Challenges with For-Profit and Non-Profit Social Enterprises

There’s a great article on business management by Mary Catherine O’Connor, from the Triple Pundit, entitled ‘The Business of Alleviating Poverty.’

In it, she interviews the inspiring founder of Samasource (a social enterprise), Leila Chirayath Janah. Samasource is focused on linking people from developing countries to people in the USA, in order to provide computer-based work. Alot of interesing questions are asked and answered, but the most fascinating response from Leila was in regards to the challenges of social enterprises.

Regarding for-profit social enterprises, she mentions:

While there’s a lot of talk about social investing, ultimately investors who are in the for-profit space have to measure their performance on the returns that they’re getting. That’s starting to change a little bit, but for the most part that’s what you see in the for-profit sector.

Non-profits, on the other hand, face a different type of challenge:

Nonprofits have to run a fundraising business and the service they are trying to provide. Fundraising is about finding the right donors, providing marketing collateral and refining your pitch. I think that’s much more burdensome than what for-profits have to do because you’re selling a mission and a vision to people who are not going to get any return on an investment in your organization.

Interestingly, Leila and her team had chosen the non-profit model of social enterprise.

Challenges in Both For-Profit and Non-Profit Social Enterprise Models

Overall, you’ll come to understand that both models of social enterprise contain systematic challenges. You’ll have to decide up front which sort of model you’ll undertake, and the pros and cons of each.

For-profit social enterprises may sometimes be tied to the desires of investors, particularly investors who seek only the profit aspect of the bottom line. Although, there are a number of venture capital firms and social investors who are willing to invest in social enterprises with the understanding that there is a mutual working of both a social and financial return on investment.

Similarly, non-profit social enterprises may also be tied, particularly to the wishes of donors and to actually finding suitable donors. Therefore, it is very mission-driven, and fundraising may take up alot of time and energy.

Deciding On Your Social Business Model

From my point of view, the suitability of a for-profit or non-profit model will depend on the social issue at hand and the viewpoint of the social enterprise founder and subsequent management. As Samasource deals with the sensitive and challenging issue of refugees, it is understandable why they had chosen the non-profit model in order to reach their goals as the best business management model.

5 Tips to Fund Your Social Enterprise

httpvh://www.youtube.com/watch?v=Oc6-HhKST3o

In starting up your own social enterprise or to venture in social entrepreneurship, you are sure to come across a particular issue, and that issue is funding.

5 Ideas to Help You Fund Your Startup Social Enterprise

Funding can be a challenge for many social entrepreneurs wanting to start up their enterprise and there are a number of sources for you to get that funding.

  1. Searching for grant funding from donors
  2. Investors, e.g. angel investors
  3. Venture capital firms or social venture capital firms
  4. Your own Seed capital that you save up
  5. Family or close friends

Challenges with Personal and External Funding Sources

From these sources sometimes the personal sources (such as your own seed capital or from family or friends), can be quite small and restrictive and so going outside for sources is maybe your best option. Seeking out external sources however can be a challenge because at times they might want to change or they may even reject your idea.

The Question of Compromising Your Idea

A few days ago I proposed my own idea to donors for grant funding so I know what it’s like.

They themselves actually sent a message back saying they want to change the idea.

When it comes to you and you’re faced with that challenge either with the rejection of that idea or changing it, you have the choice of either:

  • accepting that you are going to have to modify it to accommodate, or
  • you are going to have to move on and say no and then find another investor or save up your own funds.

Consider the Needs and Options For Your Social Enterprise Idea

Just consider that there are a number of options to never give up or trying to find the best source of funding for you.

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Queen Approves Social Enterprises

In a royal show of support of social enterprises and social entrepreneurship, Queen Elizabeth II said in a recent speech:

‘The role of social enterprises, charities and cooperatives in our public services will be enhanced.’

As a result of this speech, the reputation of social enterprises have been boosted through the Queen’s approval of them to improve social impact. Being a relatively new field of entrepreneurial venture, this is very much welcomed.

You can read up more on her speech in the article by Chrisanthi Giotis, over at Social Enterprise Live.

But there is much more to go beyond the mere words of the Queen.

More Support Needed for Social Enterprises

According to the CEO of the Social Enterprise Coalition Peter Holbrook:

‘The next step is to work with the new government to help them realise their ambitions in a way that is both sustainable and strategic, and to push social enterprise into the wider economic agenda.’

Indeed, more guidance and support needs to be given to social enterprises and social entrepreneurs overall. (Hence, our website and our community at MatthewAlberto.com helps pave the way to do just that.)

Nevertheless, in my opinion, it’s great to see the support from UK Royalty of social enterprises as the way of the future.

Because I agree with her.

Share Your Thoughts on the Queen’s Speech

What are your thoughts on the Queen’s support for social enterprises and social entrepreneurship?

How to Overcome Failure as a Social Entrepreneur

httpvh://www.youtube.com/watch?v=nc1ntv567BE

“Failure.”

A word which strikes fear in the hearts of many.

But failure is something that we as social entrepreneurs must face in almost all business ideas. Failure itself is an aspect that we must face again and again and again, on our paths to success.

Personal Experiences with ‘Failure’

A few days ago I actually applied for a number of funding grants, for positions, for opportunities on my own personal social entrepreneurial journey and I can tell you, being rejected or facing ‘failures,’ it can hurt sometimes.

But we must overcome it.

A Clear Vision Gives You Motivation to Continue Forward

And to overcome it, you know what I did and what can help you, is to always be clear about what you’re working towards.

Be clear about your vision and your goal and remember the feeling that what you are going for on that path you must realise that these are just the challenges that makes us stronger.

Never, Never, Never Give Up

In the words of Winston Churchill, I would like to inspire you to overcome those failures by: Never, Never, Never giving up.

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Overcoming Bureaucracy as a Social Entrepreneur

httpvh://www.youtube.com/watch?v=RpTEqMlEHSg

The problem of many larger social and environmental organizations is the problem of bureaucracy that stops good business ideas from happening.

Bureaucracy, Barriers & Excessive Procedures

Now larger social and environment organisations often have this challenge because of the systems that they have in place. Often those systems are there to ensure a control of corruption, to ensure a control on finances, to ensure a control on the quality of the products and services provided, among many other reasons.

While there are benefits to having the procedures in place, at times it can choke and suffocate an organization from becoming innovative.

Social Entrepreneurship: Starting Up Your Innovative Ideas

Now social entrepreneurship is one interesting cure for bureaucracy.

If you yourself are working for a larger organization and facing lot of ‘red tape’ in order to get meaningful results and positive change to other people and to the world around you, then do consider that you yourself can start up your own organisation or work in a smaller team in order to produce those results and harness innovation.

Social Intrapreneurship: Taking Initiatives From Within

While social entrepreneurship and starting up your own organization is one solution, one other way to overcome bureaucracy is through the notion of intrapreneurship.

Underlining that is the notion that even though there is some bureaucracy, you still have the confidence and you still have the ability to change things. And it does start with having the confidence and drive to believe that you can.

I made a video post recently about the concept of intrepreneurship and I would suggest looking into social entrepreneurship and intrapreneurship, and gaining the entrepreneurial spirit within yourself to build good business ideas.

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