In a previous blog post we looked at the different types of social enterprise model, and this time we’re delving deeper into the integrated model.
The integrated model often sees a social enterprise’s income generating activity partly fund some of the social activities within the social enterprise. At the same time the business side of things will also directly contribute to other forms of social good. However the product or service they offer is unlikely to solve some sort social or environmental need.
One common integrated model is where the social enterprise sells one product, but charges a premium to one customer which ultimately subsidises the other.
This great example of a social enterprise in India identified the problem in rural villages where it was very hard for locals to access adequate eye care services. There was no provision for them locally, the nearest one could be hundreds of miles away and then there was the problem with affordability.
Aravind solved this by offering subsidised outreach services for the villagers, whilst charging those who could afford it an appropriate amount that would subsidise the outreach service. They went that bit further too by making sure the doctors working with clients saw both types, those in the towns and in the village, to avoid creating a two-tier service.
The model has enabled them to expand all over India, and further afield as they work with various African countries in establishing something similar there.
Social Bite are a pretty impressive outfit, running a variety of different projects that aim to eradicate homelessness in Scotland. As part of the charity, they run Vesta, formerly known as Home, a restaurant that offers delicious food and drinks whilst doing a whole lot of other good.
Customers are encouraged to pay-forward meals for the homeless, and this is where the integrated model comes into play. Running as a restaurant it serves customers day and night, and then when people opt to, they then feed their service users using the extra money.
On top of this, they also use the restaurant as a great way to provide training and employment to homeless individuals looking for a return to work. Due to the nature of the restaurant, and the social ethos behind it, getting back into a 9 to 5 is a lot easier when you know the management, colleague and customers have got your back and want you to succeed.
The integrated model absorbs your social or environmental goals into your social enterprise. Meanwhile, the model enables you to take some mainstream ideas and convert them appropriately, since unlike the embedded model, the service or product doesn’t have to directly solve the problem.
The difference between integrated and embedded models can sometimes be a bit blurry, especially as you may have to adapt your operations to keep competitive. Ultimately the point of understanding your model is to be able to explain it to stakeholders and demonstrate the impact you are having because of it.
Text originally posted on https://medium.com/@michaelfreersplit/types-of-social-enterprise-integrated-model-b70af2355570
In a previous blog post we looked at the different types of social enterprise model, and this time we’re going to go one step further by discussing some examples of the external model.
The external model is very interesting because it actually means any business can jump straight into being a social enterprise without necessary having any social or environmental goals linked directly to their product or service.
This does not mean however that the company can have a negative effect on either. They should still meet all the other social enterprise requirements when it comes to governance, transparency, stakeholder involvement and employee satisfaction.
Moreover it usually means that while they are busy selling and maximising their profit, there will be another organisation focused on solving a need. The need doesn’t necessary have to be linked with the social enterprises main operation either, which has enabled the funding of hard-to-fund groups through this model.
Example 1 — Ginerosity
One example of the external model is Ginerosity, a gin distillery social enterprise based in Edinburgh, Scotland. They ultimately produce and sell delicious gin all over the world. What kind of social or environmental goals do you think ginmakers would have? Protect the juniper maybe, or create more gin-tasting tours?
Nothing like that. They partner with other social enterprises or nonprofits to finance and provide vulnerable young people the change to access education, training or jobs. The profit generated from the gin goes directly to this cause, which is why we call it an external model.
Example 2 — Thankyou
Another example is Thankyou, a social enterprise based in Australia who have now extended their operations to New Zealand too. This impressive social enterprise spends 100% of their profit on solving global issues and partners with the likes of Unicef and Oxfam.
However their products don’t directly target those causes like other social enterprises do, but instead there is an external connection between them. For example, they sell their own bottled water, from which the profits go towards water projects around the world. They sell their own line of nappies, the profits of which go to births and baby health all over the world.
These two examples of many external model social enterprises, go to show how no matter what you sell or offer, there is a way to be a social enterprise and have an amazing impact of society all over the world. Some people may argue that it would be hypocritical for certain sectors to operate in such a way and then claim to be having a positive impact.
We, on the other hand, believe that external models can provide a way for many companies to move into social enterprise, before aligning the rest of the operations accordingly.
