A seamless model of impact and profit
This model rarely exists unless the organisation was born as a social enterprise, as advanced planning and strategical thinking is required.
A seamless model of impact and profit
This model rarely exists unless the organisation was born as a social enterprise, as advanced planning and strategical thinking is required.
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.
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
Outputs to Outcomes
Outcomes to Goal
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 – email@example.com
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.
Community Interest Company (CiC), United Kingdom
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.
Social Traders definition, Australia
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
Benefit Corporation, United States
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.
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
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.
Originally posted on:
It’s time we looked at our relationship.
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.
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.
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.
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.
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.
With seven native species of bamboo locally, Ghana Bamboo Bikes has taken this readily available material and turned it into a social and environmental solution. They build and sell bikes as well as run a bike academy.
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.
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.
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.
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.
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.
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.
We were recently at #Impact2018, a conference in Zagreb, Croatia sharing the regional heroes and heroins in social entrepreneurship, impact investing and corporate social responsibility. As part of this conference, a few social entrepreneurs got the chance to pitch their idea, and Pana‘s story stuck with us, so we thought we would catch up with Pezana to find out more.
Everything started 5 years ago in my home town Tirana. A mix of events were happening in my personal life. Working with orphans and children with disabilities made me understand that projects don’t change their lives, but a profession CAN! My father was a mechanical engineer and he had golden hands. He was able to produce anything with wood. After he retired he wanted to give his knowledge to others, but most of the people look at those retired as not being able to work. As an architect, I saw the gap in the market of unique design furniture, since most of the actual products come from China and Italy and are not tailor-made. There was also a problem in two different areas – losing the heritage of carpenters and also a drop in Albanian manufacturing. In April 2013, Pana was created as a result of all these factors, by taking part in a competition for green ideas and social enterprise organized by an Albanian organization, where surprisingly we won the first place. This was our way to bring Pana to life.
This is a very tricky question and actually very important. As most of you know, Albania is a very small country and of course has limited resources when it comes to such a niche product like ours. In fact, we do have a lot of orders and usually our clients wait for 2-3 months to get their products, but still this is not enough for us. Our products have totally another monetary value in European countries. Today we sell our product in Albania with lower prices than they should be sold, due to the capacity of Albanians of paying. That’s why we want to expand to other European countries so we can give a real value and price to our products, an element that would help us to grow the number of employees and the value that Albania as a country can have in the European community. So we are working hard in different directions to expand the production and begin to sell our products internationally. Our big dream is to sell our products outside Albania, we see it as the only way to manage to have a bigger impact, a bigger impact on the clients, and to bring the Albanian name to the foreign market. What is more important is having more family members, as the people we are working with are not just employees but part of the big family of Pana.
Pana is only about that, making a balance between the social and ecological mission. Its one of the few cases where both the impacts are equally as important and take the same weight inside the enterprise. Profit is only a mechanism to make the whole structure work. For us, it’s important only to make the structure work properly, living in a country like Albania where the social and ecological part is not something important for our clients, has made us work very hard to have the stability that we do have today (economical). Most of our clients don’t even want to know with whom we are working and what are we saving, that’s why our work and value is underestimated, but this has been another fight for us to educate our clients. We do work hard as just another enterprise that is trying to gain some points in the chaotic Albanian market, but in the mean time to have the balance between social and ecological. During those 5 years we have trained more than 70 people to become carpenters, because for us it doesn’t matter if they are going to work with us, for us it matters for them to have a profession. The family of Pana is so diverse you can find people from 19 years until 73, those coming from Roma community, orphans, retired, returned emigrants, people with disabilities, the list goes on, but we all work together with the same mission and vision.
Things are going very slowly; and I know the reason why. It looks like there is no collaboration between different entities in Albania. The government is not there to help and manage to give a hand to the new startups and the ecosystem is very aggressive. It’s now an organized market which makes things go wrong sometimes, not because of the entrepreneur but because of corruption, high taxes, lack of financial support and even training. There are some entities trying to make a change, but even the entrepreneurs are very sporadic. There’s a whole generation that is missing the desire to create new things and this could be because the education system is not supporting them to become entrepreneurs. There is a lot of work to be done. In my case, wherever there is a possibility to inspire and give my knowledge, I do it, of course if they gave me the opportunity to make more I would have loved to do it, but until now this is not the case. I am doing my best in the Albanian conditions.
Being a social entrepreneur its one of the most difficult things in life (at least for me) , but when it goes right then the result is outstanding. If you like difficulties and adventure take this trip, it’s a life-changing experience for you and the people that you are trying to change. Besides how hard it is, I can continue forever like this, as Mother Theresa said once: It’s not how much we give but how much love we put into giving.
A very honest and informative interview from Pana, and one that many of us can relate to. How collaborative are the government in your country? The need for strong cross-sector relationships can ensure social entrepreneurship expands and succeeds, however many people working in the ministry of education or work don’t know much about what social entrepreneurship is. We try to change this through holding lectures and workshops, and if you’re a social entrepreneur, offer your knowledge too!