Social Enterprise: Myths & Realities

OC 2.0 – Nonprofit Leaders Summit May 23, 2014

Jerri Rosen – CEO and Founder, Working WardrobesDiane Helfrey – Executive Director and Founder, Social Venture PartnersLaMecia Butler – Portfolio Manager, REDFIosefa Alofaituli – Executive Director, Oak View Renewal Partnership(Moderator)

Coming to “Terms” with Social Enterprise

Definitions of Terms:Social EntrepreneurshipSocial EnterpriseDouble Bottom-LineSocial Innovation

Social Entrepreneurship

The process of pursuing innovative solutions to social problems. More specifically, social entrepreneurs adopt a mission to create and sustain social value. They pursue opportunities to serve this mission, while continuously adapting and learning. They draw upon appropriate thinking in both the business and nonprofit worlds and operate in a variety of organizations.

- "The Meaning of Social Entrepreneurship" J. Gregory Dees

Social Enterprise“Social Enterprise is any mission-based earned-income business or strategy undertaken by a nonprofit for the purpose of generating revenue in support of the nonprofit’s social mission.”

- Social Enterprise Alliance

Social mission

Business

Social enterprise

Reduction of social costs

Stronger families

Thriving communities

More people employed

Potential Outcomes:Inputs:

Is this new?

Social Enterprise is centuries old!

Monasteries Wine & Cheese Sales

Theater Groups Admission Fees

Education Tuition

Hospitals Fees to underwrite support to poor

Double Bottom Line

Mission focus delivers a social return

Business focus delivers a financial return- Donations and grants gain leverage- Unrestricted income

More mission is possible!

Social Innovation

Innovative social organizations employ new, non-obvious and/or simple, “elegant” solutions to address social problems more effectively than other organizations

- Pioneering new products or services- Delivering products/services in new ways or to

new populations- Employing new processes, organizational

structures, or business models

- Social Venture Partners

Social Venture Partners

SVP: Unleashing Potential

• Social Venture Partners builds powerful relationships among people who want to give back and the nonprofits that make change possible.• Model of engaged philanthropy: leverage money, time,

talent, and connections• Focus on a dual mission: Support high-potential nonprofits

by building their capacity; Help individuals achieve greater impact with their giving

socialventurepartners.org 9

Network Momentum

• SVP is the largest global network of engaged donors.• Founded in 1997 in Seattle• Others inspired to start new chapters in 1999• SVP International formed in 2001• Founded in LA in 2004• Today: network of 36 member organizations in US, Australia,

Canada, China, India, Japan

socialventurepartners.org 10

L.A.’s Programs

• Local SVPs tailor programs based on market dynamics and Partner interests.• Multi-year Investments• Social Innovation Fast Pitch • Partner Education and Events• New: Encore Fellowships

socialventurepartners.org 11

Social Enterprise: Myths & Realities

Social Enterprise

“Social Enterprise is any mission-based earned-income business or strategy undertaken by a nonprofit for the purpose of generating revenue in support of the nonprofit’s social mission.”

-Social Enterprise Alliance

Is this new?

Social Enterprise is centuries old!

Monasteries wine/cheese salesTheater Groups admission feesEducation tuitionHospitals fees to underwrite

support to poor

Social EntrepreneurismFor profit business

-Home care services for disabled-Adult day care services-Low cost housing projects-Wind farms

Non-for profit businesses-Workshops for at-risk youth-Substance abuse shelters-Thrift shops

Social Entrepreneurism

Earned income leads to sustainability

The Siblings:-Social innovation-Social enterprise

Double Bottom Line

Mission focus delivers a social return

Business focus delivers a financial return-Donations and grants gain leverage-Unrestricted income

More mission is possible!

What are the hard facts?

Public trust in the nonprofit sector is lowo 19% of Americans believe charitable organizations

run their programs well

More nonprofits added every yearo 3,200+ new nonprofits in OC in 2014

The big are getting biggero 6% of nonprofits control 85% of revenueo Hospitals, universities

What’s the upside?Financial impact

-Multiple sources of income-Less dependence on funders/grants

Non-financial impact-More efficient practices-More clients served

Organizational impact-Mission related-Sustainability

Is there a money trail?

Philanthropists and corporations are looking at a new model of giving

Social Venture Capitalists are investingWell written business plans are being fundedSocial Enterprise Academies

Business people are attracted a nonprofit operating an enterprise venture

Is the Business Community Aware?

Only 20% of corporate funders in Orange County are familiar with Social Enterprise Investing

12.5% are not familiar at all

67.5% recognize the national trends and are open to learning about it

What is new?Expanding pool of knowledge

Growing community of practitioners-Social Enterprise Academies-REDF

Support systems/SEA-National conference, communication networks-1,100 members; 350 at annual conference

Increasing expectations to apply business practices to the nonprofit sector

What’s our challenge?Access to Capital

-Knowing what, how and where to look

Entrepreneurial Capacity-Market awareness-Value assessment-Functional expertise

Market Viability

The Ideal Social EnterpriseRelated to mission

Feasible and realistic

Responds to a genuine market need

Builds on strengths and assets

Energizes Board members, staff and stakeholders

Makes enough money to achieve financial goals

Tustin1071 Main Street/ Newport Avenue 714-573-4596

Laguna Niguel 28051 Greenfield Drive/ Crown Valley 949-425-9900

Shop OperationsPaid Manager and Assistant Manager with

resale or consignment shop experience

Fashion Board Volunteers-12 – 20 per store-Flexible shifts-Customer service advocates-Merchandise and sell!

Local Store Marketing

Resale Shop Promotions

Girls Nite Out Parties

Anaheim3150 Lincoln Avenue/ Western 714-816-0991

Costa Mesa803 19th Street/ Placentia 949-425-9900

Garden Grove 12761 Harbor Blvd. Suite I-2

Funding Our Services 2013

Projected Site Locations

Current Hanger Boutiques

Current Thrift Shops

Retail Revenue History

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

-200,000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

12-Year Comparison

REVENUEEXPENSESPROFIT

PROJ’D

Operational IssuesHave professional managers with retail

and/or resale shop experience

Develop a training program for shop staff and volunteers

Provide an incentive in exceeding goals

Utilize all promotional opportunities

Develop social media campaigns

Hard Lessons LearnedFocus on financial sustainability

Build finance department strength in front of the curveDevelop Plan A and a strong Plan B

Build resale shop operation strength earlier

Reduce dependence on fundraising events

Easier Lessons Learned

Focus on core businessesResale operationsClient services

Resale and thrift shop can be recession proofFocus marketing efforts

Before & After

Before & After