If you work for a non-profit, social enterprise or do anything that aims to have a positive social or environmental effect, then you might have thought about your theory of change.
Your theory of change should show how what you do, has an impact more far reaching than just on your customers and users. It should also show how you aim to create impact for longer than just the instance they buy your product or use your service.
It’s a strategic piece of work that can set down the foundations for your business, test your assumptions and ensure you have indicators to show the world how great you are. So let’s delve a little deeper into what’s involved.
When you started your organisation or project, you would have seen a problem you were hoping to solve. This provides your context that your theory of change relates to.
On top of this, you would have most likely stated your mission and vision. Ultimately the goals you, as an individual or group of individuals, are hoping to solve. Think of those goals again and translate them into something that we could think about measuring.
Goals / Context
For example, instead of an all reaching and broad‘Improve the lives of those affected by addiction’, we could look more specifically at ‘Decrease deaths linked to overdose’, ‘Improve the physical and psychological wellbeing of drug and alcohol users’ and ‘Improve the physical and psychological wellbeing of carers of drug and alcohol users’.
Now we know where we’re heading, we can start looking at what we’re doing by jotting down what we activities we carry out to reach our goals. These are known as our inputs.
In this example they could be things such as ‘Provide education about drug and alcohol at schools’, ‘run weekly meetings for addicts’ or ‘provide volunteer or job opportunities at the social enterprise.
These inputs lead directly to an output, and they will sound very similar.
For each educational course in a school, 30 students will receive 4 hours of information about drugs and alcohol.
For every weekly meeting, 15 individuals with an addiction will attend.
Of the volunteer/job opportunities, 3 individuals will take up this offer.
So far, so good?
In fact many grants or contracts these days will only ask you to report this back to them with similar information, however they have become very output driven, without really thinking about the short, medium or long term impact of what they are funding. We know that it’s not just numbers that matter, but also what you’re offering and the quality of the service or product.
This is why we now think about the outcomes, some of which are easy to measure and some of which are challenging to. Furthermore, at this stage we need to think short, medium and long term in relation to what you’re doing. If you run a business, perhaps your long term could be from 10 years to a whole generation. If, on the other hand, you’re just looking at a year long pilot, then your long term could be between 3 and 5 years.
I’ll leave that up to you, and for now I’m going to focus on the outcomes for those taking up our volunteer/job opportunities, since this could be more relevant to those reading.
Short term — better and more structured routine, less likely to commit minor offences, unlikely to drink/use during the working day Medium term — improved social skills, improved self-confidence, work ready, open to coming off unemployment benefits, new and better friendships outside of old ‘circles’ Long term — employed elsewhere, stronger personal relationships outside of old circle, no offending, not drinking/using or in control of drug/alcohol use
You can now see that we have completed the bulk of our theory of change. We have looked at what we are going to do, how we are going to do it, and the effect over time we hope it to have on its users. One thing still remains, and that is our assumptions.
In everything we do, we assume that people will react a certain way, we predict that doing x will lead to y, and that we will achieve our goals. In both the business world and social sector, this doesn’t always happen, which is why we need to analyse our assumptions to make sure we don’t trip up.
We can look at our assumptions between each stage, and when we ask ourselves these questions, we can then strengthen what we are offering.
Have you ever heard of the NGO that gave out laptops to a village in Sub Sahara Africa, only to later find they were being used as paperweights? They’d made a lot of wrong assumptions — that the locals needed laptops, knew how to use them and had the power to run them, and ultimately didn’t reach their goal. Let’s not make the same mistake!
Inputs to Outputs
Users want to volunteer/work
Users want that sort of volunteer role/job position
Users will turn up as agreed to volunteer/work
Outputs to Outcomes
Users at a stage in recovery where reduction of using is possible
Users stick to the schedule given
Users will be physically/psychologically able to volunteer/work full time
Outcomes to Goal
Job secured leads to improve physical and psychological wellbeing
Job secured doesn’t lead to a return to old habits
In this example, I have limited the assumptions for each stage, however it is important to list as many as possible and answer them prior to starting your project or organisation. The ones that are easier to answer can be removed when you feel you have adequately answered or countered it.
