ocial nterprise S E Reporter ocial nterprise S E Reporter

ocial nterprise SInnovative Business Solutions for Nonprofit EntrepreneursE Reporter The Integrated Approach to : Building High Performance Organizations by Kim Alter and Vincent Dawans

The raison d’être of social index enterprise practitioners is Regardless of its degree SER 204 New to create and sustain social of integration, a social enter- 2 Editor’s Letter value. Social value creation Paradigms prise catalyzes organizational speaks directly to accom- change whether invited or 3 Boschee on plishing a social mission and not. Examples of organiza- Marketing: The Single achieving social program objectives, while tions whose social enterprises have sur- Greatest Challenge sustainability requires organizational and vived, and gone on to thrive, recognize leadership capacity, business-oriented cul- this—often after substantial trauma—and 6 Social Venture ture and financial viability. Thus, a social have ultimately integrated the enterprise Network enterprise is more likely to achieve sus- throughout the organization and worked 11 Events tained social value when the enterprise to manage this change. The hypothesis is integrated within program, operations, follows: when integrated within an orga- culture, and finance. nization, is a transforma- Rick Aubry, 1 Executive Director of tion and strengthening strategy that can Rubicon Programs, says of his organiza- increase mission accomplishment and tion’s social enterprises, “we are not in the social impact, improve organizational and business of baking cakes; we are in the financial performance and health, and business of transforming lives. We see busi- engender a more entrepreneurial culture. ness as the primary vehicle for achieving This “integrated approach” to social this change, but social enterprise is com- enterprise offers practitioners a new para- prehensive and must be integrated into digm to create and transform enterprises the whole [organizational] package.” 2 into High Performance Organizations, orga- nizations capable of achieving sustainabil- The opportunity to realize ity, appropriate scale, significant impact, social enterprise’s prom- and providing blueprints for replication. However, the opportunity to realize social ise—High Performance enterprise’s promise—High Performance Organizations—is being Organizations—is being missed. missed. (continued on page 8)

1 Rick Aubry received the Klaus Schwab Foundation “Social Entrepreneur of the Year” award in 2001 2 Interview with Rick Aubry, Executive Director, Rubicon Programs, Richmond, California, March 19, 2005.  • SER 204 sereporter.com ocial nterprise S E Reporter Social Enterprise upfront Reporter ocial nterprise S E Reporter No. 204 March 2006

Tom White Letter to Readers: Editor and Publisher Susan Weeks sjWeeks Designs Dear Reader, Production Design This month’s issue of SER contributes to the evolving definition of social enterprise with a manifesto by Kim Alter and Vincent Dawans. Their “integrated Nancy Cutler Midnight Oil Design, LLC approach” to social enterprise offers practitioners a new paradigm for creating Designer High Performance Organizations. A social enterprise, in their view, is more likely Serge Vladimiroff to achieve sustained social value when the enterprise is integrated within an orga- Web Developer nization’s programs, operations, culture, and finance. However, the opportunity to realize the full promise of social enterprise is Editorial Advisory Board Sutia Kim Alter being missed due to seeing it primarily a as funding, programmatic or leadership Philip Arca strategy. The true opportunity for social enterprise as an agent of organizational Samantha Beinhacker transformation lies in integrating these approaches in a way that builds high per- Jerr Boschee formance organizations. Beth Bubis Longstanding SER columnist Jerr Boschee urges readers to confront and Kathleen Kelly Rolfe Larson change social enterprise paradigms in a chapter excerpted from his new book, Cynthia Massarsky Migrating from Innovation to Entrepreneurship: How Nonprofits are Moving Jim Masters toward Sustainability and Self-Sufficiency. He too makes a case for the systemic Jim McClurg organizational change that needs to occur, from the Board level to line staff, when Amber Nystrom nonprofits move from asking the community for money to asking them for busi- Mal Warwick ness. Social Enterprise Reporter™ (ISSN: 1550-7300) is published Kim and Vincent’s integrated approach is echoed by Jim Collins when he calls monthly 10 times per year at for a new enterprise paradigm in Good to Great and the Social Sectors: “The criti- www.sereporter.com, Jan-June, Aug-Nov by Social Enterprise cal question is not ‘How much money do we make?’ but ‘How can we develop Reporter. a sustainable resource engine to deliver superior performance relative to our Annual Subscription: mission?’” For Jim, that resource engine has three components: money, time and $69 institutional/multi-user brand. license; $59 Individual; With your contributions, SER will continue to monitor and further these evolv- $29 Student/Low-Income. ing definitions of social enterprise. Look for a full report on the recent Gathering Editorial and Business Offices: of the Social Enterprise Alliance in the next issue! 2644 Fulton Street, Suite A Berkeley CA 94704 Best wishes, 510-384-2336 Fax: 510-217-4065 E-mail: [email protected] Subscriber Services: service@ sereporter.com Tom Copyright © 2006 Social Enterprise Reporter. Fair use quotation with attribu- tion is permitted. Extra copy, multiple sub- scription, and reprint rates are available on request.

