Transform Your Business Model with Social Enterprise Presented by: Maria Fabula President & CEO Community Resource Center
Introductions Community Resource Center
Defining Social Enterprise
Defining Social Enterprise Social enterprises are businesses whose primary purpose is the common good. They use the methods and disciplines of business and the power of the marketplace to advance their social, environmental and human justice agendas. ~Social Enterprise Alliance
Social Enterprise Examples Business Model: Donate & Resell
What can social enterprise offer? Sustainable economic model Consistent, predictable cash flow Diverse funding base Increased brand awareness Improved Skills and Expertise Greater Innovation and Creativity Increased Impact
Social Enterprise Components Directly addresses social need What is Social Enterprise? Source: Social Enterprise Alliance Commercial activity drives revenue Common good is primary purpose
Social Enterprise Examples Business Model: Pay What You Want
Social Enterprise Spectrum
Social Enterprise Examples Business Model: Buy One, Give One
Social Enterprise Examples For the first two-and-a-half years of operation, Strong, Smart & Bold Beans coffee cart was located at the Rodolfo Corky Gonzales Branch Library Exponential growth has allowed them to transition into brick and mortar with a shop at the STEAM on the Platte development in Denver Gives girls the opportunity to learn about entrepreneurship, social enterprise, and small business while creating a means of economic independence
Social Enterprise Examples Launched to give women an opportunity to express themselves artistically, while working toward their own financial independence Depending on the product sold, artists receive between 5-50% royalties on every transaction. The remainder of the proceeds are reinvested back into TGP to help make the free services they provide possible In October 2014, Art Restart launched for the holiday season and within three months sold almost 35,000 cards, making a net profit of $32,889 Launched a new line this year!
Social Enterprise Examples Offers a variety of products to families to help keep kids safe. Families visiting the Safety Store will also receive personalized education on each product they purchase in a unique venue that offers a one-stop shop for injury prevention All proceeds from the store support Children s Colorado s community-based injury prevention outreach initiatives The Safety Store opened a second location at the Anschutz Medical Campus in Aurora. In total, they have generated over $50,000
Developing a Social Enterprise
Success Criteria Honor your mission Create decision-making process Track successes & challenges Help educate stakeholders Know when to seek help
Explore Opportunities & Select a Venture to Pursue Identify organizational assets & competencies Examine market needs and opportunities Explore your social enterprise ideas to leverage assets and competencies and meet market needs Select an idea (or two or three) to explore in more depth
Characteristics of Nonprofits with Successful Social Enterprises
Characteristics of Nonprofits with Successful Social Enterprises
Financing Instruments Financing Instrument Term Sheet Implications for Social Enterprise Grants (TDF, KKF, RCF, Piton, Gov t, Family Foundations, Donor Advised Funds) Duration: Annual payments: Repayment: Short-term None None Usually restricted use for predefined projects High fundraising costs Low entrepreneurial flexibility Debt Capital (Bank, Accion, PRI, Colorado Enterprise Fund) Duration: Annual payments: Repayment: Long-term (3-7 years) Interest payments (variable) Yes Annual interest payments require low risk business model/attractive revenue model No dilution of ownership Far-reaching rights of capital providers in default High entrepreneurial flexibility in the use of capital Equity Capital (Impact Investors, Impact Funds) Duration: Annual payments: Repayment: Unlimited Dividend payments (variable) No Dilution of ownership Social investor receives control and voting rights Profit participation for social investor Potential impact on corporate culture Mezzanine Capital (Combination of grants, debt and equity capital) Duration: Annual payments: Repayment: Long-term (3-7 years) Interest payments (variable) Yes Annual interest payments require predictable cash flows Dilution of ownership only if converted into equity Mandatory repayment Profit participation for social investor Hybrid Capital (Revenue shares/rights, forgivable loans, recoverable grants, convertible grants) Duration: Annual payments: Repayment: Long-term (3-7 years) None Depends upon structure Inexpensive financing instrument No dilution of ownership Risk sharing with the social investor Great structuring flexibility
Challenges Nonprofits Face Lack of business acumen Cultural concerns Seen as a distraction from the mission Potential loss of funding; redirected funding Start-up costs / opportunity costs Unrelated business income / UBIT
Your Own Readiness Complete the scoring tool in your packet titled Organizational Characteristics and Readiness Share ideas for building on strengths and improving on weaknesses
Exchange Program Cohort
Resources Community Resource Center Colorado Nonprofit Social Enterprise Exchange intersector Partners, L3C Social Enterprise Alliance Hope Consulting
Final Questions?
Community Resource Center RESOURCES Colorado Grants Guide 770+ detailed profiles of Colorado grantmakers Nonprofit Support Center Start Up for Success EDUCATION Statewide Training Fund Development Strategic Planning Board Development Evaluation & Planning Nonprofit Leadership & Management A network of 700+ emerging and established leaders increasing community impact since 1990 Participation Project
THANK YOU! Presented by: Maria Fabula President & CEO fabula@crcamerica.org 303-623-1540 Bailey Smith Program Coordinator smith@crcamerica.org 303-623-1540 ext. 144 www.crcamerica.org