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Alex Hannant from Ākina Foundation presents "How To Make A Difference" at #LifehackLabs - a social innovation lab focused on improving youth wellbeing.
Citation preview
‘How to make a difference’ August 2014
1. The way I see the world
2. Making a difference through social enterprise
3. A global trend + what’s emerging in NZ 4. One step at a time
5. Discussion
Running order"
The Anthropocene
Disruption
Dr Michio Kaku – ‘Physics of the impossible’
Lateral power / the distributed century
‘Bursting at the seams’
Half of all children live in poverty
1.5 billion are obese
Ivan Macfadyen- ‘The ocean is broken’
Climate change / systemic change "
Inequality
Inequality
67" 3,500,000,000"="
="
Unemployment > disempowerment"
Fundamental breakdown
We ain’t that smart
"History does not crawl, it jumps."
Black swans
What do we want?"
“The barrier to change is not too little caring; it is too much complexity” Bill Gates
But how…?
Systemic
Enduring
People
What works? Enabling
Social enterprise…
What is it?
Evolutions S
yste
ms
Cha
nge
Commercial Low
Low
H
igh
High
Social Entrepreneur
Social Enterprise
Good deeds
Optimal
Hybrid form"
Social entrepreneur-ship moves from niche to mainstream
European Union just launched the Social Business
Initiative; the UK now has thousands of registered
community-interest companies; and several USA
states, including California, have passed legislation
recognizing a special legal status for privately owned
organizations that generate revenue but
prioritize fulfillment of their social mission as their
primary objective.
Other positive signs abound. Top-tier business
school students are joining social enterprise clubs at
record rates, forcing faculties to rethink curricula.
Over the past decade, social entrepreneurship has
gone from niche to mainstream. Few people under-
stood the term when the Schwab Foundation for
Social Entrepreneurship started its operations in
2000. Today, there is growing recognition among
experts that social enterprises which straddle the
space between non-profit and for-profit are emerg-
ing as a distinct sector (see figure 1).
The recent proliferation of certification bodies
and legislative initiatives is one indication among
many that the sector is reaching a tipping point. The
Katherine Milligan, Schwab Foundation for Social Entrepreneurship
Social enterprises apply business principles and tools to achieve social change, testing the age-old conceptual divide between profit and charity. The social enterprise sector is on the cusp of achieving significant scale thanks in part to the recent influx of impact investment capital, but investors should bring a nuanced view of what social investment opportunities actually look like to build the sector’s long-term potential.
Figure 1
Social enterprises blur traditional boundaries between for-proƟt and non-proƟtSource: Adapted from Heerad Sabeti, “The Emerging Fourth Sector,” The Aspen Institute, 2009.
maximize Ɵnancial beneƟt to owners maximize social beneƟt
Organizations categorized by PURPOSE
Org
aniz
atio
ns
cate
gorize
d b
y IN
CO
ME
contr
ibute
d
ear
ned
For-proƟt SocialEnterprise
Non-proƟt/Govt
Business MethodsEntrepreneurship
Public-Private PartnershipPrivatization etc.
CSR, ESG Sustainability
19
A powerful vehicle for
change
Evolu&ons)
Avoids grant dependency
Replication / Open source
Scalability / sustainability
Multiple-benefits
Empowers communities
Leverages private
investment
Innovative / disruptive
1 2 3 4 5 6 7
Varieties of Social Enterprise
Commercial Enterprise
Business with a
charitable spend
Socially Responsible
Business
Social Purpose Business
Community Benefit
Enterprise
Charity with �on mission�
contract income
Charity with fundraising and/or grant
income
Businesses that �do good� Business Not For Profit
The Social Enterprise Continuum (NESTA/Young Foundation 2011)
Different structures
‘No profit – no mission’
‘Private businesses are profit centres for shareholders, social enterprises are profit centres for stakeholders – the more income, the more benefit.’
Social enterprise models
‘The Robin Hood Business’ "
Y-Gap"
‘One for One’"
TOMS"
Social Enterprise
!!!!!!
