Types of Business: Social Enterprise, Cooperatives, Commercial Enterprise, NGO, Ethical Business

ReSearch

Organisations and Institutions

• Council of Non-Profits - www.councilofnonprofits.org
• Center of Non-Profit Management - http://cnmsocal.org/

Publications

• difference between business and social enterprise - https://www.google.com/search?q=difference+between+business+and+social+enterprise
• social enterprise model - https://www.google.com/search?q=social+enterprise+model&gws_rd=ssl

Strategic Planning for Non-Profits

• What is the Best Way To Do Strategic Planning For a Non-Profit by the Center of Non-Profit Management - http://nonprofitanswerguide.org/faq/strategic-planning/best-way-to-do-strategic-planning-for-a-nonprofit/
• Ten Keys to Successful Strategic Planning for Non-Profit and Foundation Leaders by the TCC Group - http://www.tccgrp.com/pdfs/per_brief_tenkeys.pdf
• Strategic and Business Planning for Non-Profits by Council of Non-Profits - http://www.councilofnonprofits.org/strategic-business-planning-for-nonprofits

CSR Corporate Social Responsibility

• Top 10 Corporate Social Responsibility Initiatives - http://www.smartrecruiters.com/blog/top-10-corporate-social-responsibility-initiatives/

OUTLINES

Institutions and Organisations

Social Enterprise UK

• http://www.socialenterprise.org.uk/about/about-social-enterprise/faqs
• Social Enterprise Explained http://www.socialenterprise.org.uk/uploads/editor/files/Publications/Social_Enterprise_Explained.pdf
• What makes a social enterprise a social enterprise?
• Turning a Business into a Social Enterprise http://www.bis.gov.uk/assets/bispartners/cicregulator/docs/guidance/11-953-community-interest-companies-guidance-chapter-4-creating-a-cic.pdf
• How to Measure Social Impact http://www.socialenterprise.org.uk/advice-services/topic/social-impact
• What are Social Enterprises?
  • A social enterprise is a business that trades for a social and/or environmental purpose. It will have a clear sense of its ‘social mission’: which means it will know what difference it is trying to make, who it aims to help, and how it plans to do it. It will bring in most or all of its income through selling goods or services. And it will also have clear rules about what it does with its profits, reinvesting these to further the ‘social mission’.
  • Social enterprises come in many shapes and sizes from large national and international businesses to small community based enterprises. But they all meet or aim to meet these criteria and have these commitments expressed clearly in your governing documents
    • Are businesses that aim to generate their income by selling goods and services, rather than through grants and donations
    • Are set up to specifically make a difference
    • Reinvest the profits they make in their social mission
  • According to Social Enterprise UK, social enterprises should:
    • Have a clear social and/or environmental mission set out in their governing documents
    • Generate the majority of their income through trade
    • Reinvest the majority of their profits
    • Be autonomous of state
    • Be majority controlled in the interests of the social mission
    • Be accountable and transparent
• What's the difference between a social enterprise and ethical business? The two are distinct ways of doing business.
  • A social enterprise's primary purpose is its social and/or environmental mission – it tries to maximise the amount of social good it creates balanced against its financial goals.
  • An ethical business however, attempts to minimise its negative impact on society or the environment.
• What is social impact and how do I measure it?
  • Social impact is the effect of an activity on the social fabric of a community and well-being of individuals and families.
  • Measuring your social impact will help you understand, manage and communicate the social value that your social enterprise creates in a clear and consistent way. This information can be used for a number of very beneficial purposes, the principle of which are:
    • 1. Helping you better understand, and target, your work
    • 2. Attracting investors and retaining investor confidence
    • 3. Tendering for public sector contracts or selling goods and services

European Council of Associations of Common Interests (CEDAG)

• Social enterprise, social entrepreneurship, social business – what does it all mean? www.cedag.eu/index.php?option=com_content&view=article&id=91:social-enterprise-social-entrepreneurship-social-business-what-does-it-all-mean&catid=12:news&Itemid=25
  • The key criteria linked to the definition of social enterprise are:
    • The primary objective of the action is a social goal, it is not profit driven. This does not mean that profits or revenues cannot be generated, but any profit must be primarily reinvested to enhance the achievement of or expand the enterprise’s social objectives, and not going to owners or shareholders. A social enterprise does not exist to remunerate capital.
    • It is characterised by a strong component of independence, democracy, participatory governance, and acting in general public interest. There is a very close tie to social services of general interest (SSGI). Social enterprises often stem from or are closely linked to a voluntary organisation, or a civil society organisation (CSO).

