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Social Enterprise: A Critical Engine of Simultaneous Economic and Social

Development

By Lisa NitzeCEO, Social Enterprise Alliance

I-7 ConferenceOctober 15, 2010

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A New Vision

The world’s problems are outstripping our current initiatives to address them – not necessarily our current capacity to address them

Our old models for how to address social problems need to be updated

Resources residing in silos need to be combined through collaborative partnerships for maximum positive social impact

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The Role of Government

Traditional View

Take care of those who can’t take care of themselves

Educate the peopleProtect the environmentBuild and maintain transportation and communications infrastructures

Build and maintain public health infrastructuresCreate and implement laws and punishments to provide safety, social stability, equity and fairness in society

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The Role of GovernmentRevised ViewProvide those who can’t take care of themselves with the tools to help themselves

Partner with others in the market to educate, protect the environment, create and maintain infrastructures, protect public health

Provide incentives for people to self-govern for safety, social stability and equity

Use leverage to convene partnerships among sources of resources for public good

Use leverage to convene stakeholders around issues so they can define a middle ground

Incentivize corporations to invest in societies’ well-being

Provide seed-funding, be the convener and catalyst

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Corporations

Traditional ViewEmphasis on short-term profit for shareholdersSee societal needs as the job of governmentSee environmental issues as the job of government

See non-profits as an adjunct of government and make annual contributions to them as asked

See Universities as disconnected from economySee citizen and advocacy groups as on another team

See government as ineffective

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Corporations

Revised View

See other stakeholders in society as partners in long-term health and sustainability of:

– Communities where operate– Employees– Customers– Suppliers– Distributors

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Universities

Traditional View

Educate the best on higher level thinkingStick to education

Revised View

Educate to market needsPartner with corporations, government and non-profits to create societal and commercial value while educating

Commercialize learning where possible

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Citizen Advocacy Groups

Traditional View

Corporations are deliberately ignoring needs of society and environment

Corporations are on another team - damaging society in pursuit of their interests

Revised View

Corporations have resources to contribute to the communityCorporations can be partners in solving social problems

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Nonprofits

Old View: The Traditional Nonprofit

Model of meeting need through dependency on donations

Model of pursuing good without responsibility for figuring out how to pay for it

Lack of connection to market drivers allows original model to become out of touch

Federal organizations do not meet local needs with local solutions

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Social Enterprises

Revised View: The Social Enterprise

A market-based, business-like approach to solving a social problem

Its mission is to meet a societal need in a way that is self-sustaining

Simultaneous pursuit of social and economic development that is not zero-sum

Partnering with government, business, universities and all other sources of resources creatively to achieve goals

What is a Social Enterprise?

A “Social Enterprise” is a nonprofit or private sector entity that:

• Uses earned revenue strategies, either exclusively as a business or as a significant part of a nonprofit’s revenue stream, and

• Directly addresses social needs either through its goods and/or services or by employing people who are disabled or disadvantaged

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Social Enterprises Make up a Rapidly Growing and Vital Sector of the U.S. Economy

The economic downturn has caused nonprofits to seek new solutions for sustainability as charitable contributions decline

Social need has increased as corporations and government cut jobs and budgets

Public awareness of social entrepreneurship has risen and purchasers are increasingly seeking to support positive social change with their dollars

Nonprofits adding revenue-generating streams to their business models can increase scale and impact

Government social program budgets are shrinking creating market opportunities for growth of the social enterprise sector

Having market-based elements to their business models keeps nonprofits tracking with the evolution of market need

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A Few Examples of Social Enterprises

Common Ground Women’s Bean Project Homelessness Women in Transition Real estate development Product Assembly/Retail Sale

Juma Ventures Cornerstone/National Day 1 Underprivileged Youth Domestic Violence Employment and Training Database Product

Project Health EngAGE Urban Health Clinics Elderly Care Hospital Contracts Program Design Consulting

Harbor City Services DC Kitchen Mental health Addiction/Incarceration Corporate Shredding, Moving, Catering Services Filing, Storage

Case Studies of Select Social Enterprises in the Health Care Field

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Economic and Social Infrastructures Can’t Keep Pace with the Growth of Social Enterprise

•New legal and tax structures are needed•Access to growth capital is constrained by outdated frameworks

•Clear definitions of the sector are necessary to measure impact

•Branding and awareness building is required to drive greater growth

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Why Should Corporations Be Investing in the Success of Social Enterprises?

•It represents a highly leveraged investment•They strengthen the communities where your employees live•Employee retention, attraction and development•Business-like approaches to social problems use society’s resources more efficiently

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Why are Social Enterprises Good Partners for Business?

Sources of market-research

Sources of innovation

Sources of inspiration

Investments in the future

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Social and economic development are no longer mutually exclusive

“Nonprofit” and “For Profit” are rapidly becoming outdated distinctions

Triple bottom line analysis is being done by all actors in pursuit of sustainable progress

Those enterprises that will be the most successful as the shifts continue are those that have attracted and invested in the largest percentage of change leaders – innovators who excel at leadership, teamwork and empathy

The Sands are Shifting and Stakeholder Roles are Changing in the Economy and in Society

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Social Enterprise Alliance

5358 42nd Place NWWashington, DC 20015

www.se-alliance.org info@se-alliance.org

P: (202) 758-0194F: (202) 449-9611

Questions?