thriving in turbulent times: maximizing your success in the new social environment
DESCRIPTION
This presentation looks at social innovation and social entrepreneurship models as opportunities for organizations to survive and thrive. Rick Blickstead, CEO of the Wellesley Institute Michael Shapcott, Director of Housing and Innovation Aerin Guy www.wellesleyinstitute.com Follow us on twitter @wellesleyWITRANSCRIPT
maximizing your success in the new social environment
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Thriving in turbulent times
May 4, 2009
agenda
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The emerging new economy
The third sector and survival
Funding and new opportunities
From competition to co-petition
Challenges and opportunities
Rise of social innovation
Need for social enterprise and social finance
Building a resilient and sustainable future
Culture underpins success
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independent, non partisan, think tank advancing health equity
rigorous research leads to pragmatic policy
consumer-centric, solutions focused
relentless incrementalism tipping point decisions
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affordable housing
healthcare reform
immigrant health
social innovation
“the future isn’t what it used to be”
environment
communications
information
interconnectedness
sandwich generation
Boomer and zoomer
less is less
freedom 85?
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the new normal
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shift to the intellectual capital economy
massive credit and debt loads
$5 trillion dollar stimulus
trillion dollar hangover and possible stagflation
possible loss of 20,000 NFP
coping with those left behind
the best is yet to come….we will recover
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speed debating
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Discussion 1
What macro issues do you
see affecting your
organization?
What micro issues affect
your organizations?
What is affecting your
colleagues?
What is affecting you?
the third sector (and why it matters)
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Delivers vital services and
programs to people
Strengthens
communities…builds social
cohesion
Makes a large and dynamic
contribution to economy
Significant employer
12 million volunteers
$90 billion GDP
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Six times
the size of
the auto
industry
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0%
10%
20%
30%
40%
50%
60%
70%
1997 1999 2001 2004
Trends in Revenue Sources Core Nonprofit Sector
(without business and professional associations)
earned income
charitable donations
government
Case study: developing affordable homes
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Canada-Ontario Contribution $2,100,000
Municipal grant 194,750
Donation
Fundraising
520,000
675,000
Subtotal $3,489,750
Mortgage 2,610,250
TOTAL PROJECT BUDGET $6,100,000
Financing a 50-unit seniors’ housing project (2007)
$122,000 per unit construction cost
Issues: Multiple funding sources, multiple accountability / regulatory
requirements, inconsistent funding rules, timing concerns, heavy
reliance on fundraising / earned income (20%), heavy reliance on private
financing (43%) with ongoing financial burden…
collaboration
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collaboration principles
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Collective activities form
significant part of NFP work
Much is accidental or
incidental; but still important
Much is also simply
information sharing with
some resources
Need to take to next level
speed debating
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Discussion 2
In what types of
collaborations are you
normally involved?
What makes them good or
poor?
What would you change to
improve?
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cause for concern
a heightened sense of anxiety about
funding and organizational stability, even
survival, over the next two or three years
at least one-third of the organizations
experiencing serious economic impacts,
and all fear that things will get worse before
they improve
NFP organizations are hearing that many
long-term funders, including many United
Ways, Community Foundations and family
foundations will be reducing their granting
programs in 2009 and 2010.
our collaborative initiative
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A multi-year research and
policy initiative to examine
good (and not-so-good)
collaborations in the third
sector – and the private
sector
…and to provide solid
research and policy
direction to our ongoing
work in supporting effective
collaboration
funding and collaboration
reliability remains tenuous.
cumulative administrative
burden is all consuming.
multi-year grants do not
solve the administrative
burden.
funders are slow to
approve/reject grants
slow response time causes
“gap” problems for service
delivery. www.wellesleyinstitute.com
collaboration challenges
administrative burden is heavy, unrelenting, and places many constraints on their ability to operate effectively
actual impact of the funding process is directly at odds with reasons we engage non-profit organizations to deliver community services.
funders, large and small, rarely give community organizations any latitude to adapt or adjust programs and finances to meet local conditions and changing circumstances.
grant applications tend to be overly long, complicated, and difficult to complete.
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collaboration principles
“more for the same”, not “the same for less”
collaboration can make existing organizations more efficient and effective, and can deliver better programs and services that benefit clients, through shared resources.
funders should not view collaboration (or, indeed, measures such as forced integration or amalgamation) as a means to reduce infrastructure
a means to improve effectiveness and efficiency starting, at a minimum, with existing resources.
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recommendations
A new “virtual” Centre for Leadership in Collaboration, working in partnership with a funders’ collaborative alliance, should be created to serve as a hub and a catalyst for action among individual organizations, and with funders.
a more intentional structure within the third sector to identify and share good practices and to bring together NFPs and funders to share and assess collaborative ventures.
funding agencies should shift a meaningful portion of program dollars to create the infrastructure that supports collaborative partnerships.
