Social Enterprise: A Tool to Enhance Rural & Urban Community Assets!

With the growth of big box stores and franchised retail outlets, the emergence of social enterprise is an invigorating option in the retail landscape. Many social enterprises arise as new retail entries directly responding to a community need.

However, two recent transactions illustrate how social enterprise is also a valuable tool that can be used to sustain and enhance existing community assets.

One example demonstrates how social enterprises can sustain assets in a rural community when a family-owned business owner retires. The other example shows how a social enterprise can increase the social value of multiple government-owned commercial properties in an urban area through the creation of a blended value property portfolio.

Example #1 – What happens when rural small business owners retire?

Answer: A social enterprise steps in to work with the family to keep the business going and growing.

The Yellow Barn produce store and restaurant is a fixture for many customers in the rural (but urbanizing) communities of Abbotsford and Chilliwack just east of Vancouver. With a menu of homemade pies, pickles and an outlet for fresh produce from local farmers in the summer months, it serves as an important place for the community to socialize over coffee, creating local employment and directly contributing to a local economy. But when the key family members who operate the restaurant decided to retire, the whole family was left in a quandary of how to retain the value they created and possibly extend the family legacy.

“Our family spent thirty years building the business as a service and social gathering place for the community. With my mom, dad and sister retiring, we couldn’t imagine a better way to extend the family efforts than leasing to a social enterprise”. Dale Hodgins, family member.

A lease agreement between the family and the Abbotsford based MCC Community Enterprises, an experienced operator of several social enterprises, means the business remains open and potentially adds further community and social value through the social enterprise mandates of MCC Community Enterprises.

“MCC Community Enterprises is a community based non-profit organization that already operates several social enterprises. The Yellow Barn was a natural addition – allowing us to maintain the local business and potentially create a site for job training and added targeted employment opportunities”. Ron Van Wyk Executive Director, MCCCE.

This social enterprise model has relevance in many rural communities where small business owners reach retirement and essential services like groceries, gas, hardware, and social sites like restaurants, bakeries and coffee shops face closure.

These businesses may not have a traditional ‘financial market’ value to allow them to be sold outright, but they have very strong ‘community market’ value that requires a new type of investment option. A social enterprise creates a community-owned business model for continuing their essential roles in the community.

For the Yellow Barn, that was the answer.

Example #2 – What happens when one of Canada’s poorest communities struggles with the impacts of gentrification, including the loss of affordable retail options and coffee shops, and far fewer places for low-income residents just to socialize?

Answer: A social enterprise model is designed that allows the provincial government to transform their commercial property into a community asset. Community Impact Real Estate Society, CIRES, was created to hold the head lease and operate the approximately 70 commercial properties in Vancouver’s Downtown Eastside (DTES) on behalf of BC Housing, with a primary mission to create community value and maintain financial sustainability.

CIRES will have a blended value mandate in managing the commercial properties. Some will rent at market rent, others below market in exchange for social impact, such as targeted employment for persons with barriers, social enterprise space, or non-profit use. CIRES’ financial pro-forma predicts a profitable operation that can use its surpluses to re-invest in further social enterprise development and mitigation of retail gentrification in the area. The hope is that the City of Vancouver will add more properties to the portfolio, and then the next step is to add properties held by the private sector as well.

“The DTES Community Economic Development Community Advisory Committee is hopeful that CIRES, another social enterprise in our neighbourhood, will be the generator of even greater local economic and social impact, especially serving the needs of the low income community members.” Steven Johnston, CEDSAC Director

In the past, one-off changes in government property have happened, but in this case shifting a whole portfolio will definitely change the landscape as well as the use and purpose of retail and other commercial space in a designated area. The social value impact of CIRES will be core to measuring its success. Yes, the financials look and should be sound, but CIRES’ role of strengthening social capital, creating target employment, and economic inclusion through the portfolio tenant choices will be the ultimate test.

