What is a social enterprise - and how can my organization benefit from being more like them?

Contents

• Examples of social enterprise
• Why are organizational leaders considering adopting aspects of the social enterprise model?
• Is your organization already a social enterprise?
• Benefits of adopting a social enterprise model
• Monitoring progress

While social enterprises continue to evolve and redefine themselves, they share common features. A social enterprise is a revenue-generating organization that could encompass either a non-profit organization or a for-profit company. It has two goals: to achieve social, cultural, community economic and / or environmental outcomes and to earn revenue.

Operating as a business, a social enterprise manages its operations and leverages the power of the marketplace to redirect surplus funds towards these goals.

Some organizations are pure social enterprises, existing entirely to pursue social goals through their core activities. Here are some examples of notable social enterprises:

• ACCFutures is a not-for-profit social enterprise offering a wide range of funding, financing and capacity-building services to local business communities in the Cornwall, Ont., area. Among its programs is an Indigenous-focused partnerships program that brings Indigenous and non-Indigenous partners together to build a more robust economy.
• Vancity Community Investment Bank exists to provide financial solutions for Canadian projects designed to drive social, economic, and environmental change while remaining profitable and rewarding its depositors. Based in Vancouver, B.C., Vancity projects include anything from building projects that promote sustainable and affordable communities to financing for clean energy technology projects.
• Hackney Community Transport is a successful bus transportation company based in London, England. Formed initially by community groups pooling their vehicle resources, the company faced the challenges of operating under a grant funding model. Instead, it reimagined itself and began to compete for commercial transport contracts. That allowed the organization to reinvest profits into transport services offering social impact while training people from disadvantaged groups as drivers, mechanics and passenger assistants.
• TAS is a Canadian development company that exists to develop real estate projects that respond to social, cultural, economic and environmental drivers that impact neighbourhoods and communities. TAS projects include the development of affordable housing or business spaces designed to build social capital and promote the growth of sustainable neighbourhoods. It continues to own and manage these projects to ensure social benchmarks are honoured.
• Kiva is a not-for-profit social enterprise based in San Francisco, California, that distributes funds received through grants, loans and donations to microfinance institutions, social impact businesses, schools and non-profit organizations around the world. Those donations are then loaned to entrepreneurs in communities underserved by financial services with the goal of helping them thrive.

Hybrid social enterprises are also plentiful

Becoming a more social enterprise is not an all-or-nothing premise. Some organizations redefine what they do to ensure their core activities reflect a greater purpose and are reinterpreted in light of social goals. Others redirect part of their focus to these issues and challenges in a fundamental way to drive mutually beneficial outcomes for their communities. The following are examples of hybrid social enterprises.

• Calgary Housing Company transformed its operations away from traditional municipal affordable housing models to serve the wider purpose of promoting thriving, resilient mixed-income communities. By combining both private and social enterprise practices, the Alberta-based organization embarked on the even more powerful mission of building self-sustaining communities while making the organization itself more economically sustainable.
• Highline Mushrooms, the largest independently owned and operated mushroom grower in Canada, took the initiative in 2010 to rethink its vision to fundamentally incorporate sustainability into its operations. The Crossfield, Alberta-based company has radically reduced its use of water, diverted more than 80 percent of its waste from landfills, redesigned its packaging to reduce environmental impact and developed new ways to grow mushrooms more efficiently. Those efforts go beyond the practical by working to raise awareness of environmental priorities among the broader community.
• Danone relies on dairy products as its key ingredient. A decade ago, the Paris, France-based company began to look at the wellness of its suppliers, focusing on health, education, community development and support of low-income farmers. This has resulted in a more resilient, reliable, socially stable and secure supply chain for dairy products and growth for farmers and their communities.

2. Develop an ESG strategy:

Developing a compatible environmental, social and governance (ESG) strategy can have a material impact on operating and financial performance, and help to better identify the organization’s priorities, including social purpose, and build the skills and a roadmap to meet those challenges.

3. Transform organizational culture the right way:

Ensuring you are developing the right organizational culture is critical to organizational success. Using leading-edge assessment surveys and design tools, advisors can help assess and shape the unique culture that sets your organization apart from others and identify a social purpose.

4. Consider your strategy & business planning:

If you’re a non-profit or charity that has already defined a purpose, an analysis of your operating model may identify potential revenue streams compatible with a social purpose that will make the organization more resilient and enhance its ability to deliver on that purpose. If you’re a for-profit company, perhaps you want to acquire a compatible existing social enterprise that will allow both organizations to do more or to create a subsidiary of your business devoted 100 percent to social enterprise. Becoming a more social enterprise requires sound business planning.

Leaders of an already successful enterprise commonly ask: “How do we ensure we continue to be the social enterprise we were founded as, instead of allowing success to make us more like our competitors?”

A third party can help ensure a social enterprise stays the course. For example, consider a music distribution company that built its existence on ensuring artists receive more fair compensation for their music. Building on that model, the organization grew substantially and achieved considerable financial success.

Yet, when they got to the size of about 100 employees, they were challenged with scaling-up structure and management practices that helped them keep their internal culture and experience closer to their leading and managing styles, without becoming too “corporate.” There are creative ways to address those concerns through innovative forms of business leadership, organization, strategy and culture, many of which can be learned from other social enterprises.

A social enterprise requires a purpose that emerges from within the organization. Outside expertise can help identify, sharpen and maintain that purpose so the organization’s resources can be deployed effectively to meet that challenge.

Len Nanjad is a partner on MNP’s Consulting Services team in Calgary focused on organizational renewal. Len delivers leading-edge, innovative solutions to redesign public and private sector organizations for rapid growth. He is a Certified Management Consultant (CMC) and Master of Human Capital Strategy (MHCS).