By Kevin Lindsay
Last week’s post introduced SERIC-2013, a comprehensive report designed to study social enterprise activity taking place among Colorado’s nonprofits. Through the report, we learned quite a bit about social enterprises that have already taken hold, as well as views within organizations about the benefits and challenges that social enterprise can bring. On a related note, we’ve also explored how foundations can assist in social enterprise development.
The report indicated that there is already a strong foothold for social enterprise in Colorado:
- 40 percent of SERIC-13 respondents (the overwhelming majority of whom are nonprofit senior executives and board chairs representing small to mid-sized entities) indicate their organizations currently operate one or more social enterprises, and 17 percent operate two or more.
- Among all respondents (those with and without enterprises) believe that social enterprise is, or could be, an effective tool for their specific organizations and 27 percent without a social enterprise are currently considering a launch. And the average social enterprise investment is typically less than $100,000. (We note that these start-up budgets often include in-kind assets and resources).
- Respondents operating one or more enterprises indicate the top benefits in this work (in addition to revenue generation and support in the achievement of their sustainability objective) include: increased community impact; enhancement to the organization’s credibility; and improvements to their overall general fundraising efforts. (Apparently, the giving community supports these sustainability efforts as well.)
We also learned that despite the surprising levels of activity and interest in social enterprise among our nonprofits, there are also many challenges to its growth as an intrinsic model here in the state. Chief among them are organizational and financial capacity:
- The data flagged substantive concerns that there is an overall lack of knowledge about social enterprise concepts and strategies for earned income throughout the field while 63 percent of respondents without an enterprise believe their existing boards and staff lack the resources and skills to launch a venture.
- Among those considering a new launch, 85 percent have not yet identified or secured funding for their venture and 69 percent of existing enterprises were self-funded. Respondents indicated the need for support and guidance in key areas including: feasibility assessment; business planning; legal counsel; accounting and tax planning; capital acquisition; and implementation.
In a recent discussion at the Foundation Tax Group (an organization comprised of the region’s philanthropic foundation’s financial officers that meets quarterly), we encouraged foundation officers to inquire and assess their organizations’ programmatic interest in supporting grantees’ social enterprise initiatives, and to understand why. We also suggested that if programmatic support were to expand—as their institution’s financial and business leaders—they and their departments may be tasked to evaluate the economic potential and risks of business plans submitted for funding. So there could be the need to gear up operationally for this as routine scope of their operation. Finally, getting up to speed with regard to interpreting new organizing structures and potential new tax considerations for their institutions, proved to be a focal point of the discussion and deserving of further exploration for the group.
While takeaways from SERIC-13 support the glowing viability of social enterprise and its myriad value to nonprofits operating them, there are very clear gaps in the provision of, and access to, many critical resources that could see social enterprise flourish as a more common option for organizations throughout the state. Surely, Colorado’s foundation community could play a significant leadership role in addressing these specific needs, and there are many observable, new and exciting indications that may be happening now.
Kevin Lindsay is the founder and Managing Director of Harvests Inc., a consulting firm that provides strategic marketing and operations support to nonprofit social enterprise initiatives. In 2004 Kevin and the Harvests team helped spearhead the establishment of Independent Spectrum (IS—a successful collaborative venture sponsored by five regionally-based philanthropies known as Voqal). The IS companies acquire and commercially lease proprietary FCC broadband frequencies. Kevin and Harvests also helped launch Voqal’s newest company, Mobile Citizen™ (the first 4G mobile broadband service exclusively for schools and non-profits). Currently, Harvests is leading station acquisition and operations efforts for Independent Public Media, a new Voqal initiative established to preserve America’s public television airwaves.