These are just two examples of how social enterprises in rural and urban settings are emerging as a significant tool to address community based economic and social value market needs. The approach works across many communities because social enterprises are businesses with an intentional and measureable social value and have a commitment to the majority of profits being reinvested into the community.

Accelerating Social Impact, a Community Contribution Company focused on creating a social value market place, provided significant consulting support and guidance on the design and development of these two projects. For more information contact:

 

David LePage

david@asiccc.ca

778-772-3472

www.asiccc.ca

 

 

 

A Tour of the “trending trajectory” of Social Purchasing!

Social Purchasing is Encouraging a shift towards procurement based on achieving multiple outcomes in addition to maximizing financial value.(Social Procurement and New Public Governance: Barraket et al, 2016)

Social purchasing intentionally multiplies the social and economic ripples of existing purchasing from merely supplier benefits to community benefits.

This tour through social purchasing initiatives is an evolving ‘map’ as we go along the journey. We couldn’t cover every possible point of interest, so we tried to provide a good overview. Please send us any additions to the itinerary!

 Why is the tour a ‘trending trajectory’?

A Trend is the prevailing tendency; changes in a situation or in the way that people are behaving; a direction in which something is developing.

A Trajectory is the path followed by a projectile flying or an object moving under the action of given force, a progression.

 Background for the Tour:

Social purchasing and Community Benefit Agreements are now moving beyond experiments. They are becoming innovative and effective implementations across multiple jurisdictions and locations. They are creating targeted employment opportunities, enhancing local economic development, and contributing to healthy communities. And through social purchasing social enterprises are seeing their sales opportunities increase, and their social impact grow.

 In the spring of 2014 I published Exploring Social Procurement, which outlined opportunities and barriers to advance social purchasing, especially for governments. The paper noted that we were at an early development and emerging stage of social purchasing. http://buysocialcanada.ca/2015/01/13/exploring-social-procurement-report/

Now just three years later Social Purchasing is on an amazing “trending” trajectory!

So, rather than me trying to write a comprehensive observation and analysis of what is evolving in social purchasing globally, let me just provide a tour of some quotes and quips. You can explore and see for yourself!

 The Early Days of the Tour:

Sixteen years ago, in 2000, Carter and Jennings wrote, “To the best of our knowledge, ours is the first study that has empirically examined how the involvement of any functional area of logistics management in a broad-based group of socially responsible activities affects supply chain relationships.”

https://www.instituteforsupplymanagement.org/files/sr/capsarticle_purchasingscontribution.pdf

In 2003 we launched the first Social Purchasing Portal in Vancouver, and saw it replicated across Canada. An early demand side targeted employment model experiment that faded as available grant funding diminished. (Through local funding the SPP still operates in Winnipeg, http://sppwinnipeg.org.)

 From Emerging Experiments to Multiple Examples:

The 2010 Olympics in Vancouver and 2014 Commonwealth Games in Scotland both initiated Community Benefit Agreement models to support social enterprise suppliers at international games events. They raised important policy issues and discovered supply chain opportunities for social enterprises. (http://www.ceis.org.uk/sustainable-procurement/)

Let’s continue the tour in Europe…

“Evidence from across the EU suggests that innovation in public procurement or the public procurement of innovation has re-surfaced as a popular policy solution.” Scotland Public Procurement Reform 2013 http://www.parliament.scot/parliamentarybusiness/Bills/68170.aspx

In Europe the public procurement represents 17% of the GDP of EU Member States. While preserving competition and transparency, it may be used in a way to steer the market in a more socially responsible direction and thus contribute more generally to sustainable development. http://ec.europa.eu/social/main.jsp?langId=en&catId=89&newsId=978

 And to Britain…

The UK Public Services (Social Value) Act 2012 requires public bodies to consider how the services they commission and procure might improve the economic, social and environmental well-being of the area. Commissioners are required to factor social value in at the pre-procurement phase, allowing them to embed social value in the design of the service from the outset. http://www.legislation.gov.uk/ukpga/2012/3/contents/enacted

Buy Social is SEUK’s flagship campaign launched in 2012 aims to build markets for social enterprises among the general public as well as the private and public sectors. It challenges all of us to think about where we buy our goods and services from, and the social impact of our purchasing decisions.

http://www.socialenterprise.org.uk/policy-campaigns/latest-campaigns/buy-social

And over to Wales…

 Welsh procurement policy aims to address and balance economic, social and environmental issues and impacts.