Clearly So

• Social Business Vs Social Enterprises
• What is a Social Enterprise?
  • A social enterprise is a business that has both social and commercial goals. What makes it different from other enterprises is that it places a firm emphasis on tackling social problems. This positive impact is as important to its business objective as any financial bottom line.
• How Does a Social Enterprise Work?
  • Because it operates as a business, a social enterprise does things that make money, such as selling goods or services; unlike a charity which relies on donations. This could encompass a whole host of activities and you’ll find social enterprises with every legal structure in almost every industry.
  • Social enterprises come in all shapes and sizes. However, a social enterprise will always reinvest its profits back into the company or use them to further the organisation’s social goals, rather than deliver a return to investors. For example, a social enterprise providing affordable childcare could use its surplus profits to open a new centre in another town.
• What is the Difference between a Social Enterprise and a Social Business?
  • These differ slightly in that, in addition to a social goal, they may seek to deliver a return to their shareholders. We do not argue that this approach is better or worse than social enterprise. Both place at least equal importance on generating lasting social benefit as their bottom line and that’s what counts. We want to see the emerging social economy in its entirety prosper.
• What is a Social Business
  • A social business is similar to a social enterprise in that both operate with commercial and social goals.
  • However, while a social enterprise will reinvest its profits into the company or to further its social goals, a social business may also seek to generate a return for its shareholders. It aims therefore to do good by doing well.
• How Does a Social business Work?
  • You can see successful examples of social businesses all around you. Think of JustGiving, the online donation platform which has revolutionised the way we give to charity; or Divine Chocolate which pioneered Fairtrade chocolate. These companies are set up to address a certain social need – be that alleviating poverty, improving communities or increasing the amount donated to charity – but also to make money. As such, they occupy a space between social enterprise and regular businesses as this diagram shows.
  • Because of their emphasis on return on investment as well as social benefit, it can be easy to mix up a social business with a regular company with a social aspect. Marks & Spencer, for example, would not qualify as a social business despite its highly effective Plan A designed to make the company, as it says, ‘the world’s most sustainable retailer by 2015”.
• Social Benefits Described http://www.clearlyso.com/directory/social-benefits-described.html
  • Animal Rights and Welfare
  • Awareness and Advocacy
  • Charity and Social Enterprise Support
  • Children and Young People
  • Climate Change
  • Community Development
  • Developing Countries
  • Disabled People
  • Education
  • Elderly
  • Employee Rights and Welfare
  • Employment
  • Ethical Finance and Investment
  • Forest Conservation
  • Healthy Living
  • Homelessness
  • Housing
  • Land Conservation
  • Marine Conservation
  • Mental Health
  • Others