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recommendations
If collaboration is one of many activities that NFPs are expected to perform without dedicated resources, then the real gains from collaboration will be hard to achieve.
Existing collaboratives, networks and integration structures (as an example: Local Health Integration Networks, the Community-Based Research Network, Community Partnerships, and others) should provide leadership in developing and sustaining effective collaborations.
The capacity for creativity for collaboration among these existing organizations needs to be encouraged and supported.
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recommendations
Collaborative efforts should be established as time-dated initiatives with a shared vision, clear goals and objectives, and highly-defined impact mandates by all partners
Longer-term collaboratives should be encouraged to continually self-assess and re-invent themselves to remain relevant
Collaborations should adapt to changing circumstances and, in some instances, should be prepared to wind down in response to evolving conditions.”
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not all doom and gloom
umbrella groups and networking groups are bringing their members together, to share best practices.
agencies are looking for new ways to collaborate with one another.
charities are looking at diversifying their fundraising base, and also at opportunities to generate new revenues.
concerned funders – such as foundations and United Ways – are actively engaged in explorations of how to have greater impact with fewer dollars.
reduce costs – to do more with less.
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the chase for revenue
Stock market declines have had a severe impact on the value of endowment funds that many NFPs have been carefully building for years.
Corporate donors and sponsors are frequently not renewing their support.
A number of social service agencies – such as food banks and credit counseling agencies – report significantly increased demand for their services.
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challenges
political vulnerability of grants and programs is increasing.
large and small grants impose heavy administrative burdens.
all three organizations described themselves as “operating on the edge,” with staff more than fully engaged and extremely vulnerable should a senior manager leave.
senior managers are very aware and worried that they cannot replace themselves.
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More challenges
Grant management, of necessity, takes priority
over other management responsibilities.
Funders need to do things differently.
None of the agencies we studied had a portfolio
of funders that supported them to get on with the
task of delivering effective services and building
communities.
Core non-profits rely more heavily on non-
governmental funding…
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The Roof co-location (Barrie)
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social innovation
Culture of Social
Innovation
Public PolicySocial Finance
Social Entrepreneurship
Social Enterprise
A common lexicon is important
Social innovation does not entail commercial interest and is oriented towards systemic change
Social enterprise is a profit oriented entity marketing its products and services blending business interests with social ends getting both an economic and social return on investment. Often also called a social purpose business.
Social entrepreneurship is an individual-centred concept
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social enterprise continuum
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Volunteerism
Public Services
Social enterprise
Socially responsible business
Profit driven mainstream
business
social finance in the third sector
Role of third sector is to respond to need and pioneer new approaches beyond the reach of public and private sector.
Ability to do so is undermined by financial frailty
In UK Commission on unclaimed asset develop the concept of a Social Investment bank
Objective is to provide urgently needed greater investment and professional support.
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speed debating
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Discussion 3How do you define innovation
What forms of social innovation
do you use?
What are the obstacles to
innovation?
How do you reward risk taking?
the rise of social innovation
Social innovation is an initiative, product, process or program that profoundly changes the basic routines, resource and authority flows or beliefs of any social system (F. Wesley Sig Waterloo).
Social system is defined as any organized assembly of resources, beliefs and procedures regulated by interaction or interdependence to accomplish specific outcomes
Social systems are complex and must be adaptive and constantly evolving
Social systems have own culture, political and economic structures and social interactions
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insights
Successful social innovations have durability and broad impact
Innovations avoid “band-aid” solutions
When broad and durable, SI is disruptive and create systemic change
Must cross multiple boundaries, reach different and more people, more organizations, and linked into social networks
Social innovations depend on “surprising coalitions”
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the innovation cycle (F. Wesley)
S
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exploration
choice
exploitation
resiliency
capacity
building social innovation capacity
Process needs to connect:
1) Links between vulnerability and resilience
2) Re-engaging vulnerable populations that are disenfranchised from resources
3) Creates links between a healthy environment, vibrant economy and social justice
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Social Finance: New (and sometimes not-to-
new) ways to deliver the finances that third
sector groups need to get their work done…
enpTO: A pilot project led by the Centre for
Social Innovation, with the Wellesley Institute as
a founding partner, to assist non-profits to
develop their financial base
speed debating
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Discussion 4
What new ways of
funding/financing have you
explored?
What are the barriers
internally and externally
Where might you find capital
sources?