Off to Scotland…

Develop and deliver new approaches to public service reforms and make better use of our public procurement to drive innovation. Scotland Social Value Act

http://www.gov.scot/Publications/2013/08/8854/3

 The public sector in Scotland spends £10 billion annually on goods and services and Ready for Business works with commissioners and buyers to encourage the adoption of social value in public procurement and to increase the share of these services that the third sector delivers. http://readyforbusiness.org

“We will enable more consumers, public authorities and businesses to understand and purchase from social enterprises… explore creative ways to open up market opportunities to social enterprises…encourage forward procurement planning.”

Scotland Social Enterprise Strategy December 2016 http://www.gov.scot/Publications/2016/12/4404

Over to Australia…

Australia’s Social Traders’ Connect is a unique service for government and corporate buyers seeking to procure from certified social enterprises.

Through Social Traders’ extensive social enterprise network, buyers have the opportunity to generate social impact within their supply chains, creating greater value to the community.

http://www.socialtraders.com.au/our-services/connect/overview/

Across Canada…

“In these circumstances, the government’s desire to underpin Canada’s future economic performance with a renewed innovation agenda is undoubtedly the right policy inclination…. [which includes] focusing on demand-side instruments — such as regulations and government procurement policies — that can sharpen innovation incentives, while promoting broader public interests…” Institute for Research on Public Policy, June 9, 2016

http://irpp.org/research-studies/report-2016-06-09/

Modernize procurement practices so that they are simpler, less administratively burdensome, deploy modern comptrollership, and include practices that support our economic policy goals, including green and social procurement.

Canada’s Minister of Public Service and Procurement’s Mandate Letter 2015

http://pm.gc.ca/eng/minister-public-services-and-procurement-mandate-letter

“The time to invest in Canada’s infrastructure is now—to bring Canadians good jobs, a cleaner environment and thriving communities for years to come. The government will be investing more than $180 billion.” http://www.budget.gc.ca/fes-eea/2016/docs/themes/infrastructure-en.html

Bill C-227 in Canada’s Parliament will allow the Minister of Public Service and Procurement to require a social value on infrastructure expenditures. It was introduced in early 2016 and was approved at the committee level on December 3, 2016, and is ready for final reading and approval in Parliament in spring 2017.

From February 24, 2016: “Mr. Speaker, I am honored to rise today, with the support of the member from Scarborough-Rouge Park, to introduce my first private member’s bill on Community Benefit Agreements (CBAs) in federal spending on infrastructure.

  • CBAs are a new approach to development and growth in neighbourhoods all across Canada.
  • CBAs create community wealth, quality jobs, training; responsible growth and a healthier environment
  • CBAs empower communities to make development work for them.
  • CBAs are about fairness and broad community participation in the development process resulting in everyone getting a slice of the development pie.”

http://www.parl.gc.ca/LegisInfo/BillDetails.aspx?billId=8102366&Mode=1&Language=E

 

Ontario’s Provincial Bill 6 approved, Infrastructure Legislation now includes Community Benefits. The Ontario Infrastructure for Jobs and Prosperity Act (20150 provides the planning framework for delivery of $130 Billion of infrastructure projects across the province over the next 10 years. http://www.communitybenefits.ca/bill_6

Toronto passed a social purchasing policy that targets diversifying their supply chain employment opportunities. Spring 2016

http://www.toronto.ca/legdocs/mmis/2016/ex/bgrd/backgroundfile-91818.pdf

The Toronto Community Benefits Network has built a strong community-labour partnership with a support base of workforce development agencies, learning institutions and funders. http://www.communitybenefits.ca/about