Putting together your theory of change should always be done with a wide range of stakeholders, to help combat these assumptions and really define what will work.
When I was part of setting up the social enterprise we used service user involvement to define how it would work that would make it more attractive to potential volunteers and employees. We involved them in the visual identity, branding, product list, product selection, setting of hours, role allocation and so much more.
They felt ownership from the beginning, which ensured many of our assumptions were solved. We offered flexible shifts, a relaxed work ethic, smart uniforms, suitable perks and everyone was trained to be a barista. They grew with confidence, made new friends, solved old problems and broke their own prejudices as well as fought stigma against addiction.
One only lasted a few months, he shared his views that it wasn’t right for him, not hands on enough and he didn’t want to be in that location. Others moved on to other jobs, and one or two still work their part time today.
The theory of change helped us take an idea, and turn it into reality to meet our goals. It’s not a complex thing to do, it doesn’t take weeks to do, and will really help you connect to your cause.
Give it a go and feel free to share what you’ve done or let us know if you’d like some help putting it together – firstname.lastname@example.org
Originally posted at https://medium.com/@michaelfreersplit/applying-the-theory-of-change-e1f0f570ec12
A key element which puts the social into social enterprise is the way you spend your profits. Out with the idea that only shareholders or investors should benefit from the hard work of your company. Instead, it’s now time to invest in the wider community.
However as you navigate the literal world of social enterprise you will see a range of regulations or recommendations. Here we look at what exists in terms of asset locks, commitments and suggestions.
Over in the UK, you can legally register as a social enterprise, locally known as a CiC. Once registered, the asset lock and dividend cap come into place. These ensure that the profit is either retained within the company or used to meet its social or environmental goals. This currently stands at 65%, meaning the rest can be paid out as dividends to the traditional shareholders or investors.
With no legal structure in Australia, things aren’t as clear cut as in the UK. Therefore many turn to the definition used by Social Traders in their FASES report, where it states that the majority of profit/surplus must be reinvested. Given that a majority can be 50.01%, any company that does this, either through reporting or constitutional locks can be classes as a social enterprise
Not to be confused with Certified BCorp, the Benefit Corporation is a legal structure with different rules on reporting per state. The main difference is that it gives the board the opportunity to make decisions based on both financial AND social reasons. This signifies a shift from the previous focus on a financial duty to shareholders. However there is nothing related to paying out dividends nor reinvesting profits.
What’s best for social business?
Three countries, three different set of rules. They do all protect the need for the triple bottom line, to ensure the organisation is able to make the social or environmental goal as important as the financial one. Which one goes far enough? There are arguments that dividend caps can share of investors, but this is why there is now a movement in the ‘impact investment world’.
Ultimately I would say, for trust purposes with both customers and stakeholders, having a legal requirement that a set percentage has to be committed, is better. You can build your business model around this, you can plan short, medium and long-term investment on it, and you can boast about it to the world.
What do you think is a reasonable percentage for reinvestment?
Originally published at https://medium.com/@michaelfreersplit/how-much-profit-should-go-towards-your-goal-167fe95a465a
A look at which models exist and which are deemed ‘best’
The flexibility of social enterprise is something that makes it a lot more appealing than having to go the traditional non-profit route. However with a number of models out there, it can sometimes be hard to define which is and which isn’t a social enterprise.
You may have even heard in the news that Apple was moving towards being a social enterprise. Whilst many were quick to dismiss this based on the way Apple has worked, does work, and the cash reserves it holds, others had heard the term social enterprise for the first time and suddenly thought Apple was one such model. This is not the case.
At the other end of the scale, there is the myth that the organisation has to focus on employing people from a vulnerable group in order to be classed as a social enterprise. This is, in fact, a type of social enterprise known as WISE (work integrated social enterprise).
For those new to this sector, here are the the three most commonly talked about models in social enterprise, which each have a name that relates to the social/environmental cause.
Where the product or service directly provides the solution to the cause and is fully linked to the social or environmental goal(s).
For example, providing latrine solutions in a sustainable and entrepreneurial way when the organisational goal is to improve health and wellbeing whilst reducing attacks.
