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Country: Switzerland Speaker: Mirjam Schoening What is the Problem? Starting a social enterprise is tough. Sustaining and scaling it is even tougher. What is the Opportunity? Having had the privilege of working closely with 200 of the world´s leading social entrepreneurs that are part of the Schwab Foundation´s community for the past 12 years, I can share a few observations and lessons. Some of the key questions are around how to finance a social enterprise, the importance of considering governance questions early on, how do you grow the enterprise and how do you find and retain talent?
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SENS24 24 March 2013
Social Entrepreneurship: A View from a Support
Organization
Mirjam Schöning
Sr. Researcher, Skoll Center, Oxford University
former Head, Schwab Foundation for Social Entrepreneurship
and Senior Director, World Economic Forum
Terminology: Social Enterprise and Social Business in Context
Own illustration based on Schwab Foundation, John (2006) and Elkington & Hartigan (2008)
Charities
Traditional
Non-
Profits
Social Enterprises Socially
Responsible
Business
Traditional
business
No earned
revenue
Leveraged
non-profit:
Primarily
grants
Hybrid non-
profit:
Grants and
earned
revenue
Social
Business:
Earned
revenue,
seeking profit
Profit
distributed,
socially driven
or Corporate
Social
Responsibility
Programs
Profit
maximizing
Primary driver:
Social value
Primary driver:
Financial value Blended value
Main Supporters of Social Entrepreneurs
Ashoka
Schwab
Foundation
Skoll
Foundation Echoing Green
Draper Richards
BonVenture
Acumen Fund
Bamboo Finance
Size and scale of social enterprise
for profit
non profit
+ around 100 other social investment funds
Social Entrepreneurs at the World Economic Forum
1) Schwab Foundation for Social Entrepreneurship
- community of 200 leading social entrepreneurs
- since 2000
2) Forum of Young Global Leaders (YGL)
- 200 selected annually
- under 40 years old
- about 5% social entrepreneurs
- engage in World Economic Forum events
- YGL Initiatives
3) Global Shapers
- under 30 years old
- selected based on exceptional achievement, leadership potential
and drive to make contribution to their communities
- about 30-40% social entrepreneurs
- network of Hubs in > 100 cities with > 2000 “Shapers”
Activities
• Selection of 25 SEs per year • « Social Entrepreneur of the
Year » in 14 countries and 5
continents
• 10-15 Young Global Leaders
• World Economic Forum
Events Annual Meeting Davos /
« Summer Davos » in China
6-8 regional Meetings
• Network Support Social Entrepreneurs
Meetings
Task Forces and Initiatives
« Social Innovation » Global
Agenda Council
Exec. Education, pro-bono
consulting and legal advice
1) Community of
Outstanding Social
Entrepreneurs
2) Interaction between
social entrepreneurs
and companies/
governments
3) Insight to advance
the field
4) Impact – Partner in
the transformation
process
Schwab Foundation for Social Entrepreneurship
200 Schwab Social Entrepreneurs by Field of Activity
Schwab Social Entrepreneurs by Organizational
Model
Financing Decisions: For-Profit, Non-Profit or both?
Social Investment
Manual
Comparison of Financing Instruments
Financing
Instrument Term Sheet Implications for Social Enterprise
Grants
Duration:
Annual
payments:
Repayment:
Short term
None
None
- Usually restricted use for
predefined projects
- High fundraising costs
- Low entrepreneurial flexibility
Debt Capital
Duration:
Annual
payments:
Repayment:
Long term (3-7
years)
Interest payments
(variable)
Yes
- Annual interest payments require
low risk business model
- No dilution of ownership
- Far-reaching rights of capital
providers in case of default
- High entrepreneurial flexibility in
the use of capital
Equity Capital
Duration:
Annual
payments:
Repayment:
Unlimited
Dividend
payments
(variable)
No
- Dilution of ownership
- Social investor receives control
and voting rights
- Profit participation for social
investor
- Potential impact on corporate
culture
Mezzanine
Capital
Duration:
Annual
payments:
Repayment:
Long term (3-7
years)
Interest payments
(variable)
Yes
- Annual interest payments require
predictable cash flows
- Dilution of ownership only if
converted into equity
- Mandatory repayment
- Profit participation for social
investor
Hybrid Capital
Duration:
Annual
payments:
Repayment:
Long term (3-7
years)
None
Depends upon
structure
- Inexpensive financing instrument
- No dilution of ownership
- Risk sharing with the social
investor
- Great structuring flexibility
Social Investment
Manual
Performance Measurement: Impact Value Chain
Illustration based on Clark et al. (2004) and Roder (2010)
Monitoring and
Evaluation in the
Social Sector:
Benchmarking
Study INGOs/SEs
Oxford University and
Linklaters
Publishing date:
June 2013
