More Related Content Similar to APS1015H Class 7 - Business Model Considerations for Social Enterprise Similar to APS1015H Class 7 - Business Model Considerations for Social Enterprise (20) More from Social Entrepreneurship More from Social Entrepreneurship (20) 1. APS 1015H: Social Entrepreneurship
Class 7: Business Model Considerations for
Social Enterprise
Wednesday November 9, 2011
Instructors:
Norm Tasevski (norm@socialentrepreneurship.ca)
Karim Harji (karim@socialentrepreneurship.ca)
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4. © Norm Tasevski & Karim Harji
Agenda
• Tony Pigott
• Marketing for social enterprise
• Operational considerations
• Legal Considerations
• What did we learn – today?
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6. © Norm Tasevski & Karim Harji
A caveat…
“Social “Social
Media” Enterprise”
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9. © Norm Tasevski & Karim Harji
Some Definitions
• Social Marketing is the systematic application of marketing, along with other concepts
and techniques, to achieve specific behavioral goals for a social good.
– The primary aim of social marketing is "social good", while in "commercial marketing" the aim is
primarily "financial". This does not mean that commercial marketers can not contribute to
achievement of social good.
Wikipedia
• Cause Marketing (or cause-related marketing) is a mutually beneficial collaboration
between a corporation and a nonprofit in which their respective assets are combined to
(1) create shareholder and social value, (2) connect with a range of constituents (be
they consumers, employees, or suppliers), and (3) communicate the shared values of
both organizations.
Jocelyn Daw (Marketing Consultant)
– Cause marketing differs from corporate giving (philanthropy) as the latter generally involves a
specific donation that is tax deductable, while cause marketing is a marketing relationship
generally not based on a donation.
Wikipedia
• Sustainable Marketing is the process of planning, implementing and controlling the
development, pricing, promotion and distribution of products in a manner that satisfies
the following three criteria: (1) customer needs are met (2) organizational goals are
attained, and (3) the process is compatible with ecosystems.
Donald Fuller (Sustainable Marketing Consultant)
– Sustainable Marketing encourages the process of innovation by turning the marketing process into
an experimental, iterative process that has close ties to the customer. Individuals and interactions
on a daily basis are important. Customer Collaboration over customer transactions. Responding to
change over blindly following a plan.
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Ivan Storck (founder, SustainableWebsites.com)
10. © Norm Tasevski & Karim Harji
Social Marketing
Individual
Mind Heart Spirit
Social Enterprise
Mission Deliver Practice
(why) Realize Aspiration
Satisfaction Compassion
Vision
ProfitAbility ReturnAbility SustainAbility
(what)
Values
Be Better Differentiate Make a Difference
(How)
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12. © Norm Tasevski & Karim Harji
Examples of Cause Marketing…
One of the first…
Another…
Most Recently…
1983 – American 2006 – Bono & 2010 – Pepsi & the
Express & the Statue Product (Red)
Refresh Project
of Liberty
Restoration Project
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15. © Norm Tasevski & Karim Harji
Sustainable Marketing…is tricky…
h"p://
www.youtu
be.com/
watch?
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es
16. © Norm Tasevski & Karim Harji
Sustainable Marketing Toolkit
Checklist 1!
17. © Norm Tasevski & Karim Harji
Sustainable Marketing Toolkit
Checklist 2!
18. © Norm Tasevski & Karim Harji
Sustainable Marketing Toolkit
Checklist 3!
21. © Norm Tasevski & Karim Harji
A Caveat…
Think of your HR from the perspective of “running a
business”, not “running a charity”
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22. © Norm Tasevski & Karim Harji
A Second Caveat…
Your HR Strategy must align with your business model
and align with organizational values
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23. What if you were a…
Product-based Social Business…!
Tethered Social Enterprise…!
Employment-Based Social Business…!
Accessibility-Based Platform…!
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24. 1. Product-Based
© Norm Tasevski & Karim Harji
A business/business model that provides
products or services with social benefit.
25. 2. Employment-Based
© Norm Tasevski & Karim Harji
A business that hires marginalized people
in good employment opportunities.
26. 3. Tethered
© Norm Tasevski & Karim Harji
An enterprise started by a charity or non-profit that
generates revenue for the organization.
27. 4. Accessibility-Based
© Norm Tasevski & Karim Harji
A business that maintains a purposely low profit margin
to make their products accessible.
28. © Norm Tasevski & Karim Harji
Other HR Considerations…
• Who/what do you need?
• How do you find the right people?
• How do you define what they do?
• How (and from where) do you pay them?
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31. © Norm Tasevski & Karim Harji
DAY 180
What does your average week look like?
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33. © Norm Tasevski & Karim Harji
A Caveat…
There is no defined (national or provincial) legal form
for social enterprise in Canada
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34. © Norm Tasevski & Karim Harji
A Second Caveat…
Form follows function
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35. For-Profit Non-Profit
Corporation! Corporation!