The UK experiment…FutureFund Invested unclaimed bank assets into a 250M GBP
fund with annual revenue of 20M GBP
Bank acts as a “wholesaler” of capital for the social sector
It capitalizes present financial intermediaries, provide advice and support, develops sustained investment programs, supports new intermediaries in efforts to raise capital
Facilitates access to private finance as well as broader capital markets.
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Social finance is the flow of financial capital to human need uses:
• Affordable Housing• Social Enterprise• Support for working families• Health & Home Care• Community Development• Social Economy• Clean Technology• Microfinance• Fair Trade• Green Building• Education• Bottom of the Pyramid
social finance
Charity and Non-profit
GovernmentBusiness
Hybrid
Space
source: market sector listing adapted from www.xigi.net)
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A healthy social finance marketplace contains many different MODELS
spectrum of social finance
Investment Type UK Examples Canadian Examples
Financial Institutions Triodos, Charity Bank Vancity
Financial Investment Product Universe
Social Investment Forum, GSI
Jantzi Index
Social Venture Capital - business Catalyst Investeco, Renewal 2
Social Venture Capital – social enterprise
Bridges Ventures, Venturesome
Resilient Capital
Government Loans Future Builders Fiducie Chantier de L’economie Sociale Trust
Non-Government Grants Unltd. Enterprising Non Profits (ENP) – BC and ON
Philanthropy Esmee Fairbairn McConnell FoundationVancouver FoundationOntario Trillium Foundation, Wellesley Institute
UK social finance spectrum
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Unsecured Loan
Overdraft
Quasi-equity
Equity
Grant
Pre-funding Capital
Fundraising
Working Capital (open)
Soft Development Capital
Standby Facility
LOW RISK HIGH RISK
Hard Development Capital
Increasing evidence of commercial finance available
Patient
Capital
Secured loan
Working Capital (closed)
LOW
CHANCE OF REPAYMENT
HIGH
CHANCE OF REPAYMENT
Need for further supply of capital and development of financial instruments
What does Canada’s spectrum look like?
Venturesome’s Spectrum of Venture Capital Investment
Courtesy of Paul Cheng at Venturesome
Dark grey area show where supply
of finance is readily available Light
grey area is where there is a need
for more capital and instruments
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Paul Cheng - Venturesome
3 models of social enterprise1. Profit Generator – goal to get profit and give some (or all) away to charity (Patagonia)
2. Trade Off Financial and Social Returns - activity has social impact, but needs to trade off between financial and social impact (ie, The Hoxton)
3. Lock-Step – no trade- off between social and financial impact - if one side goes down, the whole organisation does (ie. community wind farms)
Creating Social Finance Solutions
- 100% + 8%0%
Capital-protected Market-rate returnGrant-makers- 15%
Courtesy of Paul Cheng at Venturesome
Venturesome is not a bank, nor a granting organisation - it providesunderwriting/stand-by facilities, unsecured loans and equity and quasi-equity
• Responding to issues in the third sector – charities are undercapitalized with weak balance sheets and a ‘donor’ culture rather than an ‘investor’ culture
• Provided £12m to 200 organisations, with a default rate of less than 5%• Current fund is £10m with banks, foundations and HNW individual investors• Exploring the ‘negative return’ spectrum
social finance support systemsCourtesy SIG @MaRS
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The UK marketplace also contains many social finance INTERMEDIARIES
Social Enterprise
Growth
Research
GuidestarAshoka
Investment Bank
Social Finance Ltd
Corporate Finance
Catalyst
Legal Structures
CIC’s
What systems exist in Canada?
legal structure basics
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What is an appropriate legal structure?
What is CIC?
Each model has its pros and cons...what is right for Canada?
What is an L3C?
What is the Community Enterprise Act?
Community interest companies (CIC) are a type of limited company designed specifically for those wishing to operate for the benefit of the community rather than for benefit of owners of the company..
CICs can be limited by shares, or by guarantee, and will have a statutory “Asset Lock” to prevent the assets and profits being distributed, except as permitted by legislation. This ensures the assets and profits are retained within the CIC for community purposes, or transferred to another asset-locked organisation, such as another CIC or charity.
L3C'sare low-profit limited liability corporations, which function via a business modality that is a hybrid legal structure combining the financial advantages of the limited liability company, an LLC, with the social advantages of a non-profit entity. An L3C is run like a regular business and is profitable. However, unlike a for-profit business, the primary focus of the L3C is not to make money, but to achieve socially beneficial aims, with profit making as a secondary goal.
Sector leaders in Canada are exploring the creation of a legal structure, learning from CIC and L3C models.
financial stakeholders in Canada
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Federal and
Provincial
Government
Private Companies
How do we engage and connect the individuals in these stakeholder groups?
What is he role of crowd sourcing and micro-investors?
