This document summarizes a class on considerations for social enterprises. It includes the agenda, which covers marketing, operational considerations, and legal considerations for social enterprises. The document provides guidelines for student presentations on business cases, including the required components and time allotment. It also gives examples of pitching a social enterprise business model. Finally, it discusses considerations for marketing, human resources, operations, and different legal forms for social enterprises.

1. APS 1015: Social Entrepreneurship
Class 7: Considerations for Social Enterprise
Wednesday, May 28, 2014
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Instructor:
Norm Tasevski (norm@socialentrepreneurship.ca)
Alex Kjorven (alex@socialentrepreneurship.ca)

2. © Norm Tasevski
Agenda
• Marketing for social enterprise
• Break
• Operational considerations
• Legal Considerations
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3. A note on your business cases…
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4. © Norm Tasevski
Presentation guidelines
• Due Dates
– Presentations: 5pm on Thursday, May 29th
• Format
– PowerPoint deck
• Time Allotment
– 12 min presentation (strict) – will give you 5 and 2 minute
warnings
– 6 min Q&A
• Grading
– To be done by Alex and Norm
– The entrepreneurs will inform us, but not assign your grades
• Feedback from Judges
– Alex will email feedback shortly after the class
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5. © Norm Tasevski
Pitching to the Social Entrepreneur
1. Vision/Mission of the enterprise
2. Your understanding of the social system they
operate in
3. Problem/Pain being experienced (and by whom)
4. Current solution (today’s business model)
5. What you heard from the social entrepreneur
6. Your suggested adjustments to the business model
(i.e. tomorrow’s model)
7. “Here’s how it works…”
8. Why should they adopt your model?
9. Business Considerations (financial, legal,
operational)
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6. © Norm Tasevski
Advice for your pitches
• Focus on the key components of the business
model, and highlight the key financial #s
– Can you clearly explain how the business works? How it
makes money? How it generates social/environmental
change?
• Comfortably stick to the time allotment
– In your practice, aim to deliver your presentation in 10-11
minutes
• Anticipate the entrepreneur’s questions
– If you were running this business, what would you care to
know about the business model?
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An Example…
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8. A note on Part 3 (tomorrow)…
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The Business Case (the APS 1015 version)
• The Business Model (10%)
– Describe the 7 elements of the model (1 slide per element), excluding
costs and revenues
– Highlight the elements in the model you are suggesting the
entrepreneur make revisions to (i.e. your recommendations for
adjustment)
• The Financial Model (5%)
– Highlight the key financial considerations the entrepreneur will need
to keep in mind given your recommended adjustments
– Highlight the assumptions you are making to both the revenue model
and cost model
• Business Targets (3%)
– List both the financial and social targets you suggest the
entrepreneurs adopt
– Focus on the appropriateness of the targets i.e. SMART)
• Overall grade: 20% (remaining 2%: overall level of clarity and
succinctness)
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10. © Norm Tasevski
The Business Case (the APS 1015 version)
• The form:
– PowerPoint (or Keynote, or Prezi)
– Up to 10 slides (with notes)
• Tips:
– Make it visual!
– Use the “notes” section to explain the content of each
slide
• Timing:
– Complete first draft by 9am tomorrow!
– During class, you will have opportunity to improve/refine –
final submission therefore due by end of class
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11. Marketing for Social Enterprises…
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12. © Norm Tasevski
A caveat…
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“Social
Media”
“Social
Enterprise”

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A Second Caveat…
Marketing
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Sales≠

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Where does Marketing Fit?
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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.
Ivan Storck (founder, SustainableWebsites.com)
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16. © Norm Tasevski
Social Marketing
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Deliver
Satisfaction
Realize
Aspiration
Practice
Compassion
ProfitAbility ReturnAbility SustainAbility
Be Better Differentiate
Make a
Difference
Individual
SocialEnterprise
Mind Heart Spirit
Mission
(why)
Vision
(what)
Values
(How)

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Examples of Social Marketing…
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Examples of Cause Marketing…
One of the first…
1983 – American
Express & the
Statue of Liberty
Restoration Project
2006 – Bono &
Product (Red)
Another…
2010 – Pepsi & the
Refresh Project
Most Recently…

19. © Norm Tasevski
Another Example of Cause Marketing…
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20. © Norm Tasevski
Sustainable
Marketing…

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Sustainable Marketing…is tricky…