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 • SER 204 sereporter.com boschee on marketing

The Single Greatest Challenge: Existing organizational culture is frequently the biggest obstacle for social entrepreneurs

by Jerr Boschee

The following is an edited excerpt from Jerr Boschee’s only be achieved through earned revenue alone. newest book, Migrating from Innovation However, entering commercial markets to Entrepreneurship: How Nonprofits are poses significant challenges for nonprofits, Moving toward Sustainability and Self- Jerr Boschee’s none greater than their own embedded cul- Sufficiency. Among other topics, the book column about ture. describes five basic principles of social entrepreneurial The culture of a traditional nonprofit, entrepreneurship and 14 critical success marketing no matter how innovative, is vastly different factors emphasized by the pioneers in the is a regular monthly from the culture of an entrepreneurial non- field. It also contains “A Practical Lexicon feature of the profit. Entrepreneurs have a higher tolerance for Social Entrepreneurs” that defines more Social Enterprise for risk, a greater appreciation of margins, an than 80 terms, many in the form of mini- Reporter eagerness to compete. Traditional nonprofits tutorials, and a bibliography of print and distrust the capital markets, prefer collabora- electronic resources. Please see www.socialent.org for tion to competition, and underestimate the productive information about single copy or bulk discount pur- capabilities of their disadvantaged employees. They watch chases. other nonprofits become increasingly sustainable or self- sufficient, but are unwilling to emulate their practices. ocial innovators around the world have begun to Instead, they criticize. “My god, the resistance,” says Sreach a disquieting conclusion: Inspired vision, impas- Rick Walker, who runs seven small businesses in sioned leadership, enthusiastic volunteers, government Marshfield, Massachusetts, that employ people with devel- subsidies and a phalanx of donors are not always enough. opmental disabilities. “To a great extent, nonprofit people They serve admirably while innovators transform are not risk-takers, and their unwillingness to think out- their dreams into fledgling programs and steer their orga- side very standard parameters constantly amazes me. nizations through early growing pains. But there comes Quite frankly, we’ve had a lot better luck getting people a time, albeit reluctantly, when most founders and their outside the nonprofit world to understand what we’re followers begin to understand that living from year to doing and feel comfortable with it.” year does not ensure the future—and that is the moment Tony Wagner concurs. He has been astonished by when they begin migrating from innovation to entrepre- the resistance he has encountered from both the busi- neurship. It is one thing to design, develop and carry out ness community and the nonprofit sector as his nonprofit a new program, quite another to sustain it. So they begin in Minneapolis, Minnesota, tries to simultaneously create turning toward commercial markets, gradually exploring a business and carry out a social mission by employing the possibilities of earned income, many for the first time, people who are economically disadvantaged. “I’ve been and often with reluctance given their uneasiness about blown away by the level of misunderstanding and mis- the profit motive. trust,” he says. “For all the writing and talking that’s being The moment of realization is dawning today for some done about the subject, out there in the world people of the most successful social innovators in the world, and either don’t get it or don’t want to get it. They say you they are slowly moving away from a dependency model have to be one or the other.” of financing that relies almost entirely on charitable con- Why does this happen? Why is the embedded culture tributions and public sector subsidies. The movement of an organization so often the single greatest obstacle for takes two forms: Board members and senior executives trying to launch • Some are working toward sustainability, which earned income strategies or social sector businesses? can be attained through a combination of philanthropy, Because too many suffer from what Joel Arthur subsidies and earned revenue. Barker calls “paradigm paralysis.” As Barker pointed out • Others are seeking self-sufficiency, which can (continued on page 4)

