Social venturing for activists

so·cial en·ter·prise (n.)

An organization or venture that advances its social mission through entrepreneurial, earned income strategies.

This is a new model some non governmental organizations and donors are trying in the search for more powerful, lasting social impact. This model seems tailor made for a university campus like UMass Boston that prizes its engagement with the community to improve the human condition. I see growing interest in social enterprise as a strategy for addressing some of our most pressing problems.

It is not that hard to put together a for-profit arm, but to have it be a significant contributor to the core mission requires considerable strategic work. But my hunch is that the biggest challenge is that most social activists struggle to make the culture change that is required within the organization to even explore this model.

A social enterprise is one where the social aims are of equal importance to its commercial activities. Like any business, a social enterprise focuses on generating an income through the sale of goods and services to a market but the added value of a social enterprise comes from the way in which it uses its profits to maximize social, community or environmental benefits.

An announcement of this year's the winner of the MIT 100K Entrepreneurship Competition represents a coming of age of sorts for social ventures. A social venture won the grand prize of what is arguably the leading business plan competition in the world. Diagnostic for All is a not-for-profit venture from Harvard University aimed at delivering cheap, dispensable diagnostic tests to impoverished countries.

Harvard Business School gave legitimacy and gravitas to social ventures by creating the Social Enterprise Initiative in 1993, which has published more than 400 cases and teaching notes on topics related to social enterprise. It was the first formal academic program in the field. HBS has a great article called The Future of Social Enterprise on the current state of the field.

On the donor side, social venturing is picking up steam, especially as a number of high-profile business leaders (like Bill Gates) adopt this model for their charitable giving.

On the seeking side, the competition for donations and gifts seems to get tighter every year. And so-called donor fatigue seems to be becoming almost epidemic. That is in part why organizations are exploring ventures.

Investors like it when you're making just enough to pay your program expenses. It shows you've thought about sustaining your venture; it shows you have the discipline to keep your expenses low; but above all, it means you don't need them. The reason they like it when you don't need them is because that quality is what makes ventures succeed. The more you don't need them, the more they will invest.

Non profits are actually really good at identifying unserved needs and opportunities for programs and services. They also know best how to tailor a service for their particular client base, and can provide the kinds of supports required to make such a venture work. These attributes can result in community-changing ventures.

Fourth Sector Network has teamed with the Royal Bank of Scotland and NatWest to produce a new edition of A BUSINESS PLANNING GUIDE TO DEVELOPING A SOCIAL ENTERPRISE, a pragmatic tool to assess if the venture model is right for you and the range of stakeholders that have a connection with your program.