Where the product or service provides some crossover with the social or environmental goal(s). In some countries they are forced to use two legal entities — one for doing good and the other for making money.
For example, running a coffee shop which donates its profits back to the non-profit whilst also offering work for some of their users or clients.
Where the product or service has very little to no connection with the social or environmental goal, and may even donate outside of the organisation.
For example, producing and selling wooden boxes whilst funding computer lessons for primary school students.
So now when you look at the models, you could potentially see how people thought Apple could even dare to think about becoming a social enterprise. Then we can think about a number of private corporations and how they, more and more, are donating to certain causes or sponsoring specific events.
Taking a step back from that, and looking at the integrated model. This is sometimes where social enterprises have found themselves struggling to make ends meet. Perhaps their product or service didn’t have the demand they had hoped. Perhaps what is a great cause just isn’t a sustainable business. These social enterprises pivot in three ways. They can give up and collapse, innovate and stick to their guns, or find something that sells, even if it isn’t linked to their cause. It’s this last one that can commonly lead to an integrated model and can dilute the nature of the social enterprise.
Then we have the embedded model. Where the substance of everything you do is linked to your cause, it’s sustainable and you have impact pouring out of each department. Your suppliers are all social enterprises, your paper recycled in-house and you have a staff volunteering program with the local community. Social enterprise flows in the veins of everyone involved, directors, workers and buyers, and decisions are made with everyone’s best interest in mind.
It’s not hard to see why we should be striving for such a model. It’s not easy to get there, and definitely takes more effort and skill in navigating the business world we live in. Your original idea will have to be tweaked and improved, and if things aren’t going well then you will be faced with the three options mentioned earlier.
But just like any successful business, when you have that idea, and convince everyone it is the right product or service for them, this time with the added value of being an embedded social enterprise, you will be closer to dominating the market for years to come.
I’ve fallen in love with you over the last ten years. Finally, I thought, the best of the private and civil sector can come together to solve social and environmental issues both big and small, and I can be a part of this world, of your world.
However right now, I feel like we’re going through a tough spell. It seems like not everyone likes you so much, and when people start doubting you, I have to admit, I start to second-guess my own feelings. I know I shouldn’t be pressured by my peers or by people I don’t even know, but sometimes it can be overwhelming.
“Why do you love Social Enterprise?” I’ve been asked on a number of occasions, and I tell them why I love you, with all my heart. “But why would you do that?!” they continue, and all I can say that, for me, it comes down to a feeling of what’s right or not.
I’ve been mulling over what they’ve said for a few months now, and I feel like I understand why not everyone is convinced by you, or even worse, they don’t even know you exist. I’m going to share the ‘why’ with you now, and hope we can fix these problems together.
When I have to explain what you are exactly, I have to think about who I’m talking to. Where they’re from, what they do and why they do it.
I have to find examples that they can relate to, because not everyone knows Patagonia or Sanergy.
Then, I have to explain the legal nitty gritty about you, which in some cases doesn’t exist and instead I talk loosely about strategies and plans.
You’re just not so easy to define, and everyone has their own ideas of what you are, in some cases linking you to things such as socialism, communism, or hippies, instead of just doing good.
Your parents didn’t raise you so well
It’s easy to blame the parents, but lets face it, you were born out of the third sector. Your parents have loads of heart, and are perhaps idealists, but quite often lack the ‘head’ to steer you into being a real enterprise, and not just a charitable cause dependent on grants and donations.
They always needed your other relatives to join in and help, sometimes financially, but most often with leadership and guidance. This isn’t necessarily a bad thing, but when Uncle Unilever and Cousin Phillip Morris are giving advice on solving social or environmental problems, you should really take a step back and think.
You’re too quiet
When I walk into a room of business graduates, and start talking about social enterprise, I see blank faces I’m stunned. How the hell do these guys not know about you. I try to shout your name from the rooftops, promoting, education and consulting wherever I can, but it seems so many others aren’t.
Quite frankly you still haven’t found you voice. You haven’t shown people what you can do. You need to think about your PR and marketing which at the moment is close to non-existent.
