Presentation on theme: "Social Business And NGO Sustainability ACGC Lunch and Learn October 2013 Roland Vanderburg."— Presentation transcript:
Social Business And NGO Sustainability ACGC Lunch and Learn October 2013 Roland Vanderburg
Mutual Introductions Name Organization Any involvement with business ownership and management
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
Current Challenges for NGO Sustainability What are they in your experience?
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)
Defining Social Business What does this mean to you?
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
Defining Social Business Type II: For-profit business owned by marginalized entrepreneurs
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
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
Social Business Benefits and Costs What are some social business benefits? What are some social business costs and risks?
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
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…
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
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
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
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
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
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).”
Appendices: Support Organizations and Resources TRICO Charitable Foundation Building Social Business, Muhammad Yunus, PublicAffairs, New York, 2010 (Social Venture Exchange, Ontario) –impact investing
My Contact Information: Roland Vanderburg Telephone: Location: Lakeview, Calgary