Agenda

What is SE?

Where SE Fits

CharityNon-ProfitSocial EnterpriseSocial Purpose BusinessFor-Profit Business

Exampleswww.socialenterprisefund.ca

Why SE?

Something is Happening: Change is a foot!!

Net Impact is a global network of leaders who are changing the world through business.

Mark Albion co-founder 2008 in Edmonton something in the water something has changed

Blurring boundaries: Interest in Doing Good

CharityNon-ProfitSocial EnterpriseSocial Purpose BusinessFor-Profit Business

35% of existing SEs were started in the last 2 years

(October 19, 2010 Globe and Mail)

What SE Brings to the Table

Trends

Conclusion

Risks are surprisingly similar

NFPSEDirectorDirectorFinancial riskFinancial riskRevenue riskRevenue riskProgram risk Business riskRegulatory riskRegulatory riskReputational riskReputational riskHR risksHR risksEnvironmental risksEnvironmental risks

Revenue Risk

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SE

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So, the question is:

Answer: The 3 Cs

Its tested; it works

Ambition: Direction, level and pace

Development Path

I mo.I mo.I mo.2 Mos.3 mos.2 mos.Board selects one idea for market research & financial feasibility Board decides whether or not to complete the plan and prepare launch

Catalyst ; agent of change; steward of org resourcesEntrepreneurRisk ManagerStrategic advisorOwnerPartnerLeverager of social and financial capitalPromoterFiduciaryOverseerBalancer of social and economic interests

Does SE fit with the mission?Do we have the resources to take this on?Is SE a cultural fit?How are we going to balance social and economic goals?

Are we prepared to compete in the market place?What is the only way to break even is by hiring fewer disadvantaged folks?

What is the enterprise cannot afford to pay a living wage?What might our donors say and do?Who needs to owner this?

How much debt are we prepared to take on?

How much equity are we prepared to contribute?If we succeed, we likely will become less reliant on government funding. Is this a good thing?

ParticipantsBoard;

SMTBoard committee + advisors

SMT

StakeholdersNew Board

Stable: mission, funders, clients, board, SMTResilient: demonstratedFinancially Healthy: key financial indicators, reserves, deficits/surplus, growth, diversity, earned revenuesHistory of AchievementEntrepreneurial

Ready organizations are:

Cultural Shifts

ProgramBusiness

Charity trumps economicsBalance of charity and businessPublic sector Market

Clients Customers

ReferralsSales

Top Bottom

Proposal writingBusiness planning

GrantsMarket generated revenuesOperating statement Balance sheetShorterLonger

Get legal adviceKnow yourself!Are you are society, a non-profit, a charity, a co-operative?Have you read your articles of association and your by-laws?What are the powers of the organization: are you able to own assets, distribute income, borrow?Remember the CRA

Corporate Structure Legal Considerations

Non-profits, charities, social purpose co-operatives operating in EdmontonSocial entrepreneurs that agree to non-profit format

Eligibility

Social enterprisePlanningOperating/working capitalCapital

What we Finance

Social and affordable housingPlanningLand acquisitionCapital constructionRenovationsAcquisitions

Asset building/strengthening balance sheets

EligibilityAbility to executeResilient, stable, financial strength, track recordBusiness caseFeasible, sustainable, doableBlended valueExit strategy

What we Assess

Term loansPatient capital

Financial Products

Flexible fit financing to needTermInterest rateFeesSecurity

Terms and Conditions

Social Enterprise Local economy missionGood Food BoxCapital and working capital financingTerm 6 yearInterest 5%Repayments: Interest only for 1 year; blended P and I for next 5 years

Examples

Social Enterprise Affordable space to arts communityCapital and working capital financingTerm 5 yearInterest 4%Repayments: Interest only for 1 year; blended P and I for next 4 years

Examples

Examples

Affordable housing: acquisition of supportive seniors complexTerm - 1 yearInterest - 5%Security - first mortgageStatus Paid in full

Examples

Balance sheet strengthening: acquisition of program centerTerm Loan # 1 for 1 year; loan # 2 for 2 yearsInterest loan # 1 - 5%; loan # 2 6.5%Security - first mortgageStatus Paid in full

Path to Loan GrantsSeminarsPortfolio

Development Services

Loans

Furniture Recycling

Planning

Clients - SE

LoansPlanning

Clients Housing

LoansPlanning

Clients Other

Where can I learn more?

www.socialenterprisefund.ca

*Imagine a business concept built around donations, volunteers, thrift and employment of barriered people!! - Thats a SE concept and that is why it is sophisticated!

