for-profit social ventures what are they – how do they create social value?

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WHAT IS A FOR-PROFIT SOCIAL VENTURE?

Social Ventur

e

For-Profit

Venture

Social Venture: Organization designed to create positive environmental or social value for a community.

For-Profit Venture: Organization designed to create financial value for its shareholders and owners.

For-Profit Social Venture: Organization designed to create positive environmental or social value for a community while creating financial value for its shareholders and owners

COMMON FEATURES OF FPSVS

- Firm is designed to create a specific social or environmental benefit/value

- Firm leverages specific operational practices to create social value

- Firm adheres to double or triple bottom line in decision making

- Firm measures success in terms of social value creation as well as financial valuation using explicit metrics

- Firm defines social/environmental aims in fundamental documents

- Firm cultivates a culture of social priorities

VARIETIES OF FPSVS

Activist

Firm uses its brand to promote a social cause and is driven primarily by social value creation

Social Value Driven

Financial Value Driven

Promotes Social Value to

relevant actors

Activist Market Pioneers

Does not promote social

value to relevant actors

Change Agents Market Influencers

Change Agent

Firm is focused on creating a social/environmental benefit but doesn’t use its brand to promote the cause

Market Pioneer

Firm is driven by financial incentives but promotes a social cause through business dealings or “corporate responsibility” leadership

Market Influencer

Firm is primarily financially oriented and doesn’t explicitly promote a cause but generally adheres to strong social or environmental standards and practices

TERMINOLOGY

B-Corp: Benefit Corporation - FPSV

Social Enterprise*: Social Venture - FPSV and SV

501(c)3: Legal Non-Profit - SV

LLC: Limited Liability Corporation or C-Corp - FPV

L3C: Limited Liability Low-Profit Corporation – FPV and FPSV

Hybrid Venture: combination of for-profit and social venture – FPSV

CREATING SOCIAL AND ENVIRONMENTAL VALUE

- Product or Service is intrinsically beneficial

- Supply Chain Interventions- Internal Operations- Advocacy and Philanthropy- Ethics

PRODUCT OR SERVICE

The product or service offered by the company is intrinsically beneficial to the community

SUPPLY CHAIN

- Selecting Vendors by social/environmental value

- Encouraging lower prices to reach underserved communities

- Establishing relationships with minority or women-owned vendors and suppliers

- Using purchasing power to encourage social values in suppliers and vendors

INTERNAL OPERATIONS

- Encouraging pro-social company management (women or minority management)

- Encouraging pro-social employment

- Engaging pro-social employment

- Encouraging pro-social company location

- Paying living wages

ADVOCACY AND PHILANTHROPY

- Using company brand and advertising space to promote a cause

- Management spearheading social cause

- Use corporate profits to make philanthropic donations

- Use corporate foundation to make regular philanthropic donations

- Encouraging a culture of volunteerism and philanthropy amongst employees

ETHICS

- Creating statements, committees or policies to articulate and act upon ethical behavior

- Creating an internal culture of ethical standards by engaging in regular discussion with employees and management

FOR-P

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VENTURES

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Sources: RiseProject.org “For-Profit Social Entrepreneur Report.” Clark, Catherine: Ucak, Selen. March 2006

Cause Capitalism “15 Social Venture Capital Firms That You Should Know About.” April 2010

“For-Profit Social Ventures” Dees, Gregory: Andreson, Beth; Social Entrepreneurship. 2003