Articles

Destination Change Makers

- http://destinationchangemakers.com/discover/definitions/social-enterprise/

• The philosophy of social enterprises
  • A social enterprise is an organization or venture that achieves its primary social or environmental mission applying market-based strategies and using business methods. Social enterprises build a more just, sustainable world by applying market-based strategies to today’s social problems. Rather than maximizing shareholder value, the primary aim of social enterprises is to generate profit to further their social or environmental goals. Profit is viewed as a means and not a primary goal.
  • With social enterprises, business is viewed as the vehicle for social change. Whether structured as non-profits or for-profits, social enterprises are simply launched by social entrepreneurs who want to improve the common good and solve a social problem in a new, more lasting and effective way than traditional approaches. Social enterprises operate in every sector of the economy: retail, service, manufacturing, consulting and even technology enterprises…
• Differences between traditional businesses and social enterprises
  • Two distinct characteristics differentiate social enterprises from other types of businesses, nonprofits and government agencies:
    • Social enterprises directly address social needs through their products and services or the numbers of disadvantaged people they employ. This distinguishes them from “socially responsible businesses”, which create positive social change indirectly through the practice of corporate social responsibility;
    • Social enterprises use earned revenue strategies to pursue a double or triple bottom line. This distinguishes them from traditional nonprofits, which rely primarily on philanthropic and government support.
  • A traditional business
    • Aims at maximizing its shareholder value
    • Operates in a profitable market to make money
    • Operates in a competitive world
    • Serves two main stakeholders: shareholders and clients
    • Measures success according to the profit realized
  • A social enterprise
    • Aims at creating social change in solving a social problem
    • Answers uncovered social needs with a sustainable manner
    • Develops partnerships with a complementary logic
    • Serves several different stakeholders, including its beneficiaries and employees
    • Measures success according to the social utility created and the economic viability of the enterprise
• Characteristics of social enterprises
  • The common characteristics of social enterprises, summarized from different sources (Social Enterprise London, EMES), are:
  • An enterprise orientation
    • An activity of production and/or sale of goods and services
    • A high level of autonomy: social enterprises are created voluntarily by groups of citizens and managed by them, and not directly or indirectly by public authorities or private companies, even if they may benefit from grants and donations
    • A significant economic risk: its members have the responsibility of ensuring adequate financial resources, unlike most public institutions
    • A minimum number of paid workers, although, like traditional non-profit organizations social enterprises may combine financial and non-financial resources, voluntary and paid
  • Social aims
    • An explicit aim of community benefit: the primary aim of social enterprises is to serve the community or a specific group of people. Their objectives tend to fall into three categories
      • Integration of disadvantaged people through work
      • Provision of social, community and environmental services
      • Ethical trading, such as Fair Trade
    • A citizen initiative: social enterprises are the result of collective dynamics involving people belonging to a community or to a group that shares a certain need or aim
  • A social ownership
    • A decision making not based on capital ownership: the voting power is not based on capital shares. Although capital owners in social enterprises pay an important role, decision-making rights are shared with other stakeholders.
    • A participatory character: the users of social enterprises’ services and those affected by the activity are represented and participate in their structure.
    • A limited distribution of profit: social enterprises may distribute their profit only to a limited degree, thus avoiding profit maximising behaviour. Some social enterprises totally prohibit profit distribution.

The Social Spark

http://www.thesocialspark.org/spark/do-you-know-the-differences-ngo-social-business-and-social-enterprise/

• The Difference between NGO, Social Business and Social Enterprise
  • Social enterprises are not profit driven. The profit must be reinvested into the social objectives of the company, and thus cannot gain capital that may be distributed to the owners or shareholders. Furthermore, they must act upon the general public’s interests. It is, thus, similar to a charity of social services. Nowadays, more and more social enterprises are focused upon the environmental issues. Sometimes, social entrepreneurs start with low funds and resources given by NGOs, starting small before gaining traction. Such examples include SuitU, which is based at University of Toronto. They started with the idea of trying to solve the social issue of college students not having enough money to buy suits in order to make a good impression for job interviews. The money they gained from selling the suits was then donated to an NGO that benefited at-risk youths. They fit the first criteria because the profit of the company is donated for charity and reinvested into solving the social goal. They also fit the second criteria because they focus primarily on what the society needs and asks for.
  • A social business also tries to solve some sort of social problem. Similar to social enterprises, they are self sustaining. However, a social business is profit-oriented. Like The Body Shop, social businesses often have a “social profile” but are also on the Stock Exchange. Some social businesses are also owned by the poor and underprivileged; for example, soleRebels- a company started by a young Ethiopian woman that helps improve the economy of her small town.
  • A charity/NGO is different from a social enterprise because charities often aim to fund their social profile through donations and grants, whereas social enterprises do it through selling products and services to different customers. UNICEF functions by asking for donations using marketing techniques, but they do not trade money for a service or products. However, they are the same because they use their profits and reinvest it in the social mission.

http://smallbusiness.chron.com/differences-between-social-entrepreneurs-business-entrepreneurs-36624.html

