The Link Between Social Enterprise, Business

Development, and Partnerships

The Association of Fundraising ProfessionalsMarch 17, 2015

Social entrepreneurism:• Unifying business principles with social impact – Blurring

the lines between the nonprofit and for-profit sectors• For-Profit: Breaking from the traditional profit driven

mode of conducting business and incorporating into a business’ DNA, a double or triple bottom-line philosophy that considers People, Planet, and Profit

• Non-Profit: Incorporating business models into the Organization’s operations that consider business strategies and ventures, self-sustainability, and effective partnering/collaboration

• Picking up momentum in the LI nonprofit sector with about 1/3 of LI organizations engaged in it in some form of social enterprise

Social Entrepreneurism Defined

“Start a company. Change the world.” It used to be that if you wanted to make a

difference, you joined a nonprofit. And if you wanted to make money, you launched a business. These days, it's not so simple. More nonprofits are being run like fast-growth start-ups. And more traditional companies are being built around social missions.”

–Inc. Magazine, May 2011

The Evolution is Here

• Poverty and Underemployment• Competition Among Organizations• Need for Funding and Resources• Need for Innovation

As a country and global community, we stand at a unique inflection point. It appears that the world’s problems are outstripping our ability to address them. What may be more accurate is that traditional institutions are no longer sufficient.

The Evolution is Here

• Their has been a significant shift in how information is obtained and shared through social media

• More peer to peer information sharing• Consumer sentiment wields more power today than ever before• Occupy Wall Street – Push for higher ethical standards … the

Gordon Gecko sentiment of “greed is good” is no longer appropriate

• Businesses need to be more cognizant of their impact on society and the environment, and need to get real return on their philanthropic investments

Shift in the flow of information

Donors are no longer content with psychic benefit, they are interested in investing in social change and they are looking for compelling returns. (Socially Responsible Investments – shift from values to value)

Corporate partners are looking to nonprofits to drive business growth, not just make them feel better (nonprofits need to find more meaningful ways to work with the private sector)

Need to sell to the private sector their impact as a business proposition

Shift in Sector from Fundraising to Impact

Need to develop systems to track impact and show ROI◦Clear channel entered into a partnership

with BB/BS of NY City to provide 2700 PSA’s because of the benefit of the affiliation

Shift in Sector from Fundraising to Impact

Production Model: Nonprofit develops a product that is sold to a for-profit partner. Ex. Greyston Bakery sells Brownies to Ben & Jerry’s

Endorsement/Royalty Model: Nonprofit obtains revenue for use of name, logo, trademark, etc. American Heart Association – between 04 and 07 earned over $30 million from pharmaceutical companies and millions more for their heart-check mark

Co-Business Model: Nonprofit and for profit enter into a Co-Business for mutual benefit. Big Brothers/Big Sisters Processes 11 million pounds of clothing per year, much of which is sold to its for profit business partner (Savers) that re-sells it. BB/BS has a collection system in place and for-profit partner has the secondary market distribution channel

Shift in Sector from Fundraising to Impact

Pure Business: Nonprofit generates a business, often times out of necessity or strength that functions as a for-profit business. FEGS started up several businesses including All Sector technology, a for profit entity, which is a leader in the computer networking and IT space and HR Dynamics, an HR provider… specifically serving the nonprofit sector.

Franchising: The Sunrise Day Camp developed a day camp for children with cancer. It is the only true day camp for children with cancer in the US. They are in discussions with other organizations to franchise the model, whereby Sunrise will get a $50,000 per year franchise payment from each franchisee

Shift in Sector from Fundraising to Impact

Use of Resource/Expertise Model: Nonprofit has resources or expertise that is valuable to a for-profit partner. Lymphatic Education and Research Network has developed a tissue bank that have different characteristics/markers that researchers can purchase samples from … or a software company that beta-tests a software product within a school environment. School gets much needed software/technology and software company gets much needed feedback/input.

Mission Driven Business: Nonprofit establishes a business who’s purpose is to further the organization’s mission while generating revenue to subsidize its operations. IGHL developed the Flower Barn and a Bed & Breakfast which employs the developmentally disabled while generating profitability that goes back to the Organization. The Viscardi Center has a UPS store franchise.

Shift in Sector from Fundraising to Impact

The impetus for the push for social enterprise

Board buy-in Source of resources Early examples Current social enterprises Developing for profit partnerships

IGHL – The Social Enterprise Model

According to Meticulon CEO Garth Johnson, "Although many customers come to us with the motive of doing some social good, they will retain our services because of the excellent work product we provide." Meticulon is a Canadian based nonprofit that utilizes individuals on the autism spectrum to provide technology solutions such as software testing, quality assurance, and a broad range of analytical services including digitization, scanning and data verification

Shift in Sector from Fundraising to Impact

P + O = SProblem + Opportunity = Solution

1. What are the needs in the community?2. How are you poised to effectively fill the void?3. Who is your competition in the marketplace?4. How are you different/unique?5. What is your value proposition?6. Can it be self sustaining?

What Makes a Good Social Enterprise?

Technology is still not being used to the extent it should be by LI nonprofits (ALS raised over $100 million from its ice bucket challenge), e-philanthropy, enhanced social media, donations through mobile devices, etc.

Donors looking for increased collaborations and a real connection to community/organ-izational impact

Most LI based nonprofits are focused on fundraising for current needs, with tight cash flows, increasing demands, and shrinking funding. More than 70% of Li based agencies do not have any endowment established

Trends in the Sector

25% of LI based nonprofits are either currently engaged in a merger (13%) or are contemplating one (12%).

40% of agencies are still not measuring outcomes or organizational impact

Trends in the Sector