Detailed planning and mobilization
of resources
12
13. Dedicated staff / volunteer time
A ‘champion’
Business acumen
Adequate financing
Expertise in good / service being offered
Comfort with the idea of ‘profit’
Organizational desire of autonomy
13
14. Acknowledgement of time and resources needed to
start and operate a business
Comfort (and organizational capacity!) to make
mistakes and learn from them
Willingness to spend time on exploration and
planning
Adaptability to new information, changed
environments, opportunities, market changes
14
15. Viewing SE as a quick-fix to financial pressures of the
host organization
Not enough energy put into market research (i.e.
proving demand for the offering)
Lack of comfort with generating revenues
Being married to a certain business idea or approach
when research is against it
Organization inertia / resistance to change
15
16. Tensions between financial imperatives and social
goals
Being misunderstood by the business community e.g.
‘unfair competition’
‘Mission drift’... allowing mismatched SE goals to draw
the parent organization away from its core values and
mandates
16
17. The biggie: expecting a social enterprise to generate
significant profits for the parent organization while
creating significant training and/or employment
opportunities for the marginalized!
If you read nothing else... Google Seedco’s The Limits
of Social Enterprise... and Social Capital Partners’ The
Five Critical Factors of Social Enterprise Profitability
17
19. Three ‘trade-off’ factors:
1. Size / nature of the employment barriers
of employees
2. Skills / training gap (between people
being hired and levels required)
3. Degree of emphasis on the social
mission in the day-to-day decision
making process
19
20. Legal structures for social enterprise:
1. Project of a charity
2. Project of a non-profit
3. Co-operative
4. Corporation
5. Joint venture
20
21. Must meet 90% volunteer rule, or be linked and
subordinate to the charity’s purposes.
If the social enterprise does not meet one of these
tests, then it must be hived off into a taxable
corporation (‘unrelated business’).
The corporation can then donate up to 75% of its
profits to the charity.
Must be complete separation between the charity
and the corporation.
21
22. ‘Linkage’ to the organization’s charitable purpose
means that the business must meet one of the
following tests. It must:
Be a usual and necessary concomitant of charitable
programs (e.g. a hospital parking lot, a university
bookstore); or
Be an offshoot of a charitable program (e.g. a
church that records and sells choir recordings); or
22
23. Represent a use of excess capacity (e.g. charging
for parking lot use during hours of closure, or
renting out event tents when not being used by the
charity); or
Involve the sale of items that promote the charity
and its objects (e.g. calendars, T-shirts, etc.).
23
24. Training businesses are charitable:
classroom training occurs before or accompanies
the on-the-job training;
the participants are employed in the business for a
limited period of time;
the charity offers a job placement service to help
graduates of the program find work in the labour
force;
24
25. Training businesses are charitable:
the proportion of workers from the target
population in relation to the total number of
employees is no lower than 70%, but alternative
ratios may be justifiable if considerable supervision
is required; and
revenues derived from the business do not
substantially or consistently surpass the break-
even point.
25
26. Social businesses are charitable:
the work is specifically structured to take into
account the special needs of the workers;
the workforce is comprised entirely of people who
are physically, mentally, or developmentally
challenged, with the exception of a few persons with
specialized skills required for operating the
business;
26
27. Social businesses are charitable:
the workers are involved in decision-making for the
organization and sit on its board to foster their
sense of competence and control over their lives;
and
income derived from the business may pay the
workers' wages, but the organization is subsidized,
usually by government grants.
27
28. It is generally believed that the non-profit
structure is a ‘safer’ haven for social enterprise
operation, since there seem to be such tight limits
on charities operating social enterprises.
Five CRA rulings and two pieces of case law (court
decisions) suggest otherwise.
Key ruling: November 2009. CRA estimates that
75% of non-profits are currently offside.
28
29. Questions asked were...
Can a 149(1)(l) organization [i.e. a non-profit] earn
a profit?
If the profit is intentional, but used to fund the
activities of the organization, will the organization
qualify for the 149(1)(l) exemption from tax?
Answers: ‘only by mistake’ and ‘no’.
29
30. In general, the ‘safest’ forms are:
1. Cooperatives
2. Taxable corporations
Note -- Joint ventures are intended for projects with
specific end-dates, not ongoing business.
Participate in the BC Government’s
consultation on a new legal structure for SE
30
31. ...and what’s the relevance to social enterprise ??
Info mainly from
The Transition Handbook, 2008
32. Historically, social, economic, and ecological
challenges have been addressed in a piecemeal,
uncoordinated manner.
The response to all three of these global challenges
must be integrated at the community level.