Charitable
Endowments
Financial
StakeholdersFinancial
Stakeholders
SIO & SRI Mutual
Funds
High Net Worth
Individuals
Credit Unions
Insurance
Companies
Pension Funds
Mainstream
Banks
Foundations
Financial
Stakeholders
The Third Sector includes voluntary and community groups,
social enterprises, charities, cooperatives and mutuals
enabling public policy
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The UK has an OFFICE OF THE THIRD SECTOR
The UK civil society contains many successful
ADVOCATES and ASSOCIATIONS
• Created in 2006 • Sits within Cabinet with its own minister, Kevin Brenn an• Pros and Cons to placement in central government
• Social Enterprise Coalition provides research and awareness programs and is proactively developing relationships with both political parties
• The National Council for Voluntary Organisations (NCVO) provides the support and voice for the voluntary and community sector
Which government body, advocates and associations do we need in
Canada?
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Policy Catalyst Working GroupReflecting public benefit through government
Key issues to address
What should a ‘government body’ cover? • How should public benefit services be reflected in government
•Focus Innovation and not cost-cutting
What is an appropriate policy catalyst?•Creation of a social innovation ministry (Office of the Third Sector)?
•Creation of a social innovation endowment (NESTA)?
What should a ‘NESTA-like’ organisation do? •Canada-wide knowledge management and research
• Funding for social innovation projects
•Challenge Grant Programs
Should the catalyst be provincial, federal or both?
Is there a role for municipal leadership?
structure and reform(courtesy SIG @MaRS)
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Two big issues to address:
Regulatory reform (foundations and taxes)•Revising and advocating for improvement of regulations for
foundations
• CRA and PRI guidelines for foundations
• Exploring how tax levers might support investment in social
innovation and social enterprises
Legal structure• Designing and advocating for a legal structure for Canada
• Pros and cons of CIC and LC3
• Provincial and Federal actions need to be activated
Key Step: Convene a high profile working group
building a resilient and sustainable future
Third sector organizations will need to engage in new models for future expansion
Private-Public and Third sector partnerships will be critical
Collaboration will necessitate real exchange and sharing of financial and people resources
Organizations will need to agree to common missions, values and objectives
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Breaking news…legislative victory!
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The Wellesley Institute convinced
the Ontario government just last
week to amend its draft anti-
poverty law to recognize critical
importance of third sector
People are talking to each other
online
2 choices:
1. Resist it, and it will happen anyway, elsewhere,
outside your influence
2. Support it, participate, influence it, and leverage
it for extending your brand
some benefits of social media
1. Listen and learn
2. Publish valuable news and information
3. Distribute promotions
4. Create or extend your brand personality
5. Engage in conversations and customer services
6. Efforts lead back to websites – repository of
information
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The web is about conversations,
not top down delivery
of information or messages.
Social media works best in tandem
with traditional means
Baby….bathwater….no!
Segments our audiences
Build on the power of networks and burgeoning
communities
Organizations using communities to connect
faster, more collaboratively, more inclusively, and
more effectively
Proliferation of social media stories within
traditional media piques interest
the purpose of social media is to
engage with audiences in interactive
communities
Genuine engagement facilitates a highly involved
audience that wants to interact with “the brand”
The more people an organization can interact
with who already have strong social networks, the
more likely it is that a message can be spread
through those networks
Social media can change the world We’re looking for impact, influence, and change
A message that resonates can make an enormous difference
Frozen Pea Fund – original Twitter posts became a global campaign for breast cancer awareness
Barack Obama’s presidential campaign
Kiva.org
Netchange
Stableandaffordable.com
Homeless Hub
Can you think of any others?
innovative ways of getting things done
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The social web allows people and organizations
to connect in unlimited ways
connectivity as a catalyst for change
Technology as an enabler for innovation
For example: Kiva.com
Microloans for the developing world
Connects third world entrepreneurs with
microlenders world wide
Organizations using sm successfully
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Here comes everybody
Focus on relationships, not on “campaigns”
Commit resources to learning and training
Made and learned from mistakes
Respect and humbled by medium
Social web innovates….
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Public relations
Media relations
Communications
Networking
Collaboration
Outreach
Fundraising
Word of mouth
How?
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Constant, small iterations
Lather, rinse, repeat
Tell stories
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Great grassroots initiatives
Facebook groups
Flashmob opportunities
Online communities
E-commerce on site
doing more with less
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Building your brand
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Ensuring the right culture
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Culture precedes innovation success
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Social entrepreneurship governance model
Permission to fail
Integrated thinking
Creative thinking and pragmatic doing
Small acorns produce large oak trees
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We gratefully acknowledge the
support and contribution of our
various partners in the creation of
this presentation.
Thank you.
Thank you and summary
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