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Social entrepreneurship

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•Overview of Social Entrepreneurs-What is it? There are many different “social” activities what is distinct about the social entrepreneur?

-Who does it? What are the characteristics of the person and organization that are called social entrepreneurs?

-Why does it matter? Is the world different as a results? How do we know the world is different? What is the reason for being for the social entrepreneur (The importance of the mission for an organization)

Social entrepreneurship

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-The two most common forms, -the social enterprise creating a business or earned income that raises money to support the organization and which advances the mission (for example creating jobs for the unemployable)

- The innovator of systems change beyond the social enterprise: Using resources in new ways to further the mission ( An example, teach for america, reforming American education by getting graduates of the best colleges to spend 2 years teaching in poorerst schools rather than working on wall street)

Social Enterprise 101: TerminologySocial Enterprise 101: Terminology

Social Enterprise

business that generates earned income for a social purpose; often incorporates social innovation. Examples: Seventh Generation, Rubicon Landscaping, Pioneer Human Services.

three main forms:1. Revenue generation focus2. Job-training focus3. Mission focus, business as a bonus

Social enterprise recognizes inherent uncertainty and need for experimentation, affirms the value of dispersed creativity vs. centralized planning, not limited to a given sector and not bound by culture of charity, is pragmatic, open to any methods or tools to get the job done including markets; focuses on lasting social change.” – Greg Dees

The Hybrid Organization(social enterprise definition)

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Kim Alter Virtue Ventures LLC 2004

The Hybrid Organization (social enterprise definition)

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Kim Alter Virtue Ventures LLC 2004

Entrepreneurs in the business world

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• Entrepreneurs are the change agents in the market-They exploiting an invention -producing something old in a new way-Creating new markets serving traditional markets in new ways

The social entrepreneur

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• Entrepreneurship has traditionally been seen as a way of creating wealth for the entrepreneur and for those who back her/his work. Social entrepreneurs employ “entrepreneurial skills,” such as finding opportunities, inventing new approaches, securing and focusing resources and managing risk, in the service of creating a social value.

Social Entrepreneurs are change agents in the social sector

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•Adopting a mission to create social value

•Recognizing and pursuing new opportunities to serve that mission

•Continuous innovation adaptation and learning.

•Acting boldly without being limited by resources currently in hand

•Heightened accountability to stakeholders served for the outcomes and IMPACT created

New relationships of the funder and the social entrepreneur

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•Traditional providers of charity gave money away without expecting a financial return and often without involvement in the recipients’ operations.

• “Social investors” by contrast blend philanthropic giving with business principles. Committing resources to social ventures with the expectation of a specified and measurable social and sometimes also financial return,.

(M Martin 2005)

What the SE approach contributes to an organization

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• SE introduces a different kind of business thinking in non profits: paying attention to market forces as well as the need:

• Social Enterprise also moves thinking towards a focus on long term sustainability for the endeavor

(M Martin 2005)

Irupana- Bolivia

• Irupana works with 1,700 indigenous farming families across Bolivia, buying certified organically grown produce directly from them, cutting out the middleman. Irupana produces and distributes 80

products including coffee, tea, bread, honey, marmalades, chocolate, dried fruits, a variety of cereals, to 18 Irupana stores and 300 outlets that stock Irupana foodstuffs, including large supermarkets. Approximately 4,000 customers a day buy its products. Organic goods sell at higher prices as they are targeted to middle and upper income consumers, allowing Irupana to

• pay prices to farmers that are about 25% higher than non-organic produce. Javier Hurtado, Irupana’s founder, encourages the farmers with whom he works to keep a portion of their harvest, thus improving

• their own families' nutrition. Hurtado employs knowledge of organic agriculture and high standards of production to create a product that will command a premium price. Last year, Irupana’s sales

• expanded by 32% despite the economic downturn in the region. Irupana has begun to secure international markets, and just signed a contract with a German buyer to supply 180 tons of Irupana’s cereals over the next three years.

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Waste Concern- Bangladesh

By promoting the concept of waste as a resource and emphasizing on the marketing aspect of organic waste, Waste Concern is causing a chain reaction among multiple sectors in Bangladesh. Working in partnership with communities, Waste Concern has set in motion a process for house-to-house solid waste collection that is then taken to community-based composting plants to turn the waste into organic fertilizer. Waste Concern arranges for fertilizer companies to purchase and nationally market the compost-based enriched bio-fertilizers it produces. Waste Concern thus provides jobs for urban poor that collect the waste and work in the local plants and stimulates behavioural changes in urban communities and the waste management industry. In addition, Waste Concern helps to address the environmental problem of diminishing topsoil fertility due to the use of synthetic fertilizers and pesticides in Bangladesh. At present, 30,000 people are benefited from Waste Concern’s project in

Dhaka.