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row,” he said, “we are no longer self-sufficient.” The single greatest challenge a rehab agency, we’re a business. Kevin McDonald, founder of a (continued from page 3) Starting tomorrow, we no longer moving company in North Carolina have clients, we have employees. And, that employs former convicts, drug in his seminal 1992 book, Paradigms: starting tomorrow, you are no longer addicts and prostitutes, discovered The Business of Discovering the social workers, you are business man- that customers appreciated the Future, paradigms can be extraor- agers. If you can get your minds and change. He built his company primar- dinarily useful. They help us make hearts and souls around that concept, ily through personal selling and word sense of the world by organizing I want you back. If you can’t, I’ll help of mouth. “We didn’t have a very big incoming data streams and sorting you find a job somewhere else.” Nine staff,” he says, “just me and two oth- them into categories, helping us of the 11 returned to their jobs. Two ers, and we didn’t have much money decide what to think and do. But could not accept the philosophic for advertising. We were just trying paradigms can be a double-edged shift. But, from that day, the culture of to survive as a program. So, I decided sword. Blinders are slapped into the organization changed and the pri- to start hitting the pavement and place and we begin to interpret new mary goal became the operation of a gave a lot of speeches. Went out to information according to our pre-con- viable business. the Junior League, the Kiwanis Club, ceptions. We become frozen. Change However, regardless of dramatics, that sort of thing...and I found out becomes our enemy. Individuals and cultural change must be systemic. they were tired of people asking for a organizations begin to believe the handout. So I told them, ‘I don’t want categories they are using are the Paradigms can be a your money...I want your business... only ones available, and they slowly double-edged sword. call us up, let me give you an esti- become paralyzed. mate...use our services.’” Blinders are slapped into Once they begin paying for Institutional paralysis can be place and we begin to actual products or services, custom- overcome, with a sufficient dose of ers become increasingly demand- courage. But occasionally it takes interpret new informa- ing, which puts a further strain on something dramatic. In the mid- tion according to our pre- an organization’s traditional culture. 1980s, when the Board of Directors “When we started working with of a nonprofit in Louisville, Kentucky, conceptions. Ben & Jerry’s,” recalls Julius Walls, offered Bob Russell the job as CEO of Greyston Bakery, which CEO, he realized the existing make-up employs former convicts and others of the Board worked against entre- The first step usually has to with barriers to employment, “they preneurship and agreed to accept the be taken at the Board level. When made it very clear that our product position only if every member of the Charley Graham arrived at his (providing brownies and blondies board resigned. They agreed. new post in Oregon in the early for five Ben & Jerry ice cream fla- Still another CEO, who ran a shel- 1980s, he immediately began promot- vors) had to always be up to snuff tered workshop for people who were ing the idea of a double bottom line. or they wouldn’t produce their ice developmentally disabled, decided to According to his second-in-command, cream with us. They held us account- change the basic values of his organi- Roy Soards, “he told the Board able as a business and not as their zation—and in the process invented we were never going to be able to young child. They provided a lot of an entirely new type of business, employ more people with psychiatric assistance, but they told us from the known today as an “affirmative busi- disabilities if we continued operating beginning that we needed to stand ness.” On a pleasant summer evening a sheltered workshop and depending up and be a business, not a sheltered in 1973, John DuRand invited his primarily on social service subsidies workshop.” 11 senior managers to a downtown and charitable giving. He convinced When Walls took over the hotel in St. Paul, Minnesota, where he the Board that if we provided qual- Yonkers, New York, company as CEO, wined and dined them, asked them ity goods and services, people would he discovered that the biggest obsta- to sit down—and then fired them buy them and we’d therefore be able cle he faced was helping his employ- all. Five minutes later he passed out to employ even more people with ees “understand what we needed application forms. “Starting tomor- disabilities and help them become (continued on page 5)