Compassion paradoxOne of the many challenges facing nonprofit organizations, whether or not they are trying to create wealth for themselves, is to grapple with this paradox: the solutions to the problems nonprofits address are long-term, but the culture of nonprofit organizations discourages investments beyond those that pay off in the short-term. This compassion paradox is a result of being constantly torn between compassionate instincts to serve immediate needs and the strategic imperative of investing resources for longer-term solutions

We do not employ people to contract pack and make rosettes. We contract pack and make rosettes to employ people

The Forth SectorThis prospectus takes an unashamedly business view of what has been and continues to be an intractable social and financial challenge in the UK, bringing disadvantaged and disenfranchised people into mainstream employment. On the demand side, the extent of demand is unequivocal, more than two-million people in the UK claim incapacity benefit. On the supply side, there are few mainstream businesses willing and able to offer meaningful employment on the scale needed, even before the current economic crisis struck. Tinkering at the margins is of no use, what is needed is a bold but viable response on an industrial scale. This is what we propose.Interestingly, the challenge many of our service users face is not just their disability but their lack of a job history, which makes them unattractive to potential employers. Forth Sector has identified this as a gap in the market. We can provide people with a CV, gained in a supportive but real working environment. We provide a bridge across what is for so many too great a gap. This is our USP. This is what you would be investing in.

*Powering Social Changeby Bill Shore, Chairman, Community Wealth VenturesLessons on Community Wealth Generation forNonprofit Sustainability Copyright 2003 by Community Wealth Ventures, Inc.

Like the colonias, the nonprofit ventures have few of the traditional supports that are available to other types of organizations. They lack sources of capital, technical assistance is available but financially out of reach, and promotion is uncommon. They are subject to ambiguous tax treatment and sometimes-wary customers. Life on the thin strip between one land and another is always a precarious existence, full of trials and tribulations, but also charged with opportunity. It is often a crucible of sorts, where new ideas, new ways, and even new institutions are forged. Through trial and error, experimentation and entrepreneurship, one generation after another stakes its claim until a distinct new territory emerges

What are local examples:Charity:SE:Social Purpose Business: Not just for Profit - Wild Earth; Body Shop

Differentiator between SE and SPB: distribution of profits

Trends: the operating environment is and has changed so too must operating paradigms

Risk: in the eye of the beholder NPs face and mitigate risk daily; SE lots of ways the categories of risk are the same emphasis is different why not bring current risk management skills to bear in SE

SE: been around 150 years

Need to unpack the models there are differences of course, but there are many similarities

Ambition: question: can NPs achieve their ambitions within the current financial and operational models?*Key statsFounded in 1993 by MBA students2010 Stats20,000+ members 260+ chapters 160+ of the world's leading graduate schools

*Jeff Skoll is a founder of E-Bay, the Skoll Foundation, and the Skoll Centre for Social Entrepreneurship at Oxford University. Investors in this new breed of social enterprise are approaching problems from an entirely new perspective. Their goals include things like eradicating malaria, ending poverty, and making childhood hunger non-existent. They approach philanthropy from the perspective as venture capitalists approach innovation and commercialization, which targets, measures, and outcomes run through leading edge business processes. *social enterprise can also fill the Air Canada Centre in Toronto with tens of thousands of screaming teenagers. Me To We was formed around the Ecuadorian concept of the minga, which means for a community coming together to work for the benefit of all. Me to we is an expanding conversation engaging new generation of entrepreneurs leadership development, social enterprise training, project incubation, and volunteer coordination. They drive revenue through hosting events, and selling music, books, and t-shirts. Last year they reinvested $1 Million back into the core business and gifted another $1 Million in profits back to their charity of choice, Free the Children.

