Social Entrepreneurs 5.0

As long time readers know, the term "Social Entrepreneur" has morphed repeatedly over the past 15 years. At first, it was about the then odd idea of a nonprofit manager acting in a businesslike manner. Then, some of these managers started outside businesses; thus a second definition. In fact, my 2000 book Social Entrepreneurship: The Art of Mission-Based Venture Development, was about both of these uses of the term. In the book, I defined a social entrepreneur as "someone who takes reasonable risk on behalf of the people their organization serves."

Since that time, social entrepreneurs have been defined as investors who only invest in "good" businesses (those that don't abuse workers, for example) or businesses whose product benefits society. I've even heard pharmecutical representatives say that, since they make medicine and give away some of their product, they are social entrepreneurs. That seems a stretch to me, but whatever.

When I was teaching nonprofit management at the Kellogg School of Management, most of the students were very, very interested in making sure their business had social impact in some form. Kellogg's students are still in that frame of mind, but not unique-it's true at nearly all business schools today-and these graduates are increasingly pushing their businesses to help in some tangible manner. That's good, but....there's an even more interesting and potential-filled model

The definition of social enterprise I'm most excited about is what I would call version 5.0, the melding of the business and social benefit. Three good examples of this model are:

Toms Shoes: Buy a pair of shoes and a child in need gets a pair.

Two Degrees Bars: For every healthy food bar you buy, an aid organization gets a food pack for a child who is starving.

Sleeve Candy: Started by four Kellogg students, who linked up with the Salvation Army, Sleeve Candy retrieves, catalogs and sells vintage T-shirts, and 30% of the revenue goes back to the Salvation Army.

The best news? Investors are REALLY interested and have capitalized firms with this model repeatedly. They see the appeal of linking profitable business with meeting social needs.

Is it the answer to all the world's ills? No. Will businesses like this replace government in aiding the world? No. Does this foretell the end of the need for nonprofits? Not at all.

But with so many needs in so many places staying unmet, I'm on board with any idea that helps more than it hurts, and this model seems to have huge potential.

Finally--if there's still someone on your gift list for the holidays....think about patronizing these organizations or others you may know of that are using this model.

Awesome Day in Trinidad

I've just finished an amazing day with the WorkAbility Americas conference in Trinidad, speaking this morning on innovation and social enterprise, but more important, listening this afternoon to a group of Western Hemisphere nonprofits who provide jobs to people with disabilities.

Always fascinating to see how people do great work in environments that make life in the US seem a breeze.

Much fun, and very, very energizing.

Will businesslike charities become charitable businesses? Part 1

One of the more interesting debates in our sector at the moment is the discussion (panic/hue and cry/gnashing of teeth) about the merging of the nonprofit and for profit models of business. Critics and analysts have noted correctly that many nonprofits are acting in a more businesslike manner than 10 or 15 years ago. Then, these observers marry that "fact" with the growing desire of businesses to have a social outcome and become one definition of a social entrepreneur. These two trends are seen as inevitably ending the distinction between charitable groups, often accompanied by much verbal angst and pulling of hair.

My suggestion? Chill out. We are not approaching the nonprofit apocalypse by any means, so let's dissect this discussion a bit to see why in this post and my next one.

Are nonprofits in general more businesslike than 15 years ago? Absolutely. Are all nonprofits this way? No chance. There are hundreds of thousands of sloppily run nonprofits today, and there always will be, just as there are sloppily run for-profits, poorly managed government agencies, and badly managed personal finances.

What has happened is that the expectations of the quality of nonprofit management have climbed dramatically. Take outcome measurements for example, a term that was just gaining traction 15 years ago (with, I might add, much angst-filled commentary about how such measurement would be the "end of the sector" since it took valuable time away from mission). Or, look at the spread of best practice models, standards of excellence (such as the terrific ones from Maryland Nonprofits) and accreditation. And, of course, the online oversight of watchdogs like Guidestar and Charity Navigator. All of these forces have slowly raised the bar on nonprofit management, outcome and accountability.

To which I say, good, good, and good.

And, certainly we talk more about mission-based businesses (a term I've been pushing for 25 years) and using business skills such as marketing and finance. But have most nonprofits moved from being charities to becoming mission-based businesses to going all the way to being businesses with a mission on the side?

No, and it won't happen any time soon. Why? Because nonprofit staff and board have seen the light regarding the key rationale for managing their mission better: They get to do more and better mission as a result. All the business "stuff" that critics worry about is not based on becoming a business--it's about doing better mission. That's what people on the ground tell me and show me all the time. There are just too many people who are too committed to service and mission to let this morph out of control. Will some organizations go too far? Yep, and they already have. But the vast middle of the bell curve on this issue is just doing more and better mission, not turning into some sort of nonprofit Wal-Mart.

Now, how about the for-profit world and their social aspirations? That's also a real trend, and we'll look at that in my next post.

