+ Social Enterprise: Doing Business Good Amy Kincaid, ChangeMattters Wed., June 13, 2012 Human Services Coalition
+ Social Enterprise: Doing Business Good 1. What are we talking about? 2. Who s doing it? 3. Is it legal? 4. Is it wise? Should we? Should we not? 5. What could we do? 6. What s next?
+ 1. What are we talking about? Earned Revenue Social Enterprise
+ Social Enterprise and Earned Revenue social enterprise, social ventures, earned income ventures, nonprofit business activity, social entrepreneurship, community wealth creation, social purpose business, social enterprise, common good enterprise
+ 2. Who s doing it?
+ 3. Is it legal? Substantially related Is this legal? Taxable? No personal, private benefit Fair market value After reasonable expenses, profit goes back into the tax exempt It s ok, but there are some limits before it becomes taxable. Charity distribution upon dissolution
+ Not ok. Ongoing commercial or other activities that profit any individual, including anyone with a controlling interest in the organization, such as officers, directors, or staff.
+ I m not a lawyer. And even if I were
+ Legal Structures for Nonprofit Ventures Old School (but good school): Program within the nonprofit Joint venture New exotics: Spin off LLC or other entity E.g. Now, Benefit Corporation or Benefit LLC in Maryland E.g. L3C, avail thru other states
+ 4. Is it wise? Should we do this?
+ Check-in. Pluses Interestings? Minuses
+ Why you might. XYZ Nonprofit Revenue Mix Foundation Govt Individual Sales/Earned
+ Why you should be careful. Mission fit? And check by-laws and articles. Strategic fit? Board duties of care and loyalty. Prudent investment and due diligence.
+ A dollar earned Is a dollar unrestricted.
+ 5. What could we do? Three paths 1. Making a biz out of something you already do. 2. Creating a separate business. 3. Corporate Partnerships.
+ Option One: Earned Revenue Charge for what you already do. Create new services and products by Repackaging, adapting, upgrading, adding to Existing knowledge, activities, or facilities.
+ Option Two: Social Enterprise a) Starting a new enterprise. Within the organization Spinning it out into a separate company b) Buying an existing business.
+ Option Three: Corporate Partnerships Partnering with a for-profit business. Cause-related marketing Tend to be national in scope. Corporate sponsorships
+ The Sweet Spot Market Opportunity Organizational Capacity Organizational Assets
+ Market Opportunity What does this community need? That someone (customers) will pay for.
+ Organizational Assets
+ Organizational Capacity Money. Skills. Knowledge. Culture. Stomach.
+ For example. Farmworkers. Warehouse. Job training.
+ Brainstorm Community Demand Organizational Capacity Organizational Assets Earned Revenue Social Venture Corporate Partnering
Test Review + 6. What s next? Research and business planning.. Plan Plan Do Adapt
+ Funding Reserves Start Up Ongoing Operations & Growth Customers Funders and donors Investors Social venture capital Clients Web-based intermediaries Lenders Crowdsourcing platforms Fellowships Social venture competitions
+ Mission Organizational capacity Money Community Reputation Anticipating Impact If this venture succeeds, what might be the impact on And if the venture fails?
+ Managing Expectations For most nonprofits, it is unrealistic to expect that ventures could ever completely replace traditional funding sources. Even the most successful ventures seldom provide more than onethird to one-half of an organization s annual budget. Rolfe Larson
+ There are exceptions.
+ Quick Venture Idea Checks 1. Solves a real problem. 2. Builds on our assets. 3. Aligned with mission? 4. Does this fit who we are and what we do? 5. High margin? 6. Do we have a champion? 7. Do we have startup capital? 8. Who will develop the business plan?
+ Social Ventures Strategic Planning Program & Business Design Grants and Contracts Amy Kincaid, Principal changematters.com 301-588-9108 @changemtrs Major Gifts Boards Training