• Emphasis on Team Vs. Individual
  • The "Stanford Social Innovation Review" notes that venture capitalists invest in private business on the basis of a new company's leadership team and the organization that supports it. Philanthropists -- individuals who raise and donate money for charitable causes -- rather than venture capitalists are often the primary investors in social entrepreneurs' projects. They're more likely to gauge the viability of a project based on the individual at the helm. The review challenges the focus on the individual in light of research showing that successful change depends on a range of competencies -- competencies that require strong leadership but that rarely can be undertaken by a sole individual.
• Perceptions of Value
  • For the business entrepreneur, value lies in the profit the entrepreneur and investors expect to reap as the product establishes itself in a market that can afford to purchase it. The business entrepreneur is accountable to shareholders and other investors for generating these profits. To the social entrepreneur, there's also value in profits, as profits are necessary to support the cause. That said, value for the social entrepreneur lies in the social benefit to a community or transformation of a community that lacks the resources to fulfill its own needs.
• Measure of Profitability
  • The ventures of business entrepreneurs are always designed to turn profits that benefit stakeholders, such as shareholders or private investors. Social entrepreneurs also may engage in for-profit activities. However, they often structure their organizations as nonprofits, or they donate their profits to the causes they support. NIKA Water, for example, is a for-profit company that sells bottled water. According to "Entrepreneur," 100 percent of the company's profits support clean-water projects in Uganda, Kenya, Sri Lanka and Nicaragua.
• Approach to Wealth Creation
  • Although the business entrepreneur and the social entrepreneur are similarly motivated to change the status quo, their missions differ significantly. The business entrepreneur is driven to innovate within a commercial market, to the ultimate benefit of consumers. If successful, the innovation creates wealth. The venture's success is gauged by how much wealth it creates. To the social entrepreneur, wealth creation is necessary, but not for its own sake. Rather, wealth is simply a tool the entrepreneur uses to effect social change. The degree to which minds are changed, suffering is alleviated or injustice is reversed represents the organization's success.

Business Models for Social Entrepreneurs Presentation by Marcus Coetzee

at the Graduate School of Business, University of Cape Town 5 February 2015

https://www.slideshare.net/MarcusCoetzee/3-business-models-for-social-entrepreneurs-1-feb-2015

Agenda

1. What is a Business Model
2. Business Activity versus Social Activity
3. Social Enterprise Models

BUSINESS MODELS

• 4 x Interlocking Components Vs 4+1 Interlocking Components
  • Customer Value Proposition (CVP). “The model helps customers perform a specific ‘job’ that alternative offerings don’t address.”
    • Who is the customer?
    • Will they be purchasing the product for themselves or someone else?
    • What product(s) would best meet the needs of this customer?
    • What is their shortage of money, time, skill or access?
    • What do they need help doing?
      • “The most important attribute of a customer value proposition is its precision: how perfectly it nails the customer job to be done – and nothing else.
      • E.g. Clothing Bank assists its customers (large retail businesses in clothing industry) to dispose of excess stock, build their brands and comply with enterprise development codes.
  • Profit Formula: “The model generates value for your company through factors such as revenue model, cost structure, margins, and inventory turnover.”
    • Revenue Model – total revenue that could be earned = volume x unit cost
    • Cost structure – fixed costs, variable costs, economies of scale
    • Margin Model – required profit margin to meet targets
    • Resource velocity – speed at which resources (inventory) etc. need to be used
    • E.g. The Peninsula School Feeding Association currently feeds 24,000 children in 119 schools in the Western Cape. Over the past 50 years, PSFA has fine-tuned its profit formula by achieving economies of scale and decentralizing kitchens.
  • Key Resources: “A company has the people, technology, products, facilities, equipment, and brand required to deliver the value proposition to its targeted customers.”
    • People
    • Technology
    • Equipment
    • Information Channels
    • Partnerships
    • Alliances
    • E.g. Brand GreenPop runs environmental awareness campaigns and greening projects. Its key resource are its volunteers and its ability to keep these volunteers engaged and feel part of the GreenPop brand. Since 2010 it has worked with 3,778 volunteers to plant 48,000 trees in 344 locations around Southern Africa.
  • Key Processes: “A company has processes (training, manufacturing, service) to leverage those resources.”
    • Organizational processes – operational processes, HR processes, design processes, logistical processes, staff selection and training processes etc.
    • Rules – organizational policies and standards etc.
    • Metrics – outputs, outcomes, efficiency etc.
    • E.g. FoodBank receives excess food that is about to expire from retailers throughout South Africa. This food must be collected and distributed quickly to ensure that it reaches its beneficiaries before it is consumed. It has recently started decentralizing its logistics to shop level.
  • Beneficiary Value Proposition: “The model helps beneficiaries to overcome a social or environmental problem they are faced with. For social entrepreneurs, the customer is not always the beneficiary. This means that a Beneficiary Model is also needed.”
    • Who is the beneficiary?
    • What do they need help doing?
    • What is their shortage of money, time, skill or access?
    • What product(s) would be meet the needs of this beneficiary
    • E.g. Open Africa designs tourism routes in rural areas. Its value proposition to local businesses is to provide them with technical training and mentoring, send customers to them, and help their businesses become successful.
• Why are New Business Models Required/ Social Business Required?
  • New social problem
  • Failure of an existing model to fix this problem
  • Changing marketing conditions or industry dynamics.
  • E.g. Shout it Now is a youth HIV/AIDS-awareness organisation established in 2007. Their programme placed young people in front of computers to learn about HIV/AIDS from celebrities and then complete a risk profile. This was followed by an HIV testing and counselling process, and referral to appropriate care. Over 300,000 youth have gone through this programme.
• Challenges with New Business Models
  • Break the Rules – The fundamental approach of company or industry must change.
  • Disruptive Innovation.
  • New Competencies – the business model requires that new organizational and individual skills are developed.
  • New skillset
  • New values
  • New work-behaviour profile
  • Examples
    • Home-based Care Model
    • Citizen Surveys – A Social Business