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that fit their needs, and no, they can’t pose of life. Getting enough to eat is The single greatest challenge work after three o’clock because a requirement of life. Life’s purpose, (continued from page 4) they have to go see their case work- one would hope, is something broad- ers.’ We finally had to part ways with er and more challenging. Likewise to do to be a sustainable model. We the head of the rehab division.” with business and profit.” had to understand we were a busi- Hiring people from the for- And nonprofit executive Robert ness with a dual bottom line. Most profit world can be another wake- Harrington may have put it businesses have one bottom line up call. “Everything changed,” says most succinctly, and in terms social —economic dividends. (At the time) Dave McDonough, who ran a entrepreneurs would resoundingly Greyston also had a single bottom social enterprise in Los Angeles that endorse: “If you want to help the line, but it wasn’t the economic one. employed people who were home- poor people of the world,” he said, There was a mentality on the part of less. “Right off the top, it was just “step one is to make sure you’re not the employees that came here that if the way the new people walked and one of them!” ■ you’re really nice we’ll figure some- talked and dressed and approached thing out to keep you and it doesn’t their day. It was a big shock to the matter if you’re producing or if the rest of us.” Jerr Boschee has spent the past 25 business is doing well. But there Making the transition from inno- years as an advisor to social entrepre- came a time when the employees vation to entrepreneurship is fraught neurs in the United States and abroad. and the business needed to under- with dangers. Years ago, Pablo To date he has delivered seminars or taught stand that that’s not a sustainable master classes in 41 states and 14 countries model.” “Ben & Jerry's provided a and has long been recognized as one of the The cultural transformation can lot of assistance, but they founders of the social enterprise movement turn into a war. “By the time I got worldwide. Mr. Boschee is Executive Director here,” remembers Soards, who even- told us from the begin- of The Institute for Social Entrepreneurs, which tually succeeded Graham as CEO in ning that we needed to he created in 1999, and Chairman and CEO of Oregon, “there was a demilitarized Peace Corps Encore!, a nonprofit that sends for- zone between the production people stand up and be a busi- mer Peace Corps volunteers and staff members who ran the factory and the rehab ness, not a sheltered back into service on short-term assignments that people who provided social ser- match their professional expertise with specific vices. We had two very strong-willed workshop”—Julius Walls, CEO, social needs. Please direct your comments to managers and each of them had * [email protected]. Greyston Bakery their own lieutenants and armies.” The opposing forces fought over resources and, more fundamentally, they fought for the soul of the orga- Eisenberg, Founder and Chairman nization. Emeritus of the National Committee It took years for the culture wars for Responsive Philanthropy, wrote to subside, and “it was pretty ugly that “far too many charities have... at times,” says Soards. “The rehab forgotten the distinction between people would sabotage the produc- for-profit and non-profit activities, tion people, who often had to rely between fulfilling a mission and sur- on the rehab folks for employees. If vival at any cost....The appeal of non- the production people had a job that profit organizations is their commit- had to get done, they were under a ment to public service...it is not as a lot of pressure, because the rehab shadow private sector.” people were more concerned about, But, according to Kenneth ‘Well, is this the proper training for Mason, the former Chairman of this individual, they’re not ready for Quaker Oats, “making a profit is no work that’s too demanding, and why more the purpose of a corporation don’t you guys find the types of jobs than getting enough to eat is the pur-

 • SER 204 sereporter.com network spotlight Social Venture Network by Tom White

SER spoke recently with Deborah Nelson Q: What is size and scope of mem- and Pamela Chaloult, Co-Executive bers’ companies? Directors of the San Francisco, CA-based Social Venture Network. Founded in 1987, A: We target innovative mid-sized SRBs SVN is a national peer-to-peer network of and social enterprises. Most are indepen- advisors, CEO’s, investors, and Directors dently owned with revenues ranging from of for-profit and non-profit socially respon- $2-500 million. The larger companies are sible businesses and social enterprises. Deborah Nelson and doing business nationally and some inter- Pamela Chaloult, Co- nationally. Our membership guidelines help Executive Directors, Social Q: What makes SVN unique among Venture Network us attract pioneers who’ve demonstrated an networks supporting social entre- ability to effect positive change by running preneurs? for-profit or nonprofit organizations of a certain size. A: Many related organizations have been incubated out of SVN, through the work and initiative of our Q: What are your plans for updating the SVN members. Businesses for Social Responsibility, Business Standards of Corporate Social Responsibility? Alliance for Local Living Economies, , Investors Circle, have all been projects of SVN at one time. What’s A: Since 1999 there have been lots of new tools and unique about our network is that we have the pioneers standards for SRBs. The Stanford Alumni Consulting Team of socially responsible business (SRB) who came together is helped us to revise the Standards, based on member and decided that business could and should be a force feedback. Our research revealed that it would be most for social change. We provide a safe and intimate space helpful to provide short, easy-to-understand examples for business leaders to share their best practices, chal- of how to implement these practices. That’s why we lenges and successes. Our membership is composed of decided to break down the Standards into very practical the founders and CEO’s of the businesses, as opposed to steps in the new SVN book series (see sidebar next page) company membership. The difference with SVN is that launching in April in partnership with Berrett-Koehler the level of peer-to-peer networking is quite high. Publishers. The books in the series will show what the practices are, how to implement them, and are filled with Q: Are you affiliated with regional partners, for lots of examples from real executives and companies. example Social Venture Partners? We’ll show successes as well as mistakes. We’re still in the process of deciding whether it makes sense to update A: SVP is a totally separate organization. We bring and expand the Standards in addition to the book series. our members together at two annual conferences, and at our Social Venture Institutes, in the spring and fall. We Q: Do you have evidence of whether sales host the Institutes at different cities in North America in improved for those SRBs that implemented the collaboration with local members. In British Columbia, CSR standards? where the SVI has been located at Hollyhock for 10 years, we collaborate with Canadian Businesses for Social A: We have anecdotal stories, but it has been hard to Responsibility, Renewal Partners, and the Tides Canada quantify and separate out the impact of the standards vs. Foundation. The fall conference will be held October other resources. In SVN’s New Corporate Vision program, 12–15 in Tucson, AZ and the SVI on September 6–10 in members did peer-to-peer audits, evaluating and giving Hollyhock, BC. recommendations based on the Standards. One of the successes of NCV was that members came back to the (continued on page 7)

