Doing Business 2.0 Introduction to Social Enterprise Starting and Sustaining a Nonprofit Organization – July 10, 2013

At Community Wealth Partners

our goal is to help change agents solve social

problems at the magnitude at which they exist.

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Key Question

“Can we teach others the importance of being self-sufficient

and, at the same time, not be self-sufficient ourselves?”

- Mike Burns, Former CEO

Pioneer Human Services

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What is social enterprise?

A profitable or self-sustaining organization or venture

that generates revenue to promote social change

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What is different about social enterprise?

A quick fix out of a crisis –

Typically takes 3-5 years to

break even

Traditional fundraising

Grant money

Gifts/donations

For everyone

Social Enterprise is Not… Social Enterprise is…

Generating sustainable new

resources to support mission

Engaging market forces to

work for the nonprofit sector

Devising new ways to leverage

existing assets

Allowing for greater flexibility

by bringing in unrestricted

revenue

Decreasing dependence on the

external funding community

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Field Study of Social Enterprise

Source: Community Wealth Ventures Field Study of Social Enterprise, 2008. Survey sent to 5,965 nonprofits, 1,008 responded and 740 completed survey.

1. Workforce Development

2. Housing

3. Community & Economic

Development

4. Education

5. Health

1. Education & Training

2. Retail/Thrift Shop

3. Consulting Services

4. Food Services/Catering

5. Art Venture

Top 5 Mission Areas of Nonprofits

Operating a Social Enterprise

Top 5 Social Enterprise Venture

Types

The Center for the Advancement of Social Entrepreneurship at Duke

University, Community Wealth Ventures, and the Social Enterprise Alliance,

with support from REDF, conducted the largest national survey to date about

Social Enterprise with a diverse set of nonprofit organizations.

Understanding the ultimate goal of your

venture is vital when getting started

Mission Profit

A B C

Self-Sustainable Focus –

A business that generates

enough income to make it

self-sustaining

Profit Focus –

A business that

generates

substantial

profits which can

be re-invested in

the business for

growth

Mission Focus –

A business that will

need ongoing

philanthropic

support but meets

key mission

objectives

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What factors are necessary to launch a

successful social enterprise?

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A wide range of assets can be leveraged in

social enterprises

Have Do Know

Books Culinary Training Best Practices

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Social enterprise is legal for nonprofits

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Nonprofits can launch community

wealth enterprises and maintain

501c3 tax status

Consult an attorney to understand

the most appropriate legal

structure for your organization

There is no standard legal

structure

• Structure often depends on size of

the venture and degree of mission

alignment

Alternate Legal Structures - L3C, Benefit

Corporation and B Corporation

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Attribute L3C Benefit Corporation B Corporation

Legal Form Legal corporate structure Legal corporate

structure

Certification with no

legal standing

Description

State-regulated for- profit

LLC with primary social

goal and secondary

financial goal

State-regulated for-

profit corporation

required to create

material positive impact

Third party (B Lab)

certification of meeting

social performance,

accountability, and

transparency

Benefits

Simplifies Program

Related Investment

compliance, encouraging

foundation funding

Higher standards of

accountability and

transparency; primarily

signaling benefit

Seal of approval;

likeminded community;

discounted services

(e.g., Salesforce)

Additional

Information

Currently, 850 L3Cs Legislation passed in 18

states, pending in 10

states.

Currently, 778 B

Corporations

Tax Taxed as LLC Election to be taxed as

C or S Corporation

No tax implications

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“Whether or not organizations succeed in creating community

wealth depends on their ability to think in new ways about

assets they may have previously taken for granted or not

initially recognized as such. …It all begins by believing and

understanding that you are worth more than you think.”

- Bill Shore, Chairman, Community Wealth Partners

& Author, The Cathedral Within