Communities must lead the way for regions and
nations around the world—and quickly.
32
34. • No longer considered a ‘fringe’ topic.
• ‘One of the disturbing things about listening to
scientists studying climate change is the fear in the
voices and words of people not accustomed to
be[ing] fearful, and the sense that generally
speaking, scientists are far more worried than the
rest of us are.’
– Sharon Astyk, How fast is global warming
happening?
34
35. • We are all noticing dramatic weather changes,
even year to year. These include more temperate
seasons, changes in precipitation patterns, and
more dramatic weather events.
• We see changes in growing seasons, animal
migrations, and water levels.
• We are learning about accelerated animal
extinctions and damage to ecological systems (e.g.
the bees!).
35
36. • Burning fossil fuels;
• Deforestation;
• Methane emissions from
livestock, mining, and
wetland reductions;
• Nitrous oxide emissions from
agriculture and airplanes.
36
37. • A ‘thickened’ layer of greenhouse gases (e.g. carbon
dioxide, methane, nitrous oxide) trap heat in the
earth’s atmosphere (the greenhouse effect).
• Pre-industrial levels of CO2 were 278 ppm. By 2007,
they were 385 ppm. This has resulted in an
temperature increase of 0.8 degrees C.
• ‘The emerging consensus in recent years has been that
the imperative is to keep below a 2C increase at all
costs.’
37
38. Even if we were to somehow halt greenhouse gas
(GHG) emissions today, we have created a domino
effect that will continue to cause the release of
greenhouse gases.
We are today only experiencing the effect of GHG
emissions emitted in the 1970’s! as the gases heat up
over time; methane released from tundra adds to the
mix.
38
39. It is estimated that the Arctic will be ice-free by 2013.
This will accelerate the melting of the Greenland ice
sheet. (Revkin)
Sea levels could rise by 5 meters by 2099, affecting 2
million square meters of land, and 669 million people.
(Kahn)
Climate change is a social issue!!!
39
40. Until recently, it was believed that the scale of climate
change necessitated cutting our GHG emissions by
90% by 2030. (Monbiot)
The latest modelling suggests that humanity has to
ZERO its emissions by 2060, just to stay at the 2 degree
C increase. (Global Commons Institute)
40
42. Peak oil refers to the ‘peak’ in global oil supply.
Oil peaked in the U.S. in the 1970’s.
It is generally thought that we are about to peak
globally, sometime in the next 2-15 years. Some believe
that we have already peaked.
Peaks are normally not recognized until they have
passed – we see them via the rear view mirror!
42
43. Peak oil does not mean that we have run out of oil – it
means that we are halfway through our supply.
After we ‘peak’, every drop of oil is more expensive to
extract (reduced pressure) and to refine (decreased
quality).
Peak oil does mean that the market will switch from a
buyers’ to a sellers’ market. Prices will increase quickly,
on a steep curve until they simply become
unaffordable.
43
44. We will begin to exploit any sources of oil, even the
dirty, costly ones, which can create extreme
environmental and social degradation.
Consider the tar sands... Likened to steam cleaning the
carpet of an old pub in order to extract the very last
drops of beer! High labour for poor quality outputs.
Fort McMurray, AB is experiencing rapid economic
growth without the physical and social infrastructure
to sustain it: increased crime, suicide rates, and drug
use; housing shortages.
44
45. Use nearly any form of transportation
Use any products that are imported from
beyond the region
Eat (consider the oil required for farming, and
that fossil fuels are ingredients in fertilizers)
Use anything that is made of oil (plastics,
electronics, and petro chemicals are examples)
Cannot use your own skills to get your basic
needs met!
45
46. The globe is now in a phase of ‘overshoot’... using more
finite natural resources than we have, ‘borrowing’ into
the resource inventory of future generations.
It is projected that the globe will soon be in a situation
of ‘peak everything’... Peak oil, peak land, peak water,
peak food...
We need to dramatically alter our approach to
consumption!
46
47. Business as usual
Waiting for the magic elixir
The government will save us
Technology will save us
‘Every man for himself’
Atlantis scenario – collapse
47
48. ‘Climate change says we should change, whereas peak oil
says we will be forced to change. Both categorically
state that fossil fuels have no role to play in our future,
and the sooner we can stop using them, the better.’
