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Social Business And NGO Sustainability ACGC Lunch and Learn October 2013 Roland Vanderburg.

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Presentation on theme: "Social Business And NGO Sustainability ACGC Lunch and Learn October 2013 Roland Vanderburg."— Presentation transcript:

1 Social Business And NGO Sustainability ACGC Lunch and Learn October 2013 Roland Vanderburg

2 Mutual Introductions  Name  Organization  Any involvement with business ownership and management

3 My background: -involved in NGO development work for more than 25 years -12 years of living and working in Latin America -International Program Director with CAUSE Canada for 8 years -economics degree from the University of Calgary -Master’s Degree in development studies and microfinance from Eastern University in Pennsylvania -more than four years in Nicaragua with microfinance giant Opportunity International -involved in social business and microfinance with Momentum -taught several classes at Ambrose University related to community development, management and microfinance

4 Current Challenges for NGO Sustainability What are they in your experience?

5 Current Challenges for NGO Sustainability  New technical donor structures, policies  New philosophy of development among funders (investment versus charity)  For-profit approach often preferred (trickle down)  Changing conditions on the field –higher rates of growth, greater inequality, beneficiary transition from charity to investment  Donor fatigue; donor awareness  Less commitment from donors (i.e. among young people)

6 Defining Social Business What does this mean to you?

7 Defining Social Business Type I: Mission driven (like NGO) with cost recovery pricing for goods, services -non-loss, non-dividend -mission oriented activity -long term ongoing sustainability  Environmentally friendly; promotes justice  May accept donations, investments, loans  Contrast with broader social enterprise definition

8 Defining Social Business Type II: For-profit business owned by marginalized entrepreneurs

9 Examples of Social Businesses In Alberta  Thrift stores (many examples)  Catering (EthniCity Catering, CCN)  Translation services (CIWA)  Day homes (Sonshine Centre)  Consulting services  Classes (Green Calgary)  Ten Thousand Villages

10 Examples of Social Businesses Internationally  Microfinance (loans, savings, insurance, transfers)  Teaching, schools, colleges, institutes, curriculum  Retreat centre, guest house  Tree nursery  Roto-tiller rental  Mushroom production  High yield chickens  Consulting  Health clinics  Solar energy provider

11 Social Business Benefits and Costs  What are some social business benefits?  What are some social business costs and risks?

12 Social Business Benefits and Costs Benefits:  Sustainability of programming with minimal donor/funder dependency  Respects human dignity; asset based; local ownership  Furthers development goals and mission; based on local felt needs Costs:  Need for supreme flexibility and market sensitivity  Need for investment capital, business expertise  Risks of financial losses due to internal or external factors

13 Social Business Pricing Strategies  Sliding scales – clients pay according to ability to pay  Cross-subsidization – clients who are more able help subsidize less able clients  Lending: pay later; pay when able to pay; pay forward  Insurance plans – everyone pays premium, membership –service when needed  Paid for: service costs are paid by third party; donor, government  Cost recovery pricing – no profit margin; all surplus reinvested, market wages, minimize costs (while maintaining mission focus)  Combined pricing: clients pay for one service while receiving additional services without explicit pricing ie integral microfinance  Very small, regular payments (daily or weekly) according to payment capacity  Periodic payments based on household cash flow (payment capacity)  Joint buying and selling (cooperatives); and many more…

14 Preconditions for Success  Open to Business Approach –mindset, paradigm (not anti-business)  Understand market, marketing (PPPD), effective demand  Marketable goods, services  Management capacity –including finance

15 Steps to launching a Social Business  Define the mission -purpose; beneficiaries  Define ownership  Design and refine products, services  Do the marketing plan (define clients, PPPD)  Prepare a business plan (versus proposal)  Define measurement of success (impact indicators, sustainability)  Raise capital –donations, investments  Hire appropriate staff (HR policy), training  Implement a promotions plan, production

16 Social Business Management  Quality control – including customer service  Internal controls – including cash management  Monthly reporting (financial and impact)  Staff training (technical, administrative, customer service, financial)  Operational planning (SMART and SWOT)  Incentive based compensation

17 Next Steps:  Exploration and/or expansion of social business activities  In Canada or overseas  Consult in writing with CRA  Develop concept plan  Develop business plan  Access investment funding  Build capacity for implementation

18 Available Support:  No cost, one page program assessment of organizational potential for social business development (initiation and/or expansion)  Organizational assessment for social business readiness  Business Plan development  Management support  Evaluation and monitoring of social business activities

19 Discussion  Comments; share experiences  Questions  Concerns  Issues; share goals  Feedback and Evaluation

20 Appendices: CRA Guidelines “What is a Related Business?” “Examples of fees earned in the context of charitable programs include rent in low-income housing programs, university tuition fees, and museum admission. Other examples of fully acceptable charitable programs are identified in Registered Charities: Community Economic Development Programs. They include micro-enterprise programs, "training businesses" (which provide on-the-job training in vocational and life skills), and "social businesses" (which address the needs of people with disabilities).”

21 Appendices: Support Organizations and Resources  TRICO Charitable Foundation  Building Social Business, Muhammad Yunus, PublicAffairs, New York, 2010   (Social Venture Exchange, Ontario) –impact investing

22 My Contact Information:  Roland Vanderburg  Email:  Telephone: 403-264-8410  Location: Lakeview, Calgary

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