Social enterprise. Earned income streams. Revenue-generating model.
Wikipedia defines social entrepreneurship as “the application of market-based business strategies to achieve a social purpose.”
With the Great Recession, nonprofits are exploring these “market-based” or money-making strategies to sustain themselves, as well as to advance their causes.
Does that mean your nonprofit has to open a lemonade stand?
THE TIME IS NOW FOR EARNED INCOME
Paul Lamb, principal of Man on a Mission Consulting, has more than 20 years of experience as a nonprofit executive and entrepreneur who has worked with everyone from gang members to CEOs. A self-described “social enterprise addict,” Lamb has helped a dozen different organizations to launch. One of his great client success stories was the Stride Center, an award-winning program providing computer training and job placement for low-income youths, many of them involved in gangs.
Recently in downtown San Francisco, the three-day Social Enterprise Alliance Summit was expected to draw 600 attendees; more than 700 people signed up. We caught up with Lamb at his April 21 presentation at San Francisco’s Foundation Center.
Lamb stressed that social entrepreneurship is “not a quick fix, not a silver bullet,” and just like any other business, has to be well thought-out and planned. Any nonprofit can think about developing an earned income stream, but only a few are well positioned to launch an actual venture. According to Lamb, the characteristics of a nonprofit ready to take on a social enterprise are generally those with:
- an existing culture of innovation and experimentation
- a willingness to operate more like a business, and
- patience – as with small businesses, most don’t start generating a profit until three to five years in.
BEEN AROUND FOR DECADES
While the notion of earned income seems like a revolutionary new idea, Goodwill Industries is a venerable organization that has been creating solutions to poverty through its businesses for decades. Other prominent examples of successful social enterprises include Kiva - a microfinance nonprofit - and City CarShare – an Bay Area nonprofit that provides convenient, affordable access to cars in order to reduce individual car dependence and improve the environment.
Nonprofits have nothing to fear from social enterprise, Lamb said, as long as the social mission is carefully outlined and the organization makes clear social and financial goals, or as he describes it, exhibits “the mind of a business and the heart of a nonprofit.”
Lamb recommends the following steps to begin developing your own social enterprise:
- Spend the time doing proper due diligence. That includes involving all stakeholders (board, staff, and even clients) in the development process, doing thorough market research, and writing a business plan.
- Put together an advisory committee of experts who have real world experience with the type of business being explored.
- Identify sufficient financial AND human capital to start the business.
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