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Wealth, The Business Collaborative, Berrett-Koehler Publishers, Social Venture Network Community Development Venture (continued from page 6) Capital Alliance, Hispanic Association Inc. has partnered with Social on Corporate Responsibility, the Venture Network to produce SVN community and shared the audit Coalition for Environmentally a series of low-priced, down- results with the larger group. That’s Responsible Economics (CERES), and to-earth paperback guides key to how SVN works, sharing best others] who are focused on social practices and tools that members and economic justice. that will walk readers through have garnered from one another. It the practical steps of start- was also a mentoring opportunity Q: Are there any examples of ing and growing a socially for members who are striving to be how SVN members have part- responsible business. This socially responsible. nered with nonprofits or for- profits to provide basic busi- series represents the merger Q: Have you found that socially ness goods or services? of the Berrett-Koehler value responsible investors are will- of “creating a world that ing to give a social margin to A: The partnership between Ben works for all” and Social SRBs, discounting their finan- & Jerry’s Ice Cream and Greyston Venture Network’s commit- cial return for a recognized Bakery, evolved through SVN. The social benefit? Bakery is a project of the Greyston ment to building a just and Foundation and they bake all the sustainable world through A: Investors Circle, one of our sis- brownies used in a brand of Ben business. ter organizations, has looked closely & Jerry’s Ice Cream. Kevin Lynch, The first two books published at this shareholder concern. Woody an SVN Board member, is also CEO Tasch, Chairman and CEO of IC, and of Rebuild Resources, a non-profit in 2006 as part of the Social Judy Wicks, Founder and CEO of based in St. Paul, Minnesota. Rebuild Venture Network Series are Philadelphia's White Dog Cafe, talk Resources helps people break the Values-Based Business: How about getting a “living return from cycle of drug and alcohol abuse. to Change the World, Make patient capital”. Investor members of Employees manufacture, embroi- SVN are often willing to take a slight- der, and print apparel and promo- Money, and Have Fun by Ben ly lower financial return, because tional merchandise for businesses in Cohen and Mal Warwick, they’re aware of the social return. Minnesota. [See Jerr Boschee’s article and True to Yourself: Leading But they’re the exception, not the in SER 205 (July ‘05) on “Forging a Values-Based Business rule among investors. It’s a real chal- Strategic Partnerships with For-prof- by Mark Albion. Watch for lenge to measure the social impact of its” for more examples of operational SRB’s and incorporate that into the philanthropy]. reviews and excerpts of these financial return. books in upcoming issues of SER! Go to ‹www.svnbooks. Q: Does SVN facilitate invest- Investor members of com for more information. ments and other partnerships? SVN are often willing

A: It’s explicit in the work that to take a slightly lower Q: Can you share SVN’s plans we do that deal flow happens at financial return, because for the year? SVN events. The only way that SVN is going to be successful is to create they’re aware of the A: 2007 is a big year for us—it’s a collaborative model for investing. social return. But they’re our 20th. We just revised our mis- So three years ago we initiated the sion statement and are working Social Impact Leadership Coalition the exception, not the on a strategic plan for 2007–2009 (SILC) in which we brought together rule, among investors. with a particular focus on the 12 national nonprofits [includ- meeting points between socially ing Co-op America, Responsible (continued on page 10)

