Is Social Enterprise Really New or Different?
I teach a graduate class in Financial Management for Nonprofit Organizations at Hamline University in Saint Paul. This week’s class topic was social enterprise, nonprofit business start-up, and earned income strategies. One of the hurdles the class faced was with the terminology and definitions used in the “field” of social enterprise. The question that came up again and again is this: what’s the difference between “social enterprise” and ordinary, everyday program activities that have a fee for service or a price attached? I stumble over this question myself. On the one hand, we could say that it doesn’t really matter what terms we use to describe the different earned income streams for a nonprofit, but I think that the continual banging of the “social enterprise” drum make it important to face this question. Case in point: theaters generate earned income by selling tickets to audience members. When the same theater sets up a little business renting out the dark theater during the day for corporate events, they are suddenly recognized as a “social enterprise.” What about all those ticket sales?
In the FAQ section of the Social Enterprise Alliance, social enterprise is defined as “any nonprofit business, venture, activity or strategy conducted for the purpose of generating earned income in support of a social mission.” That definition would seem to include all earned income, from the ongoing theater ticket sales and community clinic’s patient fees to the start-up catering business of a daycare center or corporate events at the theater. If you read the books, articles, and research studies about social enterprise, though, you will see a distinct emphasis on the latter type of revenue – something new and different, rather than something tried and true. The Social Enterprise Alliance also has a nice article on this topic, Social Enterprise: Hype or Reality, which acknowledges that earned income has been a part of the income mix in the nonprofit world for years. The newness of these strategies may be more noticeable in social service agencies than in the arts, health care, or community development. This “new” field might be more about the importance of paying attention to the value of earned – and therefore unrestricted – income, as well as taking steps to generate earned income on purpose and purposefully.
The field of social enterprise, however you define it, is certainly well documented and analyzed. In addition to Social Enterprise Alliance, you will find interesting information and research from REDF and Community Wealth Ventures. If you want an in-depth study with lots of cases, read Community Wealth Venture’s report, Powering Social Change.
What do you think – is social enterprise a distinct and definable movement among nonprofits, or is it a just a new name?
I’d vote for “new name” for an old practice. Organizations such as the American Red Cross have been generating revenue from CPR and first aid training for years (not to mention from the sale of blood to hospitals). Goodwill/Easter Seals gets the majority of its revenue from its retail stores. Many nonprofits, such as Sabathani Community Center, have rental space available for other nonprofits. Of course, any “movement” that gets nonprofits thinking about earned revenue strategies is a good thing. Soren Jensen, M.A. in Nonprofit Management, Hamline University (June 2007). Director of Development, Sabathani Community Center.
Comment by Soren Jensen — November 29, 2007 @ 4:18 pm
Yes, it’s real, but its like a mine field planted with landmines that will hurt an organization if we do not do really effective planning, including a 3 to 5 year business plan. I remember when all of us in the nonprofit community got excited about owning our own buildings. Yet many of those groups either were seriously disrupted by owning their own building or disappeared because of related funding problems. I think it would be really helpful to have an ongoing series- maybe once a month or once every two months where those of us thinking about social enterprise and those already experienced in it, get together for along lunch to surface issues, questions, problems, etc. Maybe NAF can play a role in that? Thanks, Kate, for the blog piece on this. It is a very important issue for us at Urban Boatbuilders because our at-risk youth participants build and restore boats, build paddles and oars and shape new woodworking tools - all of which we can sell and earn mission-related …
Comment by Dave Gagne — November 29, 2007 @ 4:40 pm
I really appreciate these comments. I agree that social enterprise is real, but we need to more clearly define when it is core and when it is more ancillary. The focus, plans, and strategies will differ. I love Dave’s suggestion about a social enterprise group that could help to support, mentor, and think through ideas. We will definitely look for a way to take a lead on that. Thanks again, Kate
Comment by kate barr — December 6, 2007 @ 9:47 am