The Value of Social Enterprise?

Two new reports by a US community development Not for Profit called Seedco, evaluates the pros and cons of the growing field of social enterprise or social purpose business (businesses that use market-based approaches to generate revenue in support of a Not for Profit’s mission).

The two new reports called The Double Bottom Line and Profiting from Purpose documents the findings from Seedco’s Nonprofit Venture Network (NVN), an initiative launched in 2001 with support from the MetLife Foundation to provide targeted technical and financial assistance to NFP’s developing mission-driven social purpose businesses.

Seedco says there is no argument that Not for Profit directors and boards are under pressure to find creative, entrepreneurial ways to diversify their revenue base, reducing reliance on public contracts and private grants.

It says a business is one way to do that, but starting a business is never easy, and, as the new reports detail, there’s reason to believe it is even more difficult in the case of social enterprise.

Seedco says rarely are NFP resources of staff, time, and money sufficient to run their programs comfortably, even without shouldering the burden of losses typical of a start-up phase. Not for Profits considering a venture must be prepared, tenacious, and strategic.

Seedco President Diane Baillargeon says social purpose businesses are exciting and they have clearly captured the imagination of funders and Not for Profits, but they come with potential pitfalls and must be entered into with a great deal of planning and foresight.

Four years after the launch of Seedco’s NVN, Baillargeon added it has come to the conclusion that it is critical that any social venture must further the mission of the organisation, such as employment and training ventures that create jobs for underserved clients and cultivate customers.

He says in most successful NFP ventures, generating a ‘profit’ is not the goal, rather it is generating a reasonable level of revenue as a significant alternative revenue stream and applying solid management and business thinking to social programs.

The Double Bottom Line: Lessons on Social Enterprise was commissioned by Seedco as an assessment of NVN’s successes and challenges to date.

The report was authored by consultant Ira Cutler of Cornerstone Consulting Group based on observation of NVN’s workshops and technical assistance sessions and on interviews with NFP participants and funders.

A “snapshot” of the maturing field of social enterprise, the report provides an overview of current thinking by NFP practitioners, foundations, and individual donors in the US.

Profiting from Purpose: Profiles of Success and Challenge in Eight Social Purpose Businesses offers in-depth analysis of eight Not for Profits operating a variety of social purpose businesses across the United States.

The report was edited by consultant Kristen J. McCormack, director of the Public and Nonprofit Management Program at Boston University’s School of Management, with Seedco staff member Sarah Eisinger.

Through extensive interviews, site visits, and ongoing follow-up with the eight organisations profiled, Profiting from Purpose offers insights on the state of social venture from the point of view of organisations actually taking it on.

Individually, the cases provide useful examples of the situations organisations face when developing business ventures. Collectively, the profiles reveal the wide breadth of strategies, options, and lessons available to NFP’s launching businesses—as well as the risks and missteps.

If you would like electronic copies of the two reports just send us an email with the words Double Bottom Line and Profiting from Purpose in the subject line to probono@probonoaustralia.com.au.

Please note that the second report is large (1.4mg)