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The Integrated Approach resources and lacking business acu- nism has not paid off for many who (continued from page 1) men. Practitioners of the program have hungrily followed its lure. approach are fragmented or “siloed” Fragmentation and Myopia by sector, geography, and barred by Misunderstanding the industry vernacular thus, little sharing Benchmark There is a lack of wholeness of knowledge and experience occurs and integration in the social entre- between silos. In drawing inspiration from busi- preneurship field, evidenced by ness, social enterprise has taken bits the divergence of players and three In drawing inspiration and pieces but has missed the big schools of thought—leadership, fund- picture, stressing business function ing, and program. from business, social over social benefit and doing little to • The “leadership approach” enterprise has taken integrate the two. The private sector supports professional development does not consider any one aspect of efforts for individual “social entre- bits and pieces but has business in isolation. A business plan, preneurs”. The shortcoming of this missed the big picture, for example, maps and connects the approach is that individuals are not internal aspects of a company to replicable and too often their “social stressing business func- each other as well as to the exter- change innovations” have not been tion over social benefit nal environment. The very idea that used to build the practice or replicate practitioners use the phrase “mis- their successes. and doing little to inte- sion-driven” is antithetical to business • The “funding approach” grate the two. ethos, even if the standard corporate advocates that nonprofits start com- mission is “maximizing profit for mercial ventures to diversify their shareholders.” In the social enterprise funding. Typically, the venture is struc- the mission is complex but, like busi- tured as an auxiliary project of the Bias Toward Funding ness, must be central and anchor all organization. The funding approach decisions and activities. to social entrepreneurship has Among North American orga- increased the number of nonprofits nizations there is a bias toward the Missing an Opportunity To Do incorporating market discipline and funding approach. Currently, the More Mission income-generating activities into their majority of the literature and public organizations, yet problems arise forums speak to helping nonprofits The emphasis on funding means from disappointing financial returns, start earned income ventures. This that opportunities are being missed harder than expected implementa- is likely more of a PR issue than a to realize other benefits that social tion, complex legal and tax issues, practice issue—nonprofits need enterprise offers. A recent Harvard organizational discord and mission funding, grants or otherwise, and Business Review article instructs dissonance. the promise of earned-income is the nonprofits to “put their missions first • The “program approach” to allure that leads nonprofits down the rather than starting with a venture’s social entrepreneurship is when busi- garden path. This dangerously narrow financial potential,” citing that “a ness activities and social programs view shifts attention away from the mission-first assessment of earned- are one and the same, typically in ultimate goal of any self-respecting income opportunities returns the cases where business activities are social entrepreneur, namely social nonprofit sector to its fundamental central to, or compatible with, the impact, and focuses it on one particu- principles.4” Sadly, few recognize organization’s mission. The program lar method of generating resources. 3 social enterprise as a deliberate approach suffers from the opposite Though profit is a sexy proposition method to accomplish social mission, problem of the funding approach— for practitioners, the reality is that achieve social impact, create a stron- relying too heavily on social sector social enterprise as a funding mecha- ger organizations and affect a more entrepreneurial culture. Financial 3 Dees, Gregory, Social Entrepreneurship Is About Innovation and Impact, Not Income, Skoll Foundation aspects of resource management are Social Edge, September 2003. 4 “Should Nonprofits Seek Profits” (January 2004) (continued on page 9)

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both for-profit and nonprofit sectors. business plan often exceeds the value The Integrated Approach Social enterprise challenges the tra- of the plan itself. Social enterprise is (continued from page 8) ditional concept of charitable action an organizational change and trans- and its implications on social struc- formation process, therefore there an integral part of the social enter- tures—do we (western society) really is a need to define a framework for prise paradigm, hence the issue is want the poor no longer poor, or the monitoring the impacts that the less of perpetuating a money myth homeless no longer homeless? process of developing and managing than missing a mission opportunity. enterprise activities has on nonprofits “Social enterprise as a themselves. Resource Management— Not “Profit” tool for achieving mis- Lack of Inclusion of sion has come to the International Organizations The perception that social enter- prise is strictly about earned-income fore. It’s more than a Microfinance institutions (MFI) or profit is misleading. No amount are quintessential social enterprises of profit makes up for failure on the revenue strategy. People and their leaders are some of the social impact side of the equation. are beginning to look at world’s most formidable social entre- Any social entrepreneur who gener- preneurs, yet they have largely absent ates profits, but then fails to convert it as a tool of economic from the conversation. From early them into meaningful social impact empowerment for the on microfinance practitioners imple- in a cost effective way has wasted mented MFIs as a vehicle by which valuable resources.6 Social enterprise communities they serve. to achieve wide-scale sustainable requires effective resource manage- It’s not just another social impact. The microfinance meth- ment, which must go beyond the nar- odology takes a holistic approach, row view that financial resources are fund-raising tool—it’s its ethos is that the “social programs” the only resources. Typically, nonprof- a mission fulfillment (micro-credit services) must be insti- its most valuable resources are their tutionalized in order to be a going 5 people, networks or members, and tool!” —Yma Gordon, concern. Social programs and impact intangible assets such as methodolo- Program Officer, Ms. are not disaggregated from business gies, content, reputation and social activities and financial aspects of impact. An integrated approach to Foundation for Women the organization, rather they are an social enterprise recognizes the finan- integral part of the business model. cial as well as non-financial capital Capacity building is an enduring pro- (human, social, environmental and These potential institutional cess and central to implementation physical) and motivates practitioners benefits of social enterprise, if left and development of the MFI. Last to productively employ and manage unmanaged, are equally a source of year’s Micro Credit Summit celebrat- these assets. institutional risk. Authors and practi- ed reaching 100 million poor borrow- tioners have shared many a caution- ers. This is success, yet little has been Challenges, Risks and ary tale of mission creep, cultural done to learn from their experience Learnings strife, stakeholder and/or staff ten- or share their immense intellectual sions, lack of vision or capable lead- capital with other practitioners. Little research has been con- ership, financial losses, operational ducted to ascertain why social inefficiencies, weak marketing, and A New Social Enterprise enterprises fail, however, the practice threats to an organization’s reputa- Paradigm speaks volumes—cultural tension tion. and low capacity are the main offend- Much of the value of social enter- The reality of the current state of ers. Change is hard and resistance to prise is in the process‑for example, practice is that social enterprises are change is human nature, present in the learning gained developing a executed in isolation—treated as a distinct project or activity—when in