Partnership! Charity!
Sole Co-Operative
Proprietorship! Corporation!
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36. © Norm Tasevski & Karim Harji
For-Profit Corporation!
• Incorporated under the Business Corporations Act (Ontario) (the “OBCA”)
or the Canada Business Corporations Act (federal) (the “CBCA”)!
• With share capital!
• Most flex in terms • Pay corporate tax!
of profit-making • Cannot access grants!
activities!
• Cultural/
• Can access all
forms of investment psychological barriers
(debt, equity, etc)! with operating a “for-
• Provides clarity of profit social
purpose (i.e. the business”!
financial bottom
line)!
• Limited personal
liability!
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37. © Norm Tasevski & Karim Harji
Charity!
• Incorporated via Letters Patent under the Corporations Act (Ontario) or
Canada Corporations Act (federal)!
• Without share capital!
• Don’t pay corporate • Least flex in terms of
tax on earnings! profit-making activities!
• Limited in the types of
• Can issue tax investments you can
receipts! access (e.g. equity)!
• Can access many • Time-consuming!!
government/ • Psychological barriers
foundation/ with operating a “social
corporate grants! business”!
• An aversion to “risk
taking”!
• Can lose status if “too
successful”!
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38. © Norm Tasevski & Karim Harji
Sole Proprietorship!
• Registered via Business Names Act (Ontario) or Canada Corporations Act
(federal)!
• Without share capital!
• The simplest (and • Unlimited liability!!!
quickest) legal form! • The business is the
• You have full entrepreneur!
control of business • Hard to find investors!
decisions! • Limited creative input
• Flexibility to make (i.e. you’re the only
business decisions one with ideas!)!
quickly! • Less “professional”
• No separate filing than other forms!
for income tax!
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39. © Norm Tasevski & Karim Harji
Non-Profit Corporation!
• Incorporated via Letters Patent under Corporations Act (Ontario) or Canada
Corporations Act (Federal)!
• Generally without share capital!
• Can access grants! • Can’t issue tax
• Can access debt receipts!
financing! • Limited in the types of
• Tax exempt as long investments you can
as organized and access (e.g. equity)!
operated for defined • Psychological barriers
social/community with operating a
benefit! “social business” !
• Some NPs are more
• Can lose status if
open to (limited)
“too successful”!
risk-taking!
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40. © Norm Tasevski & Karim Harji
Partnership!
• Registered under the Partnerships Act (Ontario)!
• With or without share capital!
• Usually organized using a Partnership Agreement!
• Similar benefits to • For most
sole proprietorship! partnerships, unlimited
• Combines skills/ liability! (at least in
competencies of Canada…)!
two people! • Acrimony between
• Can sign contracts partners is common!
and borrow money in • Difficult to find
its own right! investors!
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41. © Norm Tasevski & Karim Harji
Co-Operative Corporation!
• Incorporated under the Co-Operative Corporations Act (Ontario) or Canada
Cooperatives Act (Federal)!
• Wither with or without share capital!
• Well-established • Cannot issue tax
structures! receipts!
• Integrates the • Generally not exempt
concept of from paying tax!
“community benefit” • Psychological barriers
already! with operating a
“social business”!
• Difficulty making
decisions (too many
people at the table)!
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44. © Norm Tasevski & Karim Harji
Legal Innovation: CIC (UK)
• Established to trade (goods or services) for the
community good
• Requires “community interest statement” application to
the CIC Regulator. Publically-available annual reports
required to confirm (adherence to) community interest
requirement
• May issue shares in order to raise capital
• Cap on returns (dividends paid) set by the Regulator
• Subject to an “asset lock”
– Assets and profits must be permanently retained by the CICs
for community benefit, or transferred to another CIC subject
to an asset lock, or to a charity
• Taxed in the same manner as other businesses
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45. © Norm Tasevski & Karim Harji
Legal Innovation: L3C (US)
• Variation on American Limited Liability Companies (LLCs)
• LLC investors are members rather than shareholders
• Terms of the operating agreement guarantee the public
benefit nature of the entity’s work
• Like LLCs, L3Cs are not subject to federal income tax
themselves, but the income they pay to members is
taxable according to the rates applicable to each
member
• Able to attract private capital through the sale of shares
and other securities, various forms of loans, or other
commercial financial arrangements.
• Ability to receive Program Related Investments from
foundations
• No asset lock and no dividend cap
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46. © Norm Tasevski & Karim Harji
Legal Innovation: B Corp (US)
• To be certified as a B
corporation under the B Lab
system, the corporation
must:
– Achieve a minimum score of
80 (out of 200) on the B
Ratings System, a tool to
assess a company's social
and environmental
performance.
– Agree to make legal
changes to its articles of
incorporation to expand the
responsibilities of the
company to include
consideration of stakeholder
interests.
– Pay B Lab an annual
licensing fee.
– Recertification is required
every two years.
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