‘Fair Share’"
Café Direct"
Te Whangai Trust"
‘The Nurturing Business’"
Fifteen"
‘The Nurturing Business’"
Guayaki"
‘The Regenerating Business’"
‘Waste to Value’"
TerraCycle"
‘The Good Asset’ "
Blueskin Energy"
‘The Good Asset’ "
Skypath"
‘Disruptive Provider’"
Unchartered Play"
‘Disruptive Provider’"
Chalkle"
!!!!!
Grameen Danone"
‘Disruptive Provider’"
Global trends
supported by
State of Social Enterprise Survey 2013
supported by
social enterprise: Elvis and Kresse
Global movement
Accelerators, incubators, & hubs
Education"
Investing for impact
January 2012
Research InstituteThought leadership from Credit Suisse Research
and the world’s foremost experts
How social entrepreneurship is redefining the meaning of return
Investment primed
Impact funds "
Impact funds "
Social Ventures AustraliaABN 94 100 487 572 | AFSL 428865www.socialventures.com.au
Interested in investing? Please contact Ian Learmonth, Executive Director, Social Finance
+61 2 8004 6729 | [email protected]
What are social benefit bonds?Social benefit bonds (SBBs) are a promising new approach to the government financing of social services. They are designed to raise private capital for preventative programs that address areas of pressing social need, and generate attractive financial returns for investors.
Under an SBB, a government contracts with a private-sector financing intermediary or service provider (in the case of the Newpin SBB), to fund a social services program. The government pays the bond-issuing organisation or the delivery provider an agreed return depending on achievement of performance targets. Payments are calculated as a function of government cost savings attributable to the program’s success. The payment from the government recognises that addressing areas of social need reduces the financial burden on the government.
SBBs have several benefits:
Ɣ Private investors and institutions can invest to help create better social outcomes and receive a financial return
Ɣ Paying only once performance targets are met ensures efficient allocation of scarce public resources
Ɣ Service providers are given latitude to determine which services to offer
Ɣ They enable expansion of services that might not otherwise obtain funding.
Newpin SBB diagram
SBB precedents around the worldThe first social benefit bond was issued in the United Kingdom (UK) in September 2010 to fund a preventative program targeting recidivism of former inmates at Peterborough Prison. When the program successfully decreases the rate of recidivism, the UK Government realises savings through reduced expenditure on corrective services and returns are paid to investors. The return to investors will be 7.5% to 13%, depending on success of the program. Initial indications are positive and the UK now has 14 further SBBs live or in development with an approximate total value of £280 million.
New York City launched an SBB to reduce youth recidivism for over 3,400 adolescent men coming out of incarceration. Goldman Sachs invested in the Rikers Island pilot through a US $9.6 million loan. Mayor Bloomberg’s Foundation provided support through a partial guarantee to attract investors. California, Massachusetts, Minnesota, New York and Ohio are currently pursuing SBBs.
NewpinSBB Trust
Results
$ Return
SAVINGSUnitingCare
BurnsideInvestors
i For more information see http://www.newpin.org.au/about-newpin/about-newpin ii UnitingCare is responsible for the Uniting Church’s social responsibility and community service programs. iii In 2012, the Newpin restoration rate was 74.5%. iv Investors are ensured a min 5% interest payment for the first three years regardless of performance. v The minimum proportion of principal repaid at maturity is 50%, for scenarios where the restoration rate is 35% or below.
The Newpin Social Benefit Bond offers a unique opportunity to generate a competitive financial return, as well as create a lasting positive change for children and families.
This is a summary note and potential investors should read the Information Memorandum to fully understand all of the risks and features of the Newpin Social Benefit Bond.
Social Impact Bonds
New markets - impact
‘Impact for Cash’"
Bikes in Schools"
New markets – social procurement
New structures"
NZ Market…?"