Chantier de l’Economie Sociale in Quebec has a new interface that enables consumers, buyers from large Para-public and private enterprises, and government ministries to not only learn more about the products and services provided by social economy enterprises, but also, access them directly. http://www.achetersolidaire.com

British Columbia has published Social Impact Purchasing Guidelines. 2015 http://www2.gov.bc.ca/assets/gov/employment-business-and-economic-development/business-management/social-innovation/si-purchasing-guidelines.pdf

BC Housing now includes sustainable purchasing goals in their RFP’s, which includes specific reference and preference for Aboriginal and Social Enterprise businesses. https://www.bchousing.org/doing-business/supplier-centre/contract-essentials

Cumberland BC and Wood Buffalo, AB became the first Buy Social Certified municipalities in 2016. www.buysocialcanada.ca

Vancouver Casino Community Benefit Agreement: April and May 2015: City and PARQ register on title the “Inner-City Local Employment and Procurement Agreement” and “Responsible Gaming Agreement” that covers the entire project for the duration of Casino operations at 39 Smithe Street. http://council.vancouver.ca/20161130/documents/pspc3.pdf

City of Vancouver passed the Downtown Eastside Community Economic Development Strategy that includes support for further development of social purchasing and Community Benefit Agreements. November 2016

http://vancouver.ca/people-programs/ced-strategy.aspx

 

Next Steps on the journey…

 Significant steps in the path ahead are enabling procurers and those who commission procurement has been the single most important enabler – or barrier – for innovation procurement.”

Policy instruments for public procurement of innovation: Choice, design and assessment by L Georghiou

http://www.sciencedirect.com/science/article/pii/S0040162513002552

A Strategic Opportunity for moving forward in Canada is the scaling of Buy Social Canada, which will soon be expanding our platform, resources, and facilitation for advancing social purchasing across the country…

www.buysocialcanada.ca

We’re glad you travelled with us this far, and we look forward to you joining the tour by adding your points of interest along the way as social purchasing journey continues its trending trajectory forward…

Contact us at

david@asiccc.ca

778-772-3472

Applying Social Procurement Principles to Infrastructure Investments Will Achieve the Greatest Possible Value for Canadian Communities

Submitted to the Government of Canada Consultation Request for Comments on Infrastructure Investments

Submitted by Buy Social Canada – www.buysocialcanada.ca

David LePage, CEO

August 31, 2016

We commend the government’s very significant $120 Billion commitment to infrastructure investment over the next ten years; particularly the attention to the critical needs of Aboriginal communities and seriously needed social infrastructure. We welcome the opportunity to participate in the consultation process on how the government investment in infrastructure can serve Canadian communities most effectively.

Along with our praise for the infrastructure investment decision our advice is that government can achieve significantly greater return on investment for the taxpayers and attain significant economic, employment and social impact in communities across Canada by applying a social procurement lens across the entire infrastructure contracting and delivery process.

Applying social value principles to the tendering and implementation of the infrastructure investment will also avoid the social value leakage and unintentional socio-economic damage that may occur using the current price-driven procurement policy.

Leakage is commonly understood as not getting greatest value when purchasing or investing because a value “escapes” somewhere in the process. Or as it is often colloquially referred to as ‘leaving money or value on the table’ when making a decision. In the history of infrastructure procurement government leakage has been not capturing the potential additional social impact that could have been leveraged from the same financial investment.

We believe that the federal government is able to effectively use the planned infrastructure investment to help tackle several complex social issues in our communities, including: enhance the training and employment for persons with barriers; expand SME suppliers market opportunities, especially focusing on the social enterprise sector; and empower Aboriginal community economic development initiatives. The infrastructure investment will require setting priorities and making choices, whether related to congestion in our cities, reducing the impacts of climate change, or building a more inclusive society, but in every case we believe a social value impact lens will maximize the potential whole-value creation.

