Back in the early 1990s, I was a youth counselor working to help gang-active teenagers turn their lives around. One of the approaches I tried was to launch a T-shirt production company co-managed by the youth. The business never made a lot of money, but it did get a small group of gangbangers off the street and introduced them to valuable work and life skills.
The experience changed the way I think about nonprofit work. Instead of begging for grants, why couldn't nonprofits become self sustaining and simultaneously meet their mission by launching their own businesses?
That is exactly what's happening with the rise of the so-called social enterprise, or business with a social mission. Although it's not a brand new concept (think Goodwill and Salvation Army thrift stores), there is a growing interest among nonprofits in earned income ventures. Current ventures include everything from landscaping services employing the homeless, to solar installation companies for low-income housing, to manufacturers of low cost eyeglasses for the poor. These nonprofit and for-profit businesses are able to support the mission of their organizations and generate revenue for greater self sufficiency and profitability -- achieving what many refer to as the "double bottom line." (By adding environmentally friendly goals some ventures also aim for a "triple bottom line.")
The social enterprise sector is coming of age in part driven by a younger generation of socially minded entrepreneurs, many of whom are being trained at top universities like Harvard, Stanford, UC Berkeley, and Duke. Social enterprise business plan competitions abound, and many graduates are starting their own ventures right out of college and business school -- both in the United States and overseas.
Organizations like Ashoka and Echoing Green are providing support to help successful social entrepreneurs scale their ventures domestically and globally, and a whole new "social capital" market is emerging to invest in and sustain these new ventures. New for-profit/nonprofit hybrid models like the L3C are being experimented with. There is even a new certification program for triple bottom line companies called B Corp.
As a result, more and more organizations and entrepreneurs are jumping in.
According to Lisa Nitze, President of the Social Enterprise Alliance, North America's largest social enterprise association, "our organization is expanding internally and our network of social enterprises, corporations, for-profits, nonprofits, and service providers is growing exponentially." The SEA currently has 750 members and eight established regional chapters in San Francisco, LA, Maryland, North Texas, Nashville-Middle Tennessee, Chicago, Massachusetts and Tampa Bay. Four more chapters are in formation in St. Louis, the Twin Cities, Columbus and Colorado.
Says Nitze, "The economic downturn, while creating challenges, does have a bright spot. The widening gap between social needs and the means to meet those needs are being met by social enterprise. Social enterprise is forming a stable and healthy backbone of nonprofits... it is the business of hope."
Hope (and profit) is exactly what is being generated by ventures like the Women's Bean Project in Colorado. This $2 million business makes and sells gourmet foods such as bean soups, coffee, and salsa mixes. But unlike your typical gourmet food company, the Women's Bean Project employs women who have histories of poverty and unemployment. Most do not have a GED or high school diploma and are single mothers who have been on public assistance or incarcerated. Many are recovering from substance abuse. The women work 75 percent of the time at the Bean Project and spend the other 25 percent of their time receiving training in life skills and childhood nutrition, etc.
Financially and socially successful companies like the Women's Bean Project are among many we don't often read or hear about. Nevertheless these businesses and their accompanying success stories are on the rise.
My own social enterprise story has a happy ending. Those teenagers I once worked with are now grown men and most are gainfully employed. Some even volunteer to mentor youth who similarly fell into the gang lifestyle. While the social enterprise they worked in is long shuttered its mission lives on in the example and personal successes of these men. That's an ending money alone couldn't buy.
Follow Paul Lamb on Twitter: www.twitter.com/plamb
Thanks for your commitment to improving our world. I bet that the impact you made on those gang boys-turned-men is greater than you might imagine. As a rabbi, I often hear of the profound effect that contributions like yours make. The world of social entrepreneurship is high on my radar, and is part of my blog and upcoming book, dedicated to helping people build lives of meaning and fulfillment through giving back. I invite you to take a look at: findfulfillflourish.wordpress.com, and hope to hear your feedback.
Blessings,
Robin
It was a modern collapse of capitalism which gave opportunity to prove the concept. The collapse came in Russia's attempts to implement a free market economy. The for profit approach to social enterprise, a business investing surplus revenue to target and develop a local economy was before then a theory paper.
The target was Tomsk, an education and nuclear centre in Siberia where critical food shortages were being experienced.. A development initiative was researched and proposed by Terry Hallman P-CED founder with the key component of a community microfinance bank based on the 'moral collateral' form of microcredit which had been pioneered by Grameen.
By 2004, the bank had long been self supporting and the success of the project was related after we established in London as "community interest' business.
http://www.iccrimea.org/scholarly/economicdev.html
By this time, British government had set out their social enterprise definition of at least 50% of profit invested in a community, as was suggested in the P-CED white paper and the CIC model was on the drawing board.
Our more recent impact has been in Ukraine where USAID and our British Council now colllaborate to deliver social enterprise, as our research recommended:
http://www.p-ced.com/1/projects/ukraine/national/
Keep it up!
I applaud you for promoting social enterprise and the new L3C corporate form, an exciting development in American law. I challenge your suggestion that nonprofits have not already been owning or operating profitable businesses - that's why we have unrelated business income taxes (UBIT) for nonprofits, as some of them own lucrative ventures. Social enterprise is not a new idea, but L3C's are a new legal mechanism that offers its own set of pros and cons.
Also, I wondered if you are under the impression that most or all nonprofits are humanitarian agencies that depend on grants (for which L3C's might be a good alternative form). I think you are mistaken - I believe most nonprofits in the U.S. are religious organizations (churches). An L3C might work well for a religious publishing house, but I can't see it as a feasible option for a religious congregation.
I'll bet he believes people ought to be able to sell their organs to doctors who need them for transplants. And why not take the organs from new borns. It will be good for business.
The market opened up for social enterprise because people have gotten tired of a downward spiral wherein many nonprofits have decided to position themselves as Good People Doing Good Work (tm) with no expectation that their work would be scrutinized for whether and how the work is benefiting people and whether or not the work is being done with optimum effectiveness.
I am always surprised when I encounter a businessman who is honest. My experience is that there are too many (as we have seen in the financial crisis) who treat exchange as always a win-lose situation. The idea that non-profits should be encouraged to take advantage of others (OK. Lamb does not say that. But he also does not seem aware of it.) is like encouraging a lion to eat red meat. Lions need no encouragement. Business needs no encouragement to take advantage. Listen to their spokespersons: they celebrate "greed is good."
My point about the museums was just to show that we do treasure some things as beyond price. That is also the expected motivation for non-profits. I admit that the prevailing attitude today is that everything has its price. Therefore to put a price on non-profits (that's what Lamb's strategy leads to) sinks us deeper into the oblivion of nihilism (where the only value is, what does it cost). I guess I am just spitting into the wind. I'll go wipe myself off.