– Rob Hopkins, author of The Transition
Handbook: from Oil Dependency to Local Resilience
48
49. ‘Taken together, climate change and peak oil make a
nearly airtight argument. We should reduce our
dependency on fossil fuels for the sake of future
generations and the rest of the biosphere; but even if
we choose not to do so because of the costs involved,
the most important of those fossil fuels will soon
become more scarce and expensive anyway, so
complacency is simply not an option’
– Richard Heinberg, author of Peak Everything
and Powerdown
49
50. Community-based approaches can include:
• Planned relocalization of economies
• Decentralized energy infrastructure
• The Great Re-Skilling
• Localised food production
• Energy descent planning
• Local currencies
• Smart transportation
• Connection / densification of work / home / social
settings
50
51. • Consider how the market will change given the
realities of PO and CC – what new goods and services
will be needed?
• With decreasing reliance on imports (due to high
transportation costs) plan your SE with this in mind –
both inputs and outputs.
• How can communities be assisted through SE to cope
with the emerging realities of our future?
51
52. • What skills will you need to foster in your employees /
trainees?
• How can you ‘exploit’ the need for more local
economies? This provides you with a competitive
advantage over the Big Box stores – transportation
costs will trump cheap overseas labour costs.
• How can your SE consume less or alternative energy?
Consider carbon neutrality?
52
53. • What community members will become displaced or
more marginalized given new realities? How can an SE
help?
• What ‘green’ or ‘green collar’ jobs can your SE create?
Build capacity in?
• How can your SE reduce transportation requirements,
of goods, staff, and clients?
• How can your SE set an example for other
organizations and communities?
53
54. Consider the fact that manufacturers will move to the
creation of products that last longer (as opposed to
‘disposable’ items). Repair businesses will be much
more common.
How can SE’s be co-located in order to take advantage
of economies of scale in energy use, or for one SE to
use the ‘waste’ of another?
54
55. Might you consider the launch of SE’s that sell energy-
efficient technologies or are connected to renewable
energy production?
How can you undertake a true ‘triple bottom line’
social enterprise?
55
56. Last year, we launched a popular web portal called
Timely Topics.
www.resilientcommunitiescanada.com/timely_topics/
56
57. The portal includes web links to these topics:
Climate change
Economics
Energy
Food security
Local economies
Neighbourhood building
Peak oil
Resilient communities / sustainability
Transportation
57
58. Prerequisites...
1. An understanding of what social enterprise means
generally
2. An understanding of why your organization should
launch one
3. Affirmation that your organization has access to the
skills and resources required
4. Recognition of structural limits
5. Clarity on values / goals for the social enterprise
6. An open-minded group of ‘brain-stormers’
58
59. • What does this mean?
• We need to narrow down the SE options
• How is it useful?
• Saves valuable time (no need for business plans
for all venture ideas!)
• Gives your organization clarity about why
certain venture ideas should be buried.
• Supports your decision for pursuing specific SE
concepts.
59
60. • How will this help?
• Narrow down the venture ideas
• Build stakeholder buy-in
• How is it done?
• First, agree on your values / goals...
• Second, brainstorm your venture ideas...
• Third, map the ventures against the values...
• Fourth, score the ideas.
• ...focus on the highest scoring ventures only!
60
61. Step one: agree on your values / goals
Examples:
• Revenue generation
• Job creation for the marginalized
• Pay living wages
• Promote the host agency
• Align with agency skills and interests
• Specific green priorities
• Social integration opportunities
• Low start-up costs
• Use of existing space / volunteers / staff
• Access to grants
• Replicability 61
62. Step two: brainstorm your venture ideas
Examples:
• Tim Hortons franchise
• Restaurant
• Consulting
• Thrift store
• Paper shredding
62
63. Step three: map the ventures against the values / goals:
On the vertical axis, list the values / goals.
On the horizontal axis, list the venture ideas.
Optional: assign ‘weights’ to the values / goals that are
most important.
Step four: score the ideas.
Focus on the highest scoring ventures only for feasibility
research. Create business plans for feasible concepts.
63
64. Bookmark www.centreforsocialenterprise.com:
• Links page includes section on funding sources
• Homepage item – sector brief on training and
employment SE’s
• Homepage item – review of 3 ‘must-have’ SE primers
• Homepage item – The Fine Print… what every charity
must know about operating an SE
• Sign up for our free e-newsletter!
64
65. Our fee-for-service (social enterprise) activities:
• Feasibility studies and business plans for social enterprises
• Applications for charitable status
• Charity ‘check-ups’
• Structural advice for social enterprise
• Technical assistance for social enterprise
• Advice on how to green organizations and businesses
• Technical writing on social enterprise and social finance
• Workshop delivery on related topics
65
66. Stacey Corriveau can be reached at:
stacey@centreforsocialenterprise.com
604.859.4618
66