 

Recommendation #1:Utilize a Cross Ministerial Collaboration Approach to Infrastructure Goals

Cross-ministerial collaboration will be step one to achieve the potential leveraging of greater value from the infrastructure investment.

If we examine the overlap of Ministerial mandates across government focused on social and economic development, it becomes imperative that the Ministry of Infrastructure and Communities include in the infrastructure implementation process the Ministries of Employment and Social Development; Innovation, Science, and Economic Development; Indigenous and Northern Affairs; and Public Services & Procurement.

As Tony Dean of University of Toronto’s School of Public Policy points out in his recent book Building Better Public Services “A comprehensive approach to tackling big policy challenges requires deep collaboration and joint working among several ministries as well as non-governmental organizations…”[1]

Recommendation #2: Apply Social Procurement Policy to Infrastructure Contracts

“Social procurement combines the instrumental activity of procurement with the strategic intent of generating social value in response to identified societal needs, such as local employment creation and development of the third sector.” [2]

Social Procurement has many forms; most common on major infrastructure programs are Community Benefit Agreements. “Community Benefit Agreements (CBAs) are a strategic tool used in the process of building community wealth. CBAs are negotiated agreements between a private or public development agent and a coalition of community- based groups.” [3] In Canada CBA’s were used effectively to leverage jobs and local procurement in the 2010 Winter Olympics, and are now an active component of Metrolinx construction in Toronto.

Other applications can be utilized as well, [4] such as:

  • Request for Proposal (RFP) social value evaluation criteria
  • Unbundling of large contracts
  • Selective contracting through use of established financial thresholds
  • Use of trade agreement exemptions to contract with Aboriginal suppliers, non-profit social enterprises and employers of persons with disabilities.[5]

Recommendation #3: Achieve Social Innovation through Infrastructure Purchasing Demand

The government mandates in several ministries are exploring and working toward greater social innovation learnings and outcomes. The infrastructure investment is an excellent opportunity to use this demand opportunity to achieve social innovation learnings and impact.

$120 billion over ten years is a very significant ‘demand’ for goods and services.

In the same manor that Canada has achieved technology breakthroughs using the demand power of government purchasing, we can now also use that same mechanism to achieve innovation in social impact outcomes.

Government procurement has been the source of technological and supply chain innovation over the past 60 years. Multiple Government purchasing programs specifically encourage and reward innovation. [6]

Government procurement is shifting internationally, “…contemporary social procurement is no longer an add-on element: it is a strategic and integral part of the social policy and service delivery armory.” [7]

“With regard to stimulating social innovation, Edler and Georghiou (2007, p. 949) suggest, “Public demand, when oriented towards innovative solutions and products, has the potential to improve delivery of public policy and services, often generating improved innovative dynamics and benefits from the associated spillovers”. They particularly explore the demand-side as a driver to fuel innovation.”[8]

 

Recommendation #4 Establish a Cross-sectoral Roundtable Implementation Design and Monitor Process

Successful implementation of the recommendations above will take more than the traditional top-down, government alone process. Multiple reports and analysis indicate that government alone will not solve the complex issues.

“When government are dealing with complex issues…they should start by declaring their inability to solve them on their own.” [9] And as Dean stated, big policy challenges require “collaboration and joint working among several ministries as well as non-governmental organizations…[10]

We recommend that a multi-sector Infrastructure Implementation Roundtable representing government ministries, private sector developers, social enterprises, SME’s, and community service providers be established. The roundtable advice and recommendations will support successful implementation, and be mandated to capture and share learnings for the larger social procurement community of practice.

 

Recommendation #5 Partner with Buy Social Canada, a Social Procurement Intermediary Service

We recommend that government engage with Buy Social Canada as an external intermediary service that shares their infrastructure investment goals.

Buy Social Canada, a Community Contribution Company, is excellently positioned to work with the necessary multi-sector partners to connect and coordinate the multiple partners: government purchasing, major contractors, social enterprises, multiple suppliers and community based social interests.

