Field Notes from a Social Entrepreneur
1. Where should non-profits and social enterprises begin when considering their financial options?
First stop is right at home: Is this the right time in the organization’s evolution to be making these considerations at all? It’s worth setting a filter to screen timing on making these considerations at all, and avoid wasting valuable time/energy/resources spinning wheels down the road. Here are a few suggestions for filter questions: Who is making these considerations? Are they the right person/group to champion this assessment, and do they have the resources to do it properly? Do they have a keen understanding of the organization’s mission, direction & ground level operations? What is the organization’s fitness level in terms of taking on a big new challenge that will affect mission, direction & operations in often unforeseen ways?
If an idea takes hold then the organization’s finance & operations capacity will soon be tested, but the first big hurdle is a having the right champion. Once that’s straightened away, there is little substitute for speaking directly to people who have started and operated social enterprise initiatives. Find them, buy them a [fair-trade, organic, bird-friendly] coffee: usually they will talk. Talk to people who represent different points on the spectrum and you will develop insight on comparing and contrasting different models, and how they might fit with your organization.
2. How could an organization move from a world of grants to loan/equity financing?
Part of this relates to the question below about skill-sets. Many people in social service are highly skilled in the world of grants. The lure of diversifying revenue streams is strong, but it’s easy to stick with what one knows, and hard to break from organizational cultures that revolve around the grant, and permeate all aspects of operation [a small example: how does HR deal with a commission based sales person?]. To get from A. to B. requires people who understand how to make money by selling products/services, and who have confidence in starting with, or working toward, the opportunities & risks typical of private sector, or hybrid, financial instruments. At the Phoenix Print Shop our trajectory has been very gradual. Firmly rooted in our mission we’ve driven a slow, steady strengthening of the business component. This has led us to a place now with more latitude to experiment with other types of financing, while not abandoning the conventional grant streams that allow us to maximize our social contribution to the community.
3. What new skill sets are needed internally to adapt social finance into an organization?
That old faithful, frequently undermined in the turbulence of day-to-day operations: good communication. The champion communicates early & often how the social enterprise initiative relates to mission, direction [particularly important upstream to Board/senior management], and operations. Even if it’s a stand-alone enterprise, as long as there is some link to the parent [mission-based] organization, invariably the enterprise will impact pre-existing operations, often not in ways you, or your colleagues, might like: front-line staff, admin, finance, web/IT/communications etc. Especially in the early days of the Phoenix Print Shop there were big gaps in my communication efforts. Even realizing that some years ago, I still struggle to make time for good communication that helps the organization adapt to what is continually a ‘moving part’. This of course holds for any department or program, but perhaps particularly relevant where the collision of social service and business cultures can be intense.
Often mentioned, but probably worth repeating is the need for business skills & experience, particularly skills/ experience derived from operating a small or medium sized business. That said, as social enterprise/blended value operations deepen their roots in the Canadian economy we can expect more people with the hybrid/blended skills sets – all other things being equal, the people best equipped to guide these internal adaptions.
