Social Enterprise Development

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Raymond Parrish
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1 Item2 June 4, 2009 Communities Committee To: Communities Committee Report: CC: From: A/Chief Executive Officer Date: May 29, 2009 Page 1 of 11 PURPOSE: To provide information on social enterprise development activities at Toronto Community Housing to the Communities Committee. RECOMMENDATIONS: It is recommended that Communities Committee receive the report for information. BACKGROUND: Toronto Community Housing recognizes that being a social housing provider means more than providing affordable housing. It also means improving conditions to ensure safe and healthy communities that are integrated into the social fabric of the city. While affordable, quality housing is an important means of improving a household s economic situation; access to training, education, jobs and business opportunities remains a challenge for Toronto Community Housing tenants. This holds particularly true for youth, women with children, newcomers and members of racialized communities. The Community Management Plan highlights the need for job creation and improved economic outcomes for tenants. The goal moving forward is to spark tenantled social enterprise, develop community entrepreneurs and seed small businesses to result in social, environmental and economic returns at a community level. During the 2008 organizational restructuring, a unit was formed with the focus of supporting the formation of tenant-based businesses. Toronto Community Housing s commitment to supporting new economic opportunities for tenants fits within the organization s Community Health Framework. It is a key strategy toward investing in communities and tenants. Through changing systems that are barriers to economic security and building opportunities to enable tenants, Toronto Community Housing helps tenants to improve their lives and neighbourhoods.

2 Report: CC: Page 2 of 11 REASON FOR RECOMMENDATIONS: Why Economic Opportunities Matter The average annual income of a household living in Toronto Community Housing is approximately $14,900. In stark contrast, the average annual household income in Toronto, as reported by the City based on the 2006 census, was $80,343. About 33% of households with rent geared-to-income receive Ontario Works (OW) and Ontario Disability Support Program (ODSP) as their source of income. Based on waiting list information, the number of applicants whose income is from some form of social assistance has increased. For Toronto Community Housing, this means a decline in revenue through rent and a widening gap between people living in Toronto Community Housing neighbourhoods and others. Toronto Community Housing identified an initial focus on youth, recognizing that 40% of its 164,000 tenants (66,000 young people) are less than 25 years old. By working with young people and single parent families, Toronto Community Housing aims to reduce the intergenerational and racialized, systemic nature of poverty in low income neighbourhoods. Toronto Community Housing has made great progress so far. The organization has increased employment opportunities for tenants by: hiring community animators, summer staff and interns; requiring that contractors hire tenants as 20% of their workforce; and creating apprenticeships and training opportunities through Painting, Unit Refurbishment, Appliance Replacement and Summer Safety Programs. Toronto Community Housing has funded tenant led initiatives through the Social Investment Fund and supported Youth Forums, Business Plan and Pitch contests. It is within Toronto Community Housing s role as a convenor, catalyst and advocate to build on community assets, leverage the organization s purchasing power and convene partnerships to improve economic outcomes for tenants. Defining Social Enterprise Social Enterprise is most frequently defined as a for-profit enterprise that sells goods or services with a triple bottom line business model.

3 Report: CC: Page 3 of 11 The triple bottom line measures: Social Return on Investment Economic Return on Investment Environmental Return on Investment Leaders in the field stipulate that the social outcomes must come before the financial outcomes. Enterprising Non-Profits describes social purpose enterprise as: A business operated by a non-profit directly involved in the production and/or selling of goods and services for the dual purpose of generating income and achieving social and/or environmental aims. Social enterprises are developed to enable: the poor, especially the poorest people, to create a world without poverty; and a systems changing approach to social and economic problems. Figure 1 illustrates the broad range of approaches to social enterprise. Figure 1- Social Enterprise Continuum Social Capital Finance around the World

4 Report: CC: Page 4 of 11 Canadian Social Enterprise Community Investment Context Access to risk capital for social entrepreneurs in Canada has been limited to traditional non-profit relative to entrepreneurs in other countries (the US in particular) Social Service Social Enterprise Government Funding Traditional Foundations Venture Philanthropy Community Loans CDVC Venture Capital / Private Equity Canada Area of Strength UK Area of Strength United States Area of Strength Because risk capital is essentially non-existent in Canada, entrepreneurship and creativity are stifled Figure 2 illustrates the current context for financing social enterprise. Social Enterprise in the Ontario Non-Profit Sector The Ontario non-profit sector has traditionally been strong in capacity building, training and employment programs delivered as social services by service providers and community agencies through government funding, charity and grants. This approach often improves outcomes for participants but doesn t address the root problem. It fails to harness venture capital, generate profit for low-income people and recognize the potential of random connections to yield large scale innovations because money and power are organized in silos.

5 Report: CC: Page 5 of 11 Business Model Continuum Charity / Non-profit Social Enterprise Corporate Social Responsibility For-profit Model Business Mission-driven Stakeholder Accountability Income Reinvested Produce Social Value Donations & Grants Market-driven Shareholder Accountability Profit to Shareholders Produce Economic Value Earned Income Figure 3. Enterprising Non-Profits Figure 3 illustrates social enterprise on a business model continuum A new sector has emerged across Canada in recent years to support the social economy by creating legal and financial instruments, brokering innovation, sharing knowledge and incubating social change. Examples of Canadian social entrepreneurship and social finance champions: Foundations - McConnell Family Foundation, Toronto Community Foundation Financial & Lending Institutions Citizen Bank, VanCity, Social Capital Partners Centre for Social Innovation MaRS Social Innovation Generator (SIG) Toronto Enterprise Fund (TEF) Enterprising Non-Profits Toronto (ENP-TO) Canadian CED Network Post-Secondary Institutions - University of Waterloo, University of Toronto, Simon Fraser University, Carleton University Corporations & Business Leaders (Blackberry RIM at the University of Waterloo) Arts & Culture Sector ArtSpace, Art Heart, Arts Build Ontario Environmental Sector - Evergreen, FoodShare, The STOP Community Food Social Enterprise at Toronto Community Housing