5 Interview in July 2005 issue of Social Enterprise Reporter. (continued on page 10) 6 Dees, op.cit  • SER 204 sereporter.com new paradigms

Sutia Kim Alter is Founding Partner of The Integrated Approach “Social enterprise is first Virtue Ventures LLC, a small, innovative (continued from page 9) and foremost a vehicle to firm rooted in practice and committed to furthering the field of social entre- fact social enterprise has profound accomplish, strengthen, preneurship through action-research, technical effects on the whole organization. or expand the organiza- services and its own initiatives. Alter is also The three approaches to social entre- a Visiting Fellow to the Skoll Centre for Social preneurship (funding, leadership and tion’s mission.” Entrepreneurship at Saïd , programmatic), alone or in combina- University of Oxford, where she teaches a tion, do not go far enough. The true course on social enterprise design and conducts opportunity for social enterprise organizational productivity and yield. research. She has authored several works on as an agent of organizational trans- Mission is the cornerstone, and serv- social enterprise including Managing the Double formation lies in integrating these ing it, the impetus for venturing. The Bottom Line: a Business Planning Guide and approaches in a way that builds high social enterprise is first and foremost Workbook for Social Enterprises, available from performance organizations. a vehicle to accomplish, strengthen, ‹ www.SEReporter.com. Alter has worked with The Integrated Approach takes enhance or expand the organiza- practitioners in 35 countries worldwide. the best of business and marries it to tion’s mission. * [email protected] social interest. It is strategic, requir- The Integrated Approach chal- Vincent Dawans, a Virtue Ventures LLC ing a long-term vision and clear lenges the notion that unrelated Partner, conceived the Four Lenses objectives in order to manage per- business ventures are social enter- Framework, and has worked with Alter formance and change, and to mea- prises, believing that if business to outline a conceptual framework for sure results across the organization. activities are not central or strongly The Integrated Approach to social enterprise. Capacity building is tied to objectives related to the social mission then Dawans holds an MBA from the ICHEC Business and is systematically incorporated it is pure business undertaken by a School, Brussels, Belgium. He has worked on across the organization to strengthen nonprofit, and not social enterprise. projects in Europe, the US and Francophone it and support cultural shifts related An Integrated Approach is a meth- Africa, Mexico as well as the former Soviet to the enterprise. This approach odology that helps practitioners Union. recognizes resources inherent both do what they do better—innovate, * [email protected] to the organization and the exter- increase impact and effectiveness, nal environment, and mobilizes and and improve performance. ■ manages these resources to increase

Social Venture Network Resources: (continued from page 7) ‹ www.svn.org ‹ rebuildresources.com responsible business and economic justice. In addi- ‹ www.greystonbakery.com tion, SVN received a $394,000 two-year grant from the ‹ www.net-impact.org W.K. Kellogg Foundation on behalf of the Social Impact ‹ www.investorscircle.net Leadership Coalition (SILC). This grant will enable SVN ‹ renewalpartners.com to take a leadership role in addressing the lack of diver- ‹ www.tidescanada.org sity in the socially responsible business movement and Social Venture Institute—Hollyhock 2006 further our efforts to promote economic justice. We’ll ‹ www.renewalpartners.com/svi.html also be strengthening and expanding our Social Venture Business Leaders for Sensible Priorities Institutes, doing more to share best practices outside of ‹ www.sensiblepriorities.org SVN and promoting innovative models of socially respon- Businesses for Social Responsibility ‹ www.bsr.org sible business and social entrepreneurship. ■ Business Alliance for Local Living Economies ‹ www.livingeconomies.org Tom White is Editor and Publisher of the Social Enterprise Reporter. Canadian Businesses for Social Responsibility ‹ www.cbsr.bc.ca Berrett-Koehler Publishers ‹ www.bkconnnection.com