Pilots, Positions, & Prototypes
Demand increasing & unmet"
Capability low, understanding low"
Need for standards / benchmarks"
Limited support at all levels"
Need to grow demand and supply capital"
A sustainable, prosperous and inclusive NZ"
To deliver the next generation of transformational social enterprise "
Activate talent, raise awareness and building
capability"
Support social enterprises to
deliver scalable solutions"
Facilitate access to markets and capital"
Monitor’s research has identified the following four stages of pioneer firm develop-
ment that are distinct both from the firm’s experience and the investor’s perspective:
Blueprint
First of all, pioneers need to blueprint their designs for the future business. This is
often driven by not much more than a strong sense of ‘moral imagination’, striv-
ing for radically better solutions to meet the needs of the poor. This stage involves
connecting the capability for business and often technical innovation to address the
needs of customers or suppliers in the BoP. This is no trivial matter, as the requisite
capabilities for technology, product and business innovation are not as common-
place in the BoP population as they are in more affluent populations. The gulf in
experience, understanding and skills that separates these groups of people is a
significant barrier to the origination of high-potential inclusive business ideas.
Even so, an idea or concept on its own is not a blueprint. There needs to be a clear
sense of what the business will offer, what it will do and how it will do it. In other
words, there needs to be a compelling initial business plan. At the end of this first
stage, we would also expect product prototypes and any critical novel technologies
to have been demonstrated successfully, resulting in what some might call a prod-
uct or technical ‘proof of concept’.
Validate
However, having a product that works is not enough. In the second stage, pioneers
need to validate the commercial viability and scalability of the business model
described in the blueprint. This involves running market trials in which business
plan assumptions are tested. Will customers want this product? Will they be will-
ing to pay for it from their small and hard-earned incomes? Will this be enough to
cover the costs of the business, not just the direct cost of the product itself? These
are crucial questions, and the process for answering them is almost always itera-
tive. Market trials often reveal issues and weaknesses in the blueprint, leading to
refinements in the product, technology and business model, and further trials. The
greater the degree of model innovation involved, the more time and resources need
to be invested in this stage.
Models of inclusive business call for particular effort and rigor at this stage be-
cause motives are almost always a blend of the social and the financial, which can
weaken the focus on commercial viability. Moreover, unlike a mainstream business
1. Blueprint 2. Validate 4. Scale
FOUR STAGES OF PIONEER FIRM DEVELOPMENT
3. Prepare
Having a product that works is not enough; pioneers need to validate the commercial viability and scalability of the business model.
We follow the de-velopment of these pioneering inclusive businesses through the lens of Monitor’s four-stage business lifecycle framework, and draw out the implications for capital. We describe the phenomenon of the ‘pioneer gap’ in investment, and the potential for ‘enter-prise philanthropy’ to establish new inclu-sive business models.
From Blueprint to Scale 11
Development pathway"
Development tools"
"COACHING + DIRECT SUPPORT""
"COMPASS NETWORK""
"SEED FUNDING ""
TOOLS + PERFORMANCE MEASURES "
NETWORKS + PARTNERSHIP BROKERING""
Build an ecosystem"
One step at a time"
You are part of a growing global movement whose core goal is to create a tipping point
You don’t have to do it all!
But do something that matters
PURPOSE
PROBLEM SOLUTION
KEY METRICS
UNIQUE VALUE PROPOSITION
UNFAIR ADVANTAGE
CHANNELS
CUSTOMER SEGMENTS
COST STRUCTURE FINANCIAL SUSTAINABILITY
IMPACT
V1.04 Available at www.socialleancanvas.com
Existing Alternatives High Level Concept Early Adopters
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Lic
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.Have a plan and a process"
Copy proven models
Make friends"
Stay with it – it really is the journey
…and do the little things well"
Know where the door is
Power – know it, use it
“Power!properly!understood!is!nothing!but!the!ability!to!achieve!purpose.!It!is!the!strength!required!to!bring!about!social,!poli;cal!and!economic!change...!One!of!the!great!problems!of!history!is!that!the!concepts!of!love!and!power!have!usually!been!contrasted!as!opposites!—!polar!opposites!—!so!that!love!is!iden;fied!with!a!resigna;on!of!power,!and!power!with!a!denial!of!love.!!
Now,!we've!got!to!get!this!thing!right.!Power!without!love!is!reckless!and!abusive,!and!love!without!power!is!sen;mental!and!anemic.!It!is!precisely!this!collision!of!immoral!power!with!powerless!morality!which!cons;tutes!the!major!crisis!of!our!;mes.”!!Mar$n&Luther&King&