Our relationship doesn’t have to be exclusive, I am in fact happy to share you with the whole world. I know you also want this, as it’s part of your goal that you often talk about. So please, please, please, find more spokespeople to represent you better and inspire others to start some sort of relationship with you.
I don’t know if anything in this letter to you is new, perhaps you’ve heard it from others but I just wanted you to know that I won’t lose faith in you. I will always sing your praises, and I will continue developing ideas with you in mind.
But we need to work on our relationship together, to make it stronger, and to stop people questioning whether it’s right or not.
Are you in?
Originally posted on: https://medium.com/@michaelfreer_2342/dear-social-enterprise-5fa3a4c3fd60
We’ve mentioned them before, and we’ll talk a bit more about them this time.
who gives a crap? is a social enterprise in Australia who sells toilet roll. Yes, toilet roll. They have a fitting name, an excellent mission and if you keep an eye on their social media sites, some hilarious marketing. They’ve since spread their operations to the U.S. and the U.K., and we hope to see their products in a supermarket near us all very soon.
They’re a great example of the triple bottom line, and deliver an interesting operation with elements of both the integrated and external social enterprise models:
People – with more people having mobile phones than toilets, they recognised the problem in in worldwide sanitation. Their mission is to reduce the -roughly- 40% of people who don’t have access to a toilet and improve the health and wellbeing of these people.
Planet – all the materials they source are forest friendly or recycled. This means they significantly reduce their carbon footprint and yours too – think about how many trees you flush down the toilet.
Profit – they donate 50% of their profits to partners also working in the field of sanitation- currently WaterAid and Sanergy.
If you want to find out about their more recent impact and good work – check out their ‘crap update‘. Otherwise, pop to their web shop and stock up on some toilet paper.
This week, whilst browsing LinkedIn, we came across some very useful (and free) tools and resources for social entrepreneurs at socialgoodimpact.com. So check them out! They were posted by Beth Palm who is also the founder of BAM Essentials, a social enterprise that produces organic personal care products benefiting programs for young women from disadvantaged backgrounds in Minnesota. We caught up with Beth to find out more.
How did BAM Essentials start and where is it today?
I’d been creating organic personal care products for friends and family for years, and started getting more interest in where people could buy these items. I wrote a business plan and vetted partners for about a year before formally launching in May 2015 with an online shop and 4 SKUs. Now BAM Essentials has over 30 SKUs, is sold on two online platforms, and 4 retail shops in Minnesota.
What legal entity did you choose for BAM Essentials and why? BAM Essentials is an LLC, and I chose that legal structure because even though this would qualify as a nonprofit, I didn’t want the loss of control and red tape of nonprofit operations when starting my self-funded business. I’m happy to pay taxes on my profitable social enterprise, and have full control of reinvesting in the social enterprise where I see it’s the best. I wanted to leverage an existing network of supporters and expertise at a nonprofit organization, rather than start from scratch.
Can you give us an idea of one of the challenges you face at the moment? One of our largest challenges is the competitive landscape and low barriers to entry in the personal care product market. It’s tough to stand out in a crowded marketplace!
Finally, what would be the piece of advice you offer to social entrepreneurs at the beginning of their journey? My number one most important piece of advice to budding social entrepreneurs is to WRITE A BUSINESS PLAN. The social enterprises I’ve seen fail do so because they don’t have a business plan and/or don’t run their social enterprise with a profitable mindset.
Socially, they create employment by first training people, most often women and some areas with a focus on youth, in how to assemble the bikes. Some of these individuals are employees whilst others have the chance to open their own bike shop anywhere in the country.
Meanwhile, on an environmental level they employ ten farmers to manage their bamboo plantations. Bamboo is as an alternative for existing fuel sources which can improve local forests and reduce soil erosion.
With one material they are doing so much for their country, you can read more about their impact here.
Now think about what you have locally. Is there something growing in abundance that can be used to replace something man-made? There are lots of examples on the blue economy website so have a look and learn more.
This month we head all the way to Nunavut, the largest and most northern region of Canada. A unique place in the world has a special social enterprise called Pinnguaq, a nonprofit tech startup that aims to provide tech education to young people in the region. We were fortunate to catch up with Ryan Oliver, the owner of Pinnguaq, to learn more about the organisation.