As recognized by Barraket et al, “Intermediaries are primarily focused on networking, advocacy and disseminating information and thus play a significant role in navigating institutional boundaries.”[11]

In addition, evidence from Scotland indicates the value and increased potential for success of social procurement through the use of a Social Purchasing Intermediary. Ready for Business[12], is a community-private-government partnership model that connects the sectors, provides training, and creates relationships.

Buy Social Canada, a partner in the Social Enterprise Ecosystem Project, can provide analogous Canadian services.

We look forward to collaborating with the Ministry of Infrastructure and Community to create the infrastructure investment model that will create the greatest possible value for all Canadian communities.

[1] Building Better Public Services, Tony Dean, Friesen Press, 2015, page 31; Professor University of Toronto School of Public Policy and Former Secretary of the Cabinet and Head of the Ontario Public Service

[2] Social Procurement and New Public Governance, Barraket, Keast, Furneaux, Routledge, Taylor and Francis Group.

[3] http://atkinsonfoundation.ca/wp-content/uploads/2015/08/Mowat.AF_CBA_82415.pdf

[4] http://buysocialcanada.ca/files/2014/05/Exploring-Social-Procurement_ASI-CCC-Report.pdf

[5] https://ccednet-rcdec.ca/en/new-in-ced/2015/04/10/new-ccednet-report-primer-trade-agreements-social

[6] Examples: “The Government of Canada’s Multi-sectoral Partnerships to Promote Healthy Living and Prevent Chronic Disease program, which invests $20 million per year in innovative projects and partnerships that focus on addressing common risk factors, such as unhealthy eating, physical inactivity, and smoking, to prevent chronic disease” http://news.gc.ca/web/article-en.do?nid=1037789Accessed August 20, 2016

“Are you looking to finance your innovation activities? Whether you’re working on products or services at the research and development phase, or looking to market your innovation at the commercialization stage, there are a number of government programs available to help you.” http://www.canadabusiness.ca/eng/page/2772/ Accessed August 20, 2016

[7] ibid, Barraket et al

[8] ibid, Barraket et al

[9] OECD Studies on Public Engagement Focus on Citizens Public Engagement for Better Policy and Services, page 221

[10] Building Better Public Services, Tony Dean, Friesen Press, 2015, page 31

[11] ibid Barraket et al

[12] http://readyforbusiness.org: “The public sector in Scotland spends £10 billion annually on goods and services and Ready for Business works with commissioners and buyers to encourage the adoption of social value in public procurement and to increase the share of these services that the third sector delivers. We do this in a number of ways including promotion of the Public Social Partnership model, Community Benefit Clauses and the delivery of social value through the Commissioning process.”

Major step for social enterprise in Canada… federal government launches social enterprise directory…

With little fanfare the Federal government has taken a major step forward this week in supporting the social enterprise sector – providing clarity on a definition and supporting the development of a national directory.

The directory defines social enterprise as “an enterprise that seeks to achieve social, cultural or environmental aims through the sale of goods and services. The social enterprise can be for-profit or not-for-profit but the majority of net profits must be directed to a social objective with limited distribution to shareholders and owners.”

http://www.ic.gc.ca/eic/site/ccc_bt-rec_ec.nsf/eng/h_00016.html

The Ministry of Innovation, Science, and Economic Development’s definition is clearly signalling that from their perspective a social enterprise has to blend a community impact and insure the majority of profits are also reinvested in community. Rather than looking at a corporate structure, they have opted for a performance based model, which allows several different corporate forms to be included – if the purpose and the structure both align with and meet this definition.

What it doesn’t allow is a company that has a good CSR program or donates a percentage of profits to charity to claim social enterprise ‘status’. Just being a ‘good’ company or a valued corporate citizen, or using social washing in marketing, doesn’t make you a social enterprise. But, if your purpose is to create social value and your structure commits the majority of your profits to a community development goal, you do have the opportunity to register on this directory.

