One of the oldest forms of social enterprise is called WISE — a work integration social enterprise. This is a social enterprise whose main priority is to provide employment to a specific group of people, often hard-to-employ or vulnerable.
If you start thinking about all the global issues out there, you’re likely to get pretty depressed. They’re so big that you sometimes feel unable to change anything, and even if you try to change things it’s on such a small scale that it’s hard to see the impact.
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.
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.
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 – 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.
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.
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.