6 Report: CC: Page 6 of 11 The Social Enterprise Development Strategy at Toronto Community Housing is based on: building on community assets; bringing new investment into communities; keeping money circulating in communities; increasing social, financial and environmental outcomes; and growing and replicating successful business models. In the 2008 Tenant Survey, Toronto Community Housing learned that the majority of tenant respondents own their own business and a further one quarter would be interested in starting their own business. Self-Employment The majority of tenants currently have their own business. A further one-quarter would be interested in starting their own business. Among those interested in starting their own business, the main type of business they would have is a service (cleaning business, courier, delivery, landscaping, moving) or retail (clothing, designing, accessories, tailoring). Targeting of Employment Opportunities Type of Business* Currently have own business 58 Services 26 Retail 20 Possibly interested 15 Trades 9 Don't have now, but would be interested 12 Arts Beauty 8 8 Not interested 2 Restaurant/catering 3 Other 9 Does not apply 12 Does not apply E011. Do you currently have or would you be interested in starting your own business? Base: All responses E12. What type of business would this be? Base: Those who are interested in starting their own business (n=388) *Note: Responses less than 3% not shown Figure Tenant Survey Results How We Plan to Get There

7 Report: CC: Page 7 of 11 The Community Management Plan identified the need to support the development of tenant-based businesses and the 2008 organizational restructuring provided an opportunity to create a Strategic Partnerships & Social Enterprise Development Unit. This unit will enable corporate, institutional and community partnerships for the organization and work with tenants to develop business ideas and create employment opportunities that improve community health and wealth. Enabling Links and Drivers: Through the Community Management Plan, Partnerships and Social Enterprise Development connects to the: Asset Investment Strategy (including Revitalization, Building Renewal and Green Plan); Community Economic Development Strategy; Values Based Procurement Policy; Social Investment/Community Investment Fund; Sustainable Livelihoods Framework; and Partnership Framework. Internal Champions Social Enterprise Development requires champions from across the organization including the Community of Practice Consultants, Operating Unit Managers, Community Health Managers, Community Housing Supervisors, Youth Engagement Coordinators, Economic Opportunities & Health Promotions Officers, Legal, Finance, Purchasing & Procurement, Youth Councils, Tenant Engagement Reference Committees and Labour.

8 Report: CC: Page 8 of 11 Social Enterprise Development Path Opportunity Identification Business Plan Start-up Growth Organizational Readiness Feasibility Study Launch Preparation Evaluation Figure 5. - Enterprising Non-Profits illustrates the steps needed in social enterprise development. By consulting with tenants about community needs, assets and interests and looking at successful social enterprise models, Toronto Community Housing has selected four ideas to initiate. These include a: Community Catering Incubator, Commercial Kitchen and Organic Retail Café; Eco Friendly Community Cleaning & Maintenance Service; Women s Decorative Painting Co-op; Youth Silk Screen & Design Company; and Bug and Scrub Service.

9 Report: CC: Page 9 of 11 Toronto Community Housing is also considering the potential for community owned franchises with companies such as Two Men and A Truck and Tim Horton s and co-op models for community based childcare and catering. Six most common SPE mistakes The enterprise is not the right approach for the agency. The enterprise is not sufficiently connected to the industry in which it operates. Agency staff and the business manager treat the enterprise as a project, not a business. The right people are not hired to lead the enterprise. The agency has unrealistic expectations for social and business outcomes, often underestimating how hard running a social purpose enterprise will be. Key staff have poor financial literacy.» Doing Well by Doing Good, Toronto Enterprise Fund Figure 6. - illustrates the most common mistakes in developing a social enterprise Starting a social enterprise is a complex, time consuming and challenging process and requires strong support across the organization. Board, staff and tenants must recognize the time and efforts involved in starting a traditional business and understand that developing tenant-based businesses will be even more difficult. The businesses will require feasibility studies, business plans, start-up funds, management expertise, coaching and training components to succeed. Measuring Success: It is anticipated that by the end of 2009, Toronto Community Housing will have established two new partnerships to support social enterprise development; leveraged dollars invested for financial support eight times over, and created a prototype that works across neighbourhoods.

10 Report: CC: Page 10 of 11 CONSULTATION PROCESS: Each phase of project development will require targeted consultations with staff, tenants and external resources. CONCLUSION: Toronto Community Housing is committed to enabling conditions for healthy communities. Creating opportunities for tenant based businesses is an important tenet of this strategy. It is hoped that local business models that resonate with the community and maintain financial sustainability can be replicated across the city. The long term goal of these social enterprises is to grow, exist without external subsidy, and create improved social outcomes and financial self-sufficiency. FINANCIAL IMPLICATIONS: The 2009 approved investment budget includes an allocation of funds to help support the start up. As business plans are developed for each project, financial requirements will be detailed and options outlined. LEGAL IMPLICATIONS: N/A COMMUNICATION IMPLICATIONS: A communication and outreach plan for staff and tenants will be included in the roll out. A communication and marketing plan for each initiative will be created as per business planning principles. Keiko Nakamura A/Chief Executive Officer

11 Report: CC: Page 11 of 11 Staff Contacts: Steve Floros A/Chief Operating Officer Cynthia Ross Director, Social Enterprise Development

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