Bright eyes, Boston version

Had the great pleasure of speaking to both an undergrad and graduate class at Boston University's School of Management yesterday. Thanks to Professors McCormack and Post for letting me borrow their students.

Both classes were fun; with the undergraduates I talked about the characteristics of a good nonprofit, which should fit well into their big project: figuring out how to give $15,000 away to nonprofit applicants, which is, I suspect, harder than they thought it would be. The class is using Mission-Based Management as its core text, so there was a fair amount of give and take on what makes a good nonprofit, and how my characteristics of good nonprofits would also work for a for-profit.

In the grad class, we spent most of our time discussing what social entrepreneurship (SE) is, how the definition has changed, expanded, morphed and been adopted by a wide range of different activities. For me a social entrepreneur has always been "someone who takes risk on behalf of the people their nonprofit serves". However, the class defined SE as a business that is socially responsible, and a philanthropist who figures out how to help a nonprofit succeed, and someone who sets up businesses that help the underprivileged. We even went round and round about what social good is---and does it have to apply to people who are oppressed, or poor, or, or, or....

As you might guess, all of this was great fun for me, and I hope helpful for the students. It made me miss my teaching at Kellogg even more.

Be Graphic

A nice toolkit for nonprofit graphic design showed up in this week's By the Cup from Techsoup. I would definitely give it a look, particularly if you are in the process of re-working your website or other marketing materials.

I'm back on the road after a three week break. Today to Orlando to give a two day class on business development (there's a podcast on that subject here) for nonprofits and then next week in San Francisco to talk to a large group of award winning staff on Nonprofit Stewardship.

United Airlines is always glad to see me.....it's nice to be loved.

Rocky Mountain Fun

Had a really good day yesterday...worked in Denver for Colorado Nonprofits, as well as the University of Colorado Graduate School of Public Affairs. Lots of fun interaction with some great people, and got to catch up with some long-time friends, too. And, as a free bonus, I got to spend time with my eldest son.

The subject of the day was Social Enterprise, which i posted on yesterday. The questions were good, but pretty predictable..."Do we need a new corporation?" (99.9% of the time, no), "What do we do if our board is risk-averse?" (give them more caffeine...actually just break the risk down into smaller steps and keep them involved), "What businesses work?" (read this weeks Chronicle of Philanthropy).

At breakfast, before the large 200 person luncheon, I had a more wide-ranging discussion with ten local nonprofit leaders. We talked about trends in Colorado, competition, issues of working with younger staff, and some recommended reading. They also wanted to know about my new book, Generations. Fun, smart people: I would have liked to have continued that conversation for another two hours.

A real highlight for me (as always) was talking to grad students late in the day. There was talk of me coming back to teach again, and I'd love it.

Final bonus...an awesomely easy trip home, arriving three hours early.

The magic bullet....or not.

Today, I'm going to be talking to people in Denver all day about Social Entrepreneurism. First a small breakfast of nonprofit execs, then a luncheon of 200 and then a master class of grad students at the University of Colorado Grad School of Public Policy. A fun day, no doubt, but it my preliminary conversations with some people raise long standing concerns.

First ,the term "Social Entrepreneurism" means so many different things to so many different people that I could take all day here just running through the sometime contradictory definitions. MY definition is this "The a social entrepreneur is someone who takes reasonable risk on behalf of the people the organization serves". A good thing, no doubt.

But, let's talk about what social entrepreneurism is NOT.

It's not the salvation from fundraising.
It's not always about starting a new business.
It's not the magic bullet that saves the organization.
It's NOT a sure thing.

I do get tired listening to otherwise very smart execs talking about how they are going to start a new business and save the world. If only. I think we need a large dose of reality on this subject.

Here's the deal as I see it:
1. Being businesslike in pursuit of mission is a good thing.
2. Expanding services to new areas or new populations without doing a business plan is stupid.
3. So is starting a new business you know nothing about.
4. New things are ALWAYS risky: doing the business plan reduces that risk, but never eliminates it.
5. Building a new business is hard, long work. There is no sure thing.

I've written an entire book on the subject, titled (oddly enough) Social Entrepreneurship: The Art of Mission-Based Venture Development

And, check out two editions of the Misson-Based Management Newsletter that focus on:
Business Development
and
Entrepreneurship

In addition, I've got more on this topic in the Ideas area of my website. Check these out:
Are You Ready for Competition?
The Marketing Cycle for Nonprofits
and
The Marketing Disability of Most Nonprofits

OK, I'm back

.....after something like 200 days. My bad.

I just got back from the Alliance for Nonprofit Management Conference in D.C. and went to a great session on Blogs run by TechSoup. I realized that in between my newsletter each month, I can post ideas and resources for people, and then refer them here from the newsletter, or my website.

So here goes. First of many cool things for nonprofit managers, nonprofit board members, and funders.

I've long advocated for more earned income in the nonprofit sector. Here's a study of three organizations that got involved in E-Commerce, from the Benton Foundation. Worth reading