*Loss of monopoly of doing good

Blurring of boundaries the convergence of the edges charities and for profit towards the middle SE and social purpose business competition for staff, donors, ideas, capital, etc has broadened and increased. There no longer is a monopoly on doing good within on silo of the business continuum

(Social Innovation Generation MaRS Discovery District, Toronto )

*Creation of SEF in Edmonton an indication of something happening*Focus on sustainability and mission

Strives for self reliance ownership of mission

New way of doing business

Discretionary $$$

Real life programming*Changing demographics and increasing diversity staff, directors, donors, clients, volunteers, tax payers Aging and more diverse population change operating environment: Changing needs, changing govt directions, changes to how donors give (donor profile); expectations of volunteers more demanding Transition in leadership from old dogs to new dogs change organizational culture

Performance measurement: new donors/investors are looking for measureable results linked to outcomes SROI methodology of monetizing social value. This will force organizations to do the intellectual work determining their theory of change this is difficult and humbling stuff. I venture to guess that most will find that their impact is more moderate than currently articulated. Measurement will force focus.

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*Risk argument is a red herringUn pack the risk issueFirst, NFPs absorb and mitigate risk dailySecond, in my opinion, in many ways the categories, nature and scope of risk is similarThird, SE $$ are discretionary worth some risk

Financial risk very similar: operating deficits; cash flow deficiencies, equity investments

Risk of losing money compares to the risk of failed fund raising events to mitigate the risk of a fund raising event will hire fund raising expertise but will resist to hire business expertise

Revenue risk NFP donor and funding led restricted, short term, lots of buyers few funders which generates a premium price which is the impact on mission; intermittent resource hog to compete in the cycle of apply, apply, apply - report, report, report, whose mission really - uncertain and variable;

Revenue risk SE sales led uncertain and variable particularly in the launch phase gains strength thereafter unrestricted, longer term, less reporting, ur mission, reasonably stable

*Revenue risk NFP donor and funding led restricted, short term, lots of buyers few funders which generates a premium price which is the impact on mission; intermittent resource hog to compete in the cycle of apply, apply, apply - report, report, report, whose mission really - uncertain and variable;

Revenue risk SE sales led uncertain and variable particularly in the launch phase gains strength thereafter unrestricted, longer term, less reporting, ur mission, reasonably stable

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*Liam Black and Jeremy Nicholls There is No Business Like Social Business

Culture shifts: top to bottom line; grant led vs sales led mission to blended value focus clients to customers; referrals to sales public to market

What do we do when we start a new program or need to raise more funds hire the right people; collaborate, etc

Even tho the risks of standing still are high this is where we are comfortable we know the terrain

*1844: Rochdale, England - suffering at the hands of exploitative factory owners and shopkeepers who charged extortionate prices, 28 working men scraped together a total of 28 to open their own shop. It was the beginning of the modern co-op movement.

1956: Mondragn, Spain - Mondragn Corporacin Cooperativa. The worlds largest social enterprise by annual sales and size of staff. Today, MCC consists of 120 companies; employs 42,000 worker-owners; runs 43 schools and one college; generates more than $4.8 billion annually in manufacturing, services, retail and wholesale distribution; and has a business plan animated by the principles of the social doctrine of the Roman Catholic Church

2000+Pedal Revolution provides employment and job training for at-risk youth in San Francisco who are taking steps to improve their lives. Pedal Revolution is a social enterprise that helps at-risk youth in San Francisco get ready for work and life by providing jobs, job-readiness and a supportive community

PioneerOur enterprises include retail cafs, institutional food, sheet metal fabrication, aerospace precision machining, wholesale food distribution and contract packaging and fulfillment

BaywindBaywind's aim is to promote the generation of renewable energy and energy conservation.

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There is no short cut!!

Org readiness measured by:Stable: mission, funders, clients, board, SMTResilientFinancially Healthy: literate, solid systemshistory of AchievementEntrepreneurialAdapt to new ideasRisk tolerantPlannersPaid professional staffWell Organized solid systems

Opportunity IdentificationPrefeasibility

Feasibilitydetermine WHETHER to do the businessmarket, finance, operations, regulatory, org capacity

Business Plan- determine HOW to do the business

*s

Board decides whether or not to complete the business plan and prepare for launch

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