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The Big Issue - Scotland

The Big Issue in Scotland, co-founded by Mel Young and Tricia Hughes, is a weekly street paper sold by homeless people in Scotland. Based on the philosophy of providing a hand up, not a hand out, its homeless vendors receive 60% of the cover price for each sale. Featuring a mix on hardhitting current affairs and lively critiques on art and entertainment. The Big Issue in Scotland sells 50,000 a week with a readership of 255,000 and is most popular amongst 15 to 24 year olds. Its popularity has demonstrated the viability of publications that blend social and business objectives. Building on the success of Big Issue in Scotland, Young helped launch a global association - International Network of Street Papers (INSP) - to provide support to 50 similar street papers in 30 countries across five continents. Young is currently President

of INSP.

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ASAFE -Cameroon

Gisèle Yitamben's Association pour le Soutien et l'Appui a la Femme Entrepreneur (ASAFE) is providing business training and development services, alternative financing and access to e-commerce to support thousands of women entrepreneurs in Cameroon, Guinea, Benin, Chad and the Democratic Republic of the Congo. Today, ASAFE is actively engaged with technology companies and business incubators to help African entrepreneurs overcome the

digital divide.

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IDEAAS - BRAZIL

Fabio Rosa has pioneered systems to provide electricity to hundreds of thousands of impoverished rural Brazilians. His widely-replicated Palmares Project established the standard for low-cost electricity transmission in rural Brazil, reducing costs to consumers by more than 90 percent. Today, Rosa is spreading innovative "agro-electric" solutions that combine photo-voltaic solar energy, electric fencing, and improved farming and grazing systems to simultaneously combat poverty, land degradation

and global warming.

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ApproTEC- Kenya and Tanzania,

ApproTEC seeks to develop a significant middle class in Africa by stimulating the growth of a thriving entrepreneurial sector. Beginning with Kenya and Tanzania, it seems well on its way to attaining that goal. ApproTEC creates new businesses and jobs by developing and promoting new low-cost technologies that are bought and used by local entrepreneurs to establish profitable small businesses. By identifying, developing and marketing technologies with a high benefit-cost ratio, ApproTEC enables poor but industrious individuals to play an effective role in the market economy, substantially increasing their incomes and creating jobs and a host of backward and forward linkages. By July 2002, over 28,000 pieces of ApproTEC-designed machines and tools had been purchased in East Africa. Today over 500 new pieces are sold every month. Local entrepreneurs have used these tools to start over 24,000 new small enterprises, create over 25,500 new jobs and generate over US$30 million a year in new profits and wages. Between them, they already generate over 0.5% of Kenya's GDP

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Duck Revolution- Japan

Takao Furuno has developed and disseminated a sustainable, integrated organic rice and duck farming system that significantly increases yields and has been replicated in tens of thousands of locations across Asia. Rather than using chemical inputs, Furuno introduces ducks into rice paddies to fertilize and strengthen rice seedlings and protect them from pests and weeds. This process boosts farmers' incomes and decreases their work load, while reducing environmental damage and

increasing food security.

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Rubicon Programs -USA

We make cakes and a whole lot more

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FINANCIAL SUSTAINABILITY

NATIONAL SCALE SOCIAL IMPACT

Market driven business model

focused on growth

Innovative networks of

local and national partners

Employment and pathways out of poverty

for target populations

RNSI

Rubicon National Social Innovations (RNSI) Defined

An initiative of Rubicon Programs, Inc., RNSI is a “laboratory for scaling social enterprise.”