How did you identify the need for Pinnguaq?
I grew up in a small settler town in Ontario, Canada that is about 1.5 hours away from Toronto. We were fortunate in high school to have a complete and complex computer science program. Many of my peers went into the growing Canadian industry at the time (I didn’t, I gave up on math too young!). I moved to Nunavut in 2004 and realized how fortunate I had been to grow up where I did. Computer Science was not only a rarity in Nunavut, but in all of Canada. As my kids grew up, because of my love for video games we had many in the house and their peers starting coming over on a regular basis to play games. At the same time my own peer group from when I grew up was 10+ years in the gaming industry and it was clear that the Canadian games/tech industry was going to be a huge part of the future of our country.
That’s the basics. An underserved market/population, connections of my own that I could leverage back into the territory that I loved, and kids growing up that I wanted to do what I could to help bring them the same opportunities I was given.
What is or are the key ingredients to you being so successful and winning so many awards?
The communities we’re serving.
If not one cared about what we were proposing, we would have stopped a long time ago. However, with each release, each educational session we run, the interest grows and the way we do it changes and grows. We’re far from perfect in our implementation and constantly learning with each step we take. The community has grown with us and been fantastic at keeping our mandate and our mission on track. To that effect, another key to our success is to not be satisfied with anyone iteration of what we do. Each time we go out we aim to improve upon what we did before and when that stops happening, we will have worn out our usefulness.
How is the social enterprise scene in Canada developing?
I think a formal definition of ‘social enterprise’ in Canada, and the support systems one would anticipate having around that is still largely still undefined. While there is much support for not for profit and for-profit companies alike, it relies on the companies themselves to define how that support can shape what it means to be a ‘social enterprise’. That said, I could be missing something. I knew what we were trying to do, but didn’t have a name for it until we won the award as “best social enterprise startup” in Canada. I get it now!
My immediate comparison point is our neighbors in the US, and to that extent, Canada has a ton of support for growing businesses, artists, and not for profits. With the current government, we also have a significant amount of support now for technology and coding as a whole. That said, we are a settler defined country with significant inequality and a long history of colonization. What is available from a Government support standpoint often requires an ability to navigate a complex application process and red tape. There are indications this is shifting but the reality is that often those who can benefit the most from a strong social enterprise system are not provided with the experience and education to navigate the mandatory bureaucracy.
All of that said, there are many good people here who want to do good things and increasingly, it seems, we have a system that is adapting and figuring out a way to empower and enable that action.
Can you tell us one of your favourite stories, maybe the impact you’ve had on one of your users?
With each passing month, I have new favorites that emerge. When we first started the company and created a language app called “Singuistics”, it was incredible to see it being used in my kids daycare and by their peers. From there we started hosting te(a)ch sessions (computer science camps across Nunavut communities) and seeing a participant go from having no experience with programming to an employee who designs and teaches future courses has been a pleasure to watch.
That said, each passing month brings new highlights and the past few have been among the best. We recently completed our newest te(a)ch sessions in Rankin Inlet and Arctic Bay, Nunavut. Four years of refining our curriculum and our teaching style has been incredible and these sessions were among our best ever. Our goal with te(a)ch is to offer something to Nunavummiut (people of Nunavut) that isn’t currently available through the traditional education system, and the impact of that is more and more evident with each session we run.
What advice would you offer to new social entrepreneurs or social enterprises?
It’s too easy to say, “do what you love”, because a lot of people love things that won’t allow them to also be successful. I’m still figuring it out myself. I know for Pinngauq it was a combination of our luck, timing, and privilege that led us to this place and we acknowledge and work towards sharing and growing that with each project we undertake. My recommendation would be to expose yourself to everything relevant to your field. Don’t insulate yourself, meet everyone, get to know every project, every idea. Follow things that have nothing to do with what you’re doing as you’ll learn plenty from every walk talk of life. Never stop learning, never be satisified.
A great example of how a social enterprise can succeed in the most remote of areas by meeting the needs of the community. It also goes to show how red tape and bureaucracy affect both developed and underdeveloped countries in the world, and therefore how important it is for us to play a part in shaping the sector.