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Sustainable Marketing Toolkit
Checklist 1

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Sustainable Marketing Toolkit
Checklist 2

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Sustainable Marketing Toolkit
Checklist 3

25. Break
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26. HR Considerations…
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Where does HR Fit?
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A Caveat…
Think of your HR from the perspective of “running a
business”, not “running a charity”
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A Second Caveat…
Your HR Strategy must align with your business model
and align with organizational values
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30. What if you were a…
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Product-based Social Business…
Tethered Social Enterprise…
Employment-Based Social Business…
Accessibility-Based Platform…

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A business/business model that provides
products or services with social benefit.
1. Product-Based

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2. Employment-Based
A business that hires marginalized people
in good employment opportunities.

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3. Tethered
An enterprise started by a charity or non-profit that
generates revenue for the organization.

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A business that maintains a purposely low profit margin
to make their products accessible.
4. Accessibility-Based

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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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36. Operational Considerations…
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DAY 1
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What do you do first?

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DAY 180
What does your average week look like?
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39. Legal Forms Applicable to Social
Enterprise…
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A Caveat…
There is no defined (national or provincial) legal form
for social enterprise in Canada
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A Second Caveat…
Form follows function
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42. For-Profit
Corporation
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Non-Profit
Corporation
CharityPartnership
Sole
Proprietorship
Co-Operative
Corporation

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For-Profit Corporation
• Incorporated under the Business Corporations Act (Ontario) (the “OBCA”) or the
Canada Business Corporations Act (federal) (the “CBCA”)
• With share capital
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• Most flex in terms of
profit-making activities
• Can access all forms
of investment (debt,
equity, etc)
• Provides clarity of
purpose (i.e. the
financial bottom line)
• Limited personal
liability
• Pay corporate tax
• Cannot access grants
• Cultural/psychological
barriers with operating a
“for-profit social
business”

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Charity
• Incorporated via Letters Patent under the Corporations Act (Ontario) or Canada
Corporations Act (federal)
• Without share capital
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• Don’t pay corporate
tax on earnings
• Can issue tax receipts
• Can access many
government/foundatio
n/corporate grants
• Least flex in terms of
profit-making activities
• Limited in the types of
investments you can
access (e.g. equity)
• Time-consuming!
• Psychological barriers with
operating a “social
business”
• An aversion to “risk taking”
• Can lose status if “too
successful”

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Sole Proprietorship
• Registered via Business Names Act (Ontario) or Canada Corporations Act (federal)
• Without share capital
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• The simplest (and
quickest) legal form
• You have full control of
business decisions
• Flexibility to make
business decisions
quickly
• No separate filing for
income tax
• Unlimited liability!!
• The business is the
entrepreneur
• Hard to find investors
• Limited creative input
(i.e. you’re the only one
with ideas!)
• Less “professional” than
other forms

46. © Norm Tasevski
Non-Profit Corporation
• Incorporated via Letters Patent under Corporations Act (Ontario) or Canada
Corporations Act (Federal)
• Generally without share capital
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• Can access grants
• Can access debt
financing
• Tax exempt as long as
organized and
operated for defined
social/community
benefit
• Some NPs are more
open to (limited) risk-
taking
• Can’t issue tax receipts
• Limited in the types of
investments you can
access (e.g. equity)
• Psychological barriers
with operating a “social
business”
• Can lose status if “too
successful”

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Partnership
• Registered under the Partnerships Act (Ontario)
• With or without share capital
• Usually organized using a Partnership Agreement
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• Similar benefits to sole
proprietorship
• Combines
skills/competencies of
two people
• Can sign contracts
and borrow money in
its own right
• For most partnerships,
unlimited liability! (at
least in Canada…)
• Acrimony between
partners is common
• Difficult to find investors

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Co-Operative Corporation
• Incorporated under the Co-Operative Corporations Act (Ontario) or Canada
Cooperatives Act (Federal)
• Wither with or without share capital
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• Well-established
structures
• Integrates the concept
of “community benefit”
already
• Cannot issue tax receipts
• Generally not exempt
from paying tax
• Psychological barriers
with operating a “social
business”
• Difficulty making
decisions (too many
people at the table)

49. © Norm Tasevski
Talk to a Lawyer!
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50. Legal Innovations…
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51. © Norm Tasevski
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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52. © Norm Tasevski
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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53. © Norm Tasevski
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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54. © Norm Tasevski
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What did we learn?
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