Solutions Frameworks For Social Challenges Comm 306 Blocks 5 & 6 Wednesday March 26, 2008

Today’s objectives— Explore the social enterprise sector (SES) –definitions, characteristics, examples, issues –focus on nonprofit organizations Learn about SROI (social return on investment) Analyze the case of Habitat for Humanity

Definitions Social enterprise sector— provides goods and services with social aims and ethical values (satisfies triple bottom line: social, environmental, financial) Nonprofit organization/NGO— formed for the purpose of serving a public need, not profit seeking. A.k.a. social sector, third sector, charitable sector, philanthropic sector, independent sector. Often, classified as a 501(c)(3). Corporate social responsibility— taking responsibility for a firm’s impact on the community; voluntary steps to improve the quality of life for the communities in which it does business

Social Enterprise Sector (SES) U.S. NP Characteristics arts, education, healthcare, human services (non-religious) 1.4 million NPs registered with the IRS 5.2% of U.S. GDP 8.3% of U.S. wages & salaries $260 billion donated in million volunteers *Urban Institute’s Nonprofit Almanac 2007

Social Enterprise Sector (SES) U.S. Funding 70.9% from fees and services 12.5% from private contributions 9% from government grants 3.9% from investment income 3.7% from other income No change in constant dollars over past 5 years *Urban Institute’s Nonprofit Almanac 2007

Global NP Characteristics $1.3 trillion in expenditures World’s 7 th largest economy 5% average of country GDP 21.8 million paid employees in 35 countries 12.6 million full-time volunteers 190 million part-time volunteers Global Civil Society : An Overview (35 countries) 2003 Social Enterprise Sector (SES)

Global Characteristics 66% of expenditures are for labor v. 27% for non-financial corporations revenue—fees & charges 35%, government payments 27%, 65% private philanthropy 24% annual country average growth in employment v. 8% overall employment UN Handbook on Nonprofit Institutions Social Enterprise Sector (SES)

Who are the stakeholders? 1.“ Customers,” clients, those served or aided 2.Management and Board members 3.Staff, volunteers 4.Community 5.Government (local, national, international) 6.Competitors 7.Lenders and donors 8.Partners (corporations, foundations)

Social Enterprise Sector (SES) What issues and problems confront the SES? Who are the directors? What concerns do paid staff have? What are volunteers’ needs? What characterizes Boards? What financial problems exist? How might the mission present conflicts or limits?

The Social Enterprise Spectrum: Philanthropy to Commerce Gregory Dees Purely PhilanthropicHybridsPurely Commercial General Methods: Appeal to goodwill Non-pecuniary rewards Mission driven Mixed motives Some subsidy Impersonal exchange Arms-length bargaining Market driven Key Stakeholder Relationships Primary beneficiaries: Unclear or needy Not required to pay Subsidized pricing Price discrimination Third-party payers Customer able to pay Priced for profit Capital sources: Philanthropic Donations/grants Mixed debt & donations or subsidized investments Capital market rate Equity and debt Work force:Volunteers with high Commitment to social mission Mixture of volunteers, professionals, paid staff or below-market wages Paid employees, focus on financial rewards Suppliers:In-kind donationsDiscounts, or mixture of in-kind and full price Charge market prices GovernanceMission-constrained Self-perpetuating Board stewardship Mixtures of representation and self-selection Balancing constituencies Board elected by owners Property rights Fiduciary responsibilities

The Social Enterprise Spectrum Mostly PhilanthropicHybridsMostly Commercial “Alleviating Poverty & Malnutrition: Successful Models” Financing and development aid, Nutrition and Food Fortification, Food Production & Distribution General Methods: Appeal to goodwill Non-pecuniary rewards Mission driven AGRA B&MGF ICCIDD SAA & Burlaug Mixed motives Some subsidy LAAD ALCOSA GAIN TetraPak NutriSip AMUL Dairy Coop Impersonal exchange Arms-length bargaining Market driven P&G NutriStar Nestle Monsanto Key Stakeholder Relationships Primary beneficiaries: Unclear or needy Not required to pay Subsidized pricing Price discrimination Third-party payers Customer able to pay Priced for profit Capital sources:Philanthropic Donations/grants Mixed debt & donations or subsidized investments Capital market rate Equity and debt Work force:Volunteers with high Commitment to social mission Mixture of volunteers, professionals, paid staff or below-market wages Paid employees, focus on financial rewards Suppliers:In-kind donationsDiscounts, or mixture of in-kind and full price Charge market prices GovernanceMission-constrained Self-perpetuating Board stewardship Mixtures of representation and self- selection Balancing constituencies Board elected by owners Property rights Fiduciary responsibilities

Play Pump—a nonprofit organization

Where does the money go? PBS report on rating charities Banda Ache, Sumatra & the Tsunami