10 • SER 204 sereporter.com events The Grantsmanship Center Sustainable World Symposium & Festival New Business Ventures for Nonprofits Workshop May 13–14, San Francisco CA May 1–3, Erie, PA; July 17–19, Baton Rouge, LA; August 21–23: ‹ www.swcoalition.org Charleston, WV State Venture Capital Symposium An entirely new and up-to-date curriculum has been developed in coopera- May 18, Washington, DC tion with two SER contributors who also share the actual training: Rolfe ‹ www.nasvf.org/web/nasvfinf.nsf/pages/2006svcagenda.html Larson, and Andy Horsnell. ‹ www.tgci.com/training/nbv/nbv.asp National Coalition for Asian Pacific American Community Earned Income: Assessing Your Nonprofit’s Revenue Development Annual Convention Options: Foundation Center Training Centers May 18–20, Houston, TX April 24, San Francisco CA; 2006, April 28, Ft. Worth TX; May 4, ‹ www.nationalcapacd.org/convention2006 Atlanta, GA; May 9, New York NY ‹ http://fdncenter.org/marketplace/catalog/subcategory_training. Community College National Center for Community jhtml?id=cat250001 Engagement Annual Conference NYU Stern School of Business Conference of Social May 24–26, Scottsdale AZ ‹ www.mc.maricopa.edu/other/engagement/2006Conf/ConfInfo.jsp Entrepreneurs: Where Research & Practice Align April 6–8, New York City Business Alliance for Local Living Economies Conference: ‹ www.stern.nyu.edu/berkley/conference Creating Sustainable Communities Global Social Venture Competition Final Event and June 8–10, Burlington, VT ‹ www.livingeconomies.org/events/conference06 Awards Ceremony APRIL 7, Columbia Business School, New York, NY Cause Marketing Forum Conference ‹ www.socialvc.net June 12–14, New York City ‹ www.causemarketingforum.com National Offender Workforce Development Conference April 11–13, St. Louis, Missouri Community Development Society Annual Conference ‹ www.proworkdev.com Communities That Click: Individuals, Families, and Organizations Working Together Social Venture Network Spring Conference June 25–June 28, St. Louis, MO April 20–23, Kennebunkport, Maine ‹ www.comm-dev.org ‹ www.svn.org/Initiatives/spring-/spring.htm AMA Nonprofit Marketing Conference LOHAS 10 Forum July 10–12, Washington DC April 26–28, 2006 Los Angeles, CA The Business of Growth – Mission, Message and Measures ‹ www.lohas.com ‹ www.marketingpower.com/aevent_event24809.php Mountain-Midwest States Economic Development Peer Alliance for Nonprofit Management Annual Conference Learning Conference August 2–5, Los Angeles, CA May 3–5 Kansas City, MO Collaborative Leadership... Teaming Up to Strengthen the Sector National Association Of Development Organizations ‹ www.allianceonline.org/annual_conference/la06.page http://www.nado.org/conferences/other.php?con_id=20 National Association Of Development Organizations Annual Resource Alliance International Workshop on Resource Training Conference Mobilisation August 26–29, Reno NV May 5–7, Bangkok, Thailand ‹ www.nado.org/conferences/annual.php ‹ www.resource-alliance.org Risk Management and Finance Summit for Nonprofits Business and NGO Partnerships Sept. 18–20, Pasadena, CA May 9–10, New York City ‹ http://nonprofitrisk.org/training/2006/summit/summit.htm ‹ www.ethicalcorp.com/nycpartnership Inaugural Conference of Center for Social Profit Investors’ Circle Spring Conference and Venture Fair Leadership: Transforming the Helping Industry from Co-Dependency May 10–12, San Francisco, CA to Co-Creation ‹ www.investorscircle.net/index.php?tg=articles&topics=99 October 6th, San Diego, CA Association for Enterprise Opportunity Annual Conference ‹ http://socialprofitleadership.org Microenterprise Development: From Dreams to Reality 2006 Transitional Jobs Conference May 16–19, 2006 Atlanta, Georgia October 12–13, Atlanta, GA ‹ microenterpriseworks.org ‹ www.transitionaljobs.net/Events.htm

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