- Sheila Warren - Coblentz, Patch, Duffy & Bass LLP (Moderator)
- Caroline Pappajohn - New Door Ventures
- Kirsten Gagnaire, Social Enterprise Group
- social enterprise - An organization or venture that advances its social mission through entrepreneurial, earned income strategies.
- spans all corporate forms
- organization or venture
- sometime nonprofit has social enterprise component, or entire model
- social enterprise is changing the world
- biggest challenges for social enterprise
- same as what face enterprise
- capital market issues
- effective technical assistance
- sba, score don’t quite meet needs
- nonprofit orgs also don’t quite needs
- cultural issues – when starting within existing org
- board issues – wearing nonprofit hat, different when managing social enterprise; needs board education
- when starting something new, you may do due diligence but things you didn’t expect pop up
- be crystal clear on what you want to do
- if objective is to train single mothers, needs flex hours, proper day care
- cant be bakery, cant expect them to be there at 5am
- most small business have only small chance to succeed in first five years
- when do plan, expect 5 years before you break even
- be really thoughtful about objectives and outcomes
- when's the right time to invest? to close?
- finding the right manager – businessperson? nonprofit background? two people?
- having the right manager is key
- boards
- mix of nonprofit & for profit members
- have committees – enterprise, evaluation, youth development
- look at the enterprise and find what the skills sets are that you need
- find people who have been entrepreneurs themselves
- social mission understanding
- different people to round out your board
- find people who understand to blend profit & nonprofit
- some board members of nonprofit adamantly opposed to social enterprise
- how do you ensure everything in the enterprise leads to the mission
- now part of culture and dna – 6 months of planning with several board approvals along the way
- many checks that mission of business maps to mission of organization
- structures that work
- what are your goals
- why are you engaging in social enterprise
- develop skills assets, get unrestricted income for organization, branding opportunity,
- be incredibly clear on goals and reasons
- keep it simple
- different ways: for profit llc wholly owned by nonprofit; division of nonprofit;
- blanket advice: as you're planning you social enterprise, don't get caught up on the structure. goals, business model, then talk to attorney and accountant re corporate form that best fits that
- mission, goal, orientation, purposes
- seek local counsel
- a lot of these are investigated and audited on a regular basis
- what's more important is the mission, e.g. if job training, makes sense to have all under one org
- demand same level of accountability
- financial bottomline, social mission, go before board every month
- a lot of transparency
- run it like a business even though its part of a nonprofit
- viability
- look at just the business part and see if just the business is at least a break even business, then figure out how much extra does it cost to do the mission (e.g. job training)
- factor that cost of goods sold will be higher since it's on the job training
- women will need case management support
- are we really subsidizing a for profit business?
- is it sustainable, not just profitable
- two major sources of funding: foundations and individual donors
- know the funder you're pitching to, know what they're angle is
- skoll foundation – funding scale
- some others want smaller
- find the right funders, eg early stage; fewer that do due diligence; if they want scale, that's what you have to pitch them – the resources, intellectual capital
- Draper Richards Foundation
- look for entrepreneurs for funding, much better likelihood of getting support; it's an entrepreneurial model
- foundations not interested in long term funding, they do three years
- have overview of business model that' realistic, with a reasonable degree of reality
- seattle – paul allen foundation
- medina foundation
- write down everything you care about that’s important, and what's important for them
- you need an advocate inside
- day one mission alignment
- then bring in legal help
- models
- hybrid corporate form – not there yet
- try to make the structures we have work
- "getting to scale" by jill bamburg - analyzes businesses with explicitly social missions, case studies on how they got to scale; the only real text and resource – easy read, fascinating
- branding vs cause related marketing
- you cannot rent a c3 – so many problems giving your name – illegal – you can't give away your name
- laundering money through the c3
- when it goes sour, big problem, not thought through properly
- Resources
- checklist – fundamental questions when you're starting a new; what's the level of risk taking - sustayne.blogspot.com
- social enterprise alliance
- audits
- started as compensation audits, then general audits
- people don’t think about it, don’t think it's ubi, their income spikes, they get audited
- how much ubit can you generate – no too much – call your accountant
- that's why charities spin off their income making – to get ubit out
- what's ubit? (unrelated business income tax) limits charitable organizations
- how find lawyer? social enterprise-alliance.org
- look for one with specific social enterprise knowledge – what clients have you had, what kinds of issues, what common issues you see in your practice
- foundations will also refer you
- there aren’t that many – centered ion seattle and sf bay, one in ny
- needs experience with charities; many business lawyers don’t get charity – most law firms don’t have charity dept – find one with a charitable law department
- outlook for growth in social enterprise vs c3
- huge – exploding here, lagging behind rest of the world
- not a fad, here to stay, hugely growing sector in the world
- looking at the way we do business and meet social issues
Notes by: Vanae Tran, Rock Your Awareness; Leo Romero