BUSINESS ACTIVITY VERSUS SOCIAL PROGRAMMES

• Mission Drift
  • What is Mission Drift? Those social entrepreneurs that work in social enterprises need to balance their social mission with their business mission. The tendency for the business mission to undermine the social mission is called “mission drift”.
  • Mission drift can
    • Undermine focus
    • Undermine funding
    • Undermine partnerships
    • Stress organizational culture
    • Particularly a problem with nonprofit organizations that are transitioning into social enterprises.
    • The solution is to
      • setup a hybrid social enterprise
      • “lock” social value into the business objectives.
• Social Programmes versus Business Programmes
  • Which of these models is the most vulnerable to mission drift?
    • Business Programmes = Social Programmes OR Social Programmes + Business Programmes
      • E.g. Social Enterprise Academy delivers training and mentoring programmes directly to its beneficiary organizations. Its business programmes align directly with its social programmes.
    • Business Programmes overlap with Social Programmes
      • E.g. Oasis Association employs its beneficiaries in a recycling operation. Since its primary intention is to support and provide employment to the intellectually disabled, there is a degree of overlap.
    • Business Programmes ≠ Social Programmes
      • E.g. Shawco runs a community transport service to help generate income for its education and health social programmes. This business activity is unrelated to its core social programmes. Social Programmes Business Activities

