Source: Adapted from Venturesome, Financing Civil Society, 2008

 

Let's take a quick look at the spectrum in a little more detail:

Traditional non-profit/charity

This type of organization operates on 100% subsidy (government and philanthropic support) to sustain operations. There is no earned income and requires revolving external financing (grants) on a yearly basis.

Charity/non-profit with an associated business (Ontario definition: social enterprise)

A Charity/non-profit's income strategy may take different forms based on their goals and level of expertise/capacity to take on work in-house. Three different types of strategies:

Mission-related business

A mission-related business generates revenues to support its programs by providing services directly linked to the mandate of the organization. This could happen when the organization can leverage investments in research, program development, or administration for a fee.

Standalone Ventures

Charities/non-profit also create business that uniquely differ from the existing programs/services they provide. It is set-up to generate new revenue streams, enhance brand image and awareness, and grow networks of support.

Blended Program and Business Ventures

In this case, the social enterprise is the program is the mission of the organization. A great example is a social enterprise structured in he form of programs to support job skills training or employment transitions where revenues are generated from their service.

Social benefit enterprise

This type of enterprise is established for public benefit and relies primarily on a business enterprise for its sustainability, though still benefits from some public and/or philanthropic subsidy. These enterprises may return a limited profit to investors, but their assets are not tradable and their governance structures are democratic and member/stakeholder driven - not tied to capital ownership. In Canada, these include cooperatives focused at providing a public benefit and micro-finance institutions.

Social purpose business

This type of business is established to pursue in equal measure a defined public benefit and economic profit. These enterprises are often referred to as double or triple bottom line businesses as they measure their performance in terms of positive social and/or environmental impacts as well as economic profit. Investors seeking positive market-rate or below-market returns primarily capitalize on these types of businesses. In some cases, this type of business may acquire some public or philanthropic subsidy, particularly during the start-up and early growth phases.

Content adapted from Talking Social Enterprise, A VISION Management Services Publication

 

Source: Adapted from Margaret Bolton (2003)

 

Featured contributors for Topic 3 will address the following:

1. Where should non-profits and social enterprises begin when considering their financial options?

2. How could an organization move from a world of grants to loan/equity financing?

3. What new skill sets are needed internally to adapt social finance into an organization?