Our near-term goal is to launch businesses that meet these three criteria:

The Criteria RNSI Uses To Evaluate Social Enterprise Opportunities

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• Number of people impacted (e.g., jobs per location and number of location; affected population)

• Scalability of the enterprise– National partners– Fixed cost economies

• Positive overall social impact from the enterprise• Target population (e.g., low-skill workforce)• Positive impact through jobs (skill-building, transitional

workforce)• OR … positive impact on those same people by other means

• Target break-even in three years or less• RNSI competitive advantage• Partners available who can help us scale• Operationally feasible

– Proven elsewhere, needs to scale– Risks are manageable– Team available with expertise and experience

Scale

Individual impact

Attractive economic

s

RNSI Business Development Process

TO REACH SCALE, WE NEED TO BE AGGRESSIVE. AS OUR COLLEAGUES AT IDEO HAVE TAUGHT US, IN TRYING TO DESIGN SOMETHING DIFFERENT AND BETTER: “FAIL- FORWARD- FAST”

Phase I: Idea Generation

Phase II: Feasibility

Study

Phase III: Launch first

RNSI site

• Develop pipeline of business ideas• Vet ideas using business development tool created

by RNSI• Pass top ideas (~3-5) onto Phase II

• Conduct feasibility studies on top ideas• Select ~1-3 ideas to pilot and test for

success on a national scale• Assess capital and organizational needs

• Secure capital• Hire leadership/staff • Launch • Evaluate for national

scale

(Phases I & II are done in parallel as we continue to evaluate new ideas)

Opportunity: Bulk Item/Mattress Recycling Facilities

15-20 multi-stream facilities handling 5-10 million mattresses and other items per year, with successful placement of over 1000 transitional workers per year

5 year goal

10-15 permanent jobs initially, can run as a transitional job program with up to 100 TJ workers per yearSocial

Impact

Running a materials recovery facility for multiple bulk item streams is marginally profitable, potential to improve by combining with other higher grade waste stream net income and/or finding value-added uses of product parts.

ProfitabilityPotential

Top ten retail chains, top ten bedding manufacturers, large national haulers, Int’l Sleep Products Assn.

Key National

Partners

Transfer station/landfill operators, trash collectors, retailers, manufacturers, hotel chains, universities and military

KeyCustomers

Per unit tipping fees, retailer and manufacturer take back programs, component part sales and potential renovation and value-added products business income

RevenueModel

Rubicon has conceptualized a new model for providing small unsecured loans for emergency needs

Applies for loan, authorizes

employee to make disclosures and

payroll deductions

BorrowerEmployer

Payroll Service Provider

Lender

RNSI

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2

3

4 5

Online Application

Verifies application, performs

underwriting, verifies repayment detailsCommunicates

underwriting result and loan details

Loan delivery in medium of

choiceRepayment

through monthly payroll deductions

Loan proceeds could be delivered in any form of the borrower’s choice i.e.

check, deposit, card or cash

Access to employee information and payroll deduction management could be

ideally provided through a payroll service provider or employer database

A New Model for Employer-Based Lending A New Model for Employer-Based Lending

The Rubicon Business Model

Lessons Learned From The TrenchesLessons Learned From The Trenches

• Execution matters • Management team is paramount; need to pay for talent • A great marketing plan is the great divider• Entrepreneurial, business-like thinking in staff and

board• Focused but adaptable – be aware of mission drift but

have flexible people, processes, culture• Utilize traditional financial tools to account for costs

and risks• Articulate specific business vs. social goals; use metrics

to measure both & manage double bottom line. • Hire people who really get both social mission and

business

1. Disciplined management is critical

Lessons Learned From The TrenchesLessons Learned From The Trenches

• Social mission will not sell a crummy cake • Some business types don’t lend themselves to the

social enterprise model • Competitive pressures are real despite perceived unfair

advantage of social mission

• Sweetheart deals (not) so sweet

2. Use Market-based analysis

Lessons Learned From The TrenchesLessons Learned From The Trenches

Understand the needs, context, challenges, opportunities among each group:

• Customers• Employees• Community• Partners• Funders

3. Know your stakeholders

Lessons Learned From The TrenchesLessons Learned From The Trenches

• Acknowledge profound differences in organizational culture between for profits and nonprofits

-What balance do you want to strike-What tradeoffs are you willing to make?

• Leadership must be undistracted from program or other nonprofit focused activities

4. Build entrepreneurial culture

Lessons Learned From The TrenchesLessons Learned From The Trenches

• Know the target population you are serving

• Offer a vertical career ladder - select business that provides right level of job opportunities

• Ensure access to appropriate support services to help participants be successful- Housing? Mental health counseling? Legal counseling? Childcare? Access to clothes? Food?

• Promote from within and build mentors

• Have mix of ‘participant’ and ‘regular’ employees

• Find trusted sources for employee/participant referrals – partnerships with other nonprofits/workforce services programs

• Provide hard and soft skills training opportunities to make participants more marketable for future jobs.

• Constantly evaluate/measure progress of participants

Design business to support program participants