The 11 Social Enterprise Models

• 1 Entrepreneur Support Model
  • Social Enterprise provides business support services to its beneficiaries (e.g. small businesses) and helps them to become more capable and serve their markets
  • Examples:The Business Place • SAB Foundation • Fetola • Impact Hub • Open Africa • Hubspace • CDRA • Inyathelo
  • Primary Income Source
    • Sale of services to beneficiaries
• 2 Market Intermediary Model
  • Social Enterprise acts as a middle-man or broker and helps connect its beneficiaries (e.g. small businesses or sole proprietors) with their market.
  • Examples: • Streetwires • Wola Nani • Township Patterns
  • Primary income Source:
    • Membership/registration fees
    • Resale of products with markup
    • Consignment sales with markup
• 3 Employment Model
  • Social Enterprise employs beneficiaries, provides them with training and support, and uses them to produce products for a market.
  • Examples: • Oasis Association • Carpenter’s Shop • Work 4 You • Village Work Centre • NICRO Social Enterprise • Livity Africa (Live Magazine) • Learn to Earn
  • Primary Income Source:
    • Sale of products to open market
• 4 Fee for Service Model
  • Social enterprise packages it social services and sells them directly to its beneficiaries.
  • Examples: • Centre for Justice and Crime Prevention • Greater Capital
  • Primary Income Source:
    • Sale of services to beneficiaries
• 5 Low-Income Client Model
  • Social enterprise sells products to its beneficiaries. However, in this instance the services are carefully designed as BOP and low-cost versions of standard products.
  • Examples: • Shonaquip • Communicare • Dharma Life • Econicom (EPAP) • Iyeza Express • Espinaca Innovations (Bread) • Khulani Fund
  • Income Source:
    • Sale of services to BOP beneficiaries
• 6 Cooperative Model
  • Social enterprise provides services to cooperatives. These services range from access to information and technical support through to access to markets and bulk buying.
  • Examples: • SaveAct • Sharing Our Ubuntu Legacy
  • Income Source:
    • Sale of services to beneficiary cooperatives.
    • Membership fee.
• 7 Market Linkage Model
  • Social enterprise acts as a broker and links its beneficiaries with a market. Social enterprise does not directly stock and sell members’ products but rather links them to markets.
  • Examples: • TRADE-MARK
  • Income Source
    • Membership fees
    • Sale of services
    • % of deals
• 8 Service Subsidization Model
  • Social enterprises sells products to an external market and uses the revenue to subsidize its services to its beneficiaries. Business activities are designed to subsidize and smaller in scope than social activities.
  • Examples: • NICRO’s (Probation assessments) • Carpentry Shop • Shawco (Community Transport) • Common Ground Café • CWD Bookshop
  • Income Source:
    • Sale of products to Open Market
• 9 Organization Support Model
  • Social enterprise sells products to an open market, and then uses a share of its profits to fund a social service organization which serves its own beneficiaries. Business activities very large in scope and hybrid model is required.
  • Examples: • Praekelt Foundation • Salvation Army Charity Shops • Goedgedacht Foods
  • Income Source
    • Sale of products to Open Market
• 10 Certification Model
  • Social enterprise develops and markets a moral standard, and certifies businesses that adhere to it.
  • Examples: • Heart & Stroke Foundation (e.g. Heartmark) • Sustainable Seafood Initiative • Forestry Stewardship Council • South African Market Research Association • Fairtrade International • Proudly South African
  • Income Source
    • Certification fees
• 11 Sponsored Product Model
  • Social Enterprises gets donors to purchase products that get provided to beneficiaries.
  • Examples: • Food and Trees for Africa • Mandela Day Libraries • Peninsula School Feeding Association • Lapdesk • Siyavula • GreenPop • James House
  • Income Source:
    • Donations
    • Implementation Fees

<For distilling>

The 3 Models of Social Enterprise Part 1 - http://evpa.eu.com/wp-content/uploads/2010/11/CAF-Ventursome-3-Models-Of-Social-Enterprise-Part-1.pdf

Social Enterprise: An Innovative New Model - http://www.metowe.com/about-us/our-organization/social-enterprise-an-innovative-new-model/

Using the Business Model Canvas for Social Enterprise Design - http://knode.com.au/wp-content/uploads/Knode_BusModCanv4SocEntDesign_E1LR_30p.pdf

Business Planning Guide for Social Enterprise - http://socialventures.com.au/assets/Business_Planning_Guide_for_Social_Enterprise.pdf

Other References

• http://inspired-pragmatism.blogspot.sg/2006/09/social-vs-business-entrepreneurship.html
• http://ottawa.the-hub.net/hub-updates/social-vs-business-entrepreneurship
  • "What is the difference between social entrepreneurship and business entrepreneurship?
    • Both approaches fulfill a need in the market and aim to earn a sustainable profit.
    • The main difference is that social entrepreneurship focuses beyond simply generating a profit, and measures its performance on the positive impact the business makes on society – whether social, cultural or environmental. This focus on generating positive social returns make social enterprises an important alternative to conventional and outdated “corporate social responsibility” models which tend to only occur once healthy profits have been achieved."