Solutions Frameworks

For

Social Challenges

Comm 306 Blocks 5 & 6

Wednesday March 26, 2008

Today’s objectives—

• Explore the social enterprise sector (SES)– definitions, characteristics, examples, issues– focus on nonprofit organizations

• Learn about SROI (social return on investment)

• Analyze the case of Habitat for Humanity

Definitions

Social enterprise sector— provides goods and services with social aims and ethical values (satisfies triple bottom line: social, environmental, financial)

Nonprofit organization/NGO— formed for the purpose of serving a public need, not profit seeking. A.k.a. social sector, third sector, charitable sector, philanthropic sector, independent sector. Often, classified as a 501(c)(3).

Corporate social responsibility— taking responsibility for a firm’s impact on the community; voluntary steps to improve the quality of life for the communities in which it does business

Social Enterprise Sector (SES)

U.S. NP Characteristics

arts, education, healthcare, human services (non-religious)

• 1.4 million NPs registered with the IRS• 5.2% of U.S. GDP• 8.3% of U.S. wages & salaries• $260 billion donated in 2005• 65 million volunteers

*Urban Institute’s Nonprofit Almanac 2007

Social Enterprise Sector (SES)

U.S. Funding

• 70.9% from fees and services• 12.5% from private contributions• 9% from government grants• 3.9% from investment income• 3.7% from other income• No change in constant dollars over past 5 years

*Urban Institute’s Nonprofit Almanac 2007

Global NP Characteristics

• $1.3 trillion in expenditures• World’s 7th largest economy• 5% average of country GDP • 21.8 million paid employees in 35 countries• 12.6 million full-time volunteers• 190 million part-time volunteers

Global Civil Society : An Overview (35 countries) 2003

Social Enterprise Sector (SES)

Global Characteristics

• 66% of expenditures are for labor v. 27% for non-financial corporations

• revenue—fees & charges 35%, government payments 27%, 65% private philanthropy

• 24% annual country average growth in employment v. 8% overall employment

UN Handbook on Nonprofit Institutions 20007

Social Enterprise Sector (SES)

Social Enterprise Sector (SES)

Who are the stakeholders?

1. “Customers,” clients, those served or aided

2. Management and Board members

3. Staff, volunteers

4. Community

5. Government (local, national, international)

6. Competitors

7. Lenders and donors

8. Partners (corporations, foundations)

Social Enterprise Sector (SES)

What issues and problems confront the SES?

• Who are the directors?• What concerns do paid staff have?• What are volunteers’ needs?• What characterizes Boards?• What financial problems exist?• How might the mission present conflicts or

limits?

The Social Enterprise Spectrum: Philanthropy to CommerceGregory Dees

Purely Philanthropic Hybrids Purely Commercial

General Methods:

Appeal to goodwill

Non-pecuniary rewards

Mission driven

Mixed motives

Some subsidy

Impersonal exchange

Arms-length bargaining

Market driven

Key Stakeholder Relationships

Primary beneficiaries:

Unclear or needy

Not required to pay

Subsidized pricing

Price discrimination

Third-party payers

Customer able to pay

Priced for profit

Capital sources:

Philanthropic

Donations/grants

Mixed debt & donations or subsidized investments

Capital market rate

Equity and debt

Work force: Volunteers with high

Commitment to social mission

Mixture of volunteers, professionals, paid staff or below-market wages

Paid employees, focus on financial rewards

Suppliers: In-kind donations Discounts, or mixture of in-kind and full price

Charge market prices

Governance Mission-constrained

Self-perpetuating Board stewardship

Mixtures of representation and self-selection

Balancing constituencies

Board elected by owners

Property rights

Fiduciary responsibilities

The Social Enterprise Spectrum

Mostly Philanthropic Hybrids Mostly Commercial

“Alleviating Poverty & Malnutrition: Successful Models”

Financing and development aid, Nutrition and Food Fortification, Food Production & Distribution

General Methods:

Appeal to goodwill

Non-pecuniary rewards

Mission driven

AGRA

B&MGF

ICCIDD

SAA & Burlaug

Mixed motives

Some subsidy

LAAD

ALCOSA

GAIN

TetraPak NutriSip

AMUL Dairy Coop

Impersonal exchange

Arms-length bargaining

Market driven

P&G NutriStar

Nestle

Monsanto

Key Stakeholder Relationships

Primary beneficiaries:

Unclear or needy

Not required to pay

Subsidized pricing

Price discrimination

Third-party payers

Customer able to pay

Priced for profit

Capital sources: Philanthropic

Donations/grants

Mixed debt & donations or subsidized investments

Capital market rate

Equity and debt

Work force: Volunteers with high

Commitment to social mission

Mixture of volunteers, professionals, paid staff or below-market wages

Paid employees, focus on financial rewards

Suppliers: In-kind donations Discounts, or mixture of in-kind and full price

Charge market prices

Governance Mission-constrained

Self-perpetuating Board stewardship

Mixtures of representation and self-selection

Balancing constituencies

Board elected by owners

Property rights

Fiduciary responsibilities

Play Pump—a nonprofit organization

Where does the money go?PBS report on rating charities

Banda Ache, Sumatra &the Tsunami