The directory will be a valuable tool for social enterprises to identify with a defined model, allow purchasers to know how to find social enterprise suppliers, and raise awareness on the website of the strength and value of the sector. The definition includes social impact, like employment for persons with barriers; it includes cultural impact, like so many of our local arts and theatre groups; and environmental impact, like community owned alternative energy.

There is no monitoring body or gatekeepers, so we will all have to be diligent to insure social enterprises that meet the criteria are posted and asking others that are not meeting the definition to use other directories, like CSR lists, Fair Trade and B Corps certification websites.

Without a doubt the social enterprise definition debate will continue. Some people will think this definition too broad, others will think it too narrow… but that is all right in my mind – because this step definitely contributes to the real discussion — social enterprise is a means to build a social value market place that contributes to creating healthy communities.

Vancouver Inner City Social Enterprise Survey Results

24 Social Enterprises Generating $14.92 Million in Revenues

& Creating over 1500 Jobs

ASI CCC and Buy Social Canada is pleased to share with you some very impressive income and employment statistics on social enterprises located in the Vancouver inner city.

Social enterprises play a significant role in the economic and social well being of DTES and surrounding communities. There are over 40 non-profit market-based social enterprises focused on employment, arts, and Community Economic Development in this geographic area. Beyond that, there are many other non-profits that provide social, health, housing and related services on a performance based contract basis for the government and other funders.

The information was gathered through an on-line survey of targeted social enterprises in summer 2016 and is presented in aggregate only. The survey respondents are predominantly, but not exclusively, serving the Downtown Eastside community residents.

 

Social Enterprises focused on Employment, Arts and CED

Sample size: 24 Social Enterprises

Full time workers: 92

Part time workers: 1,470

Total workers: 1,562

Gross annual revenue: $14.92 million

Total annual sales: $12.14 million

Total annual expenses: $14.32 million

 

A subset of the total survey group are Social Enterprises that are focused on Employment and / or Training:

Sample size: 11 Social Enterprises

Full time workers: 40

Part time workers: 1,277

Total workers: 1,317

Gross annual revenue: $8.32 million

Total annual sales: $7.76 million

Total annual expenses: $8.12 million

 

This information is merely a surface view, more research and deeper analysis is definitely needed to assess the economic ripple effect and the social impact of social enterprise in the DTES.

 

 

 

Social Enterprise: If you want the title you have to live the values too!

Now, quite unexpectedly, every body is a social enterprise or a social entrepreneur. Not that many years ago the early proponents and pioneers were looked upon with kindhearted dismissal. Social enterprise was an oxymoron. You were a charity or a business – and please, don’t blend the two together! But suddenly in the last few years every one wants to claim the social enterprise mantle.

But some of us that have laboured in this field for years want to remind you that if you want that title you have to live the values too! And what is that you ask? Well, it’s quite simple. You are operating a social enterprise if all of the following criteria are present:

1) You’re a business selling something in the market place.

2) Your business has a definable and measurable social, environmental or cultural value.

3) You prioritize your community impact above any financial profits.

4) The majority of any profits go back to the social purpose.

Social enterprises almost always use corporate structures that insure transparency and guarantee their social value in perpetuity. They are non-profits, non-profit co-ops, or hybrids.

It is great to see that many businesses are emerging with stated social values, constantly increasing the number of what would be social ventures. They reflect and practice many of the same values as social enterprises but they retain a private, profit based ownership model. We should encourage them and more through our purchasing choices and supply chain relationships.

Adding social values into a business can represent a positive and real shift in thinking and behaviour. Benevolent capitalism, B-Corp certification and CSR can play an important role in the business environment and add value to communities. But remember, they can be very temporary until the IPO, the corporate buy out or the next owners come along without the same value or goals.

For some other businesses it’s merely ‘social washing’ when in actuality profits underly and drive the decisions; or when social values are based on chasing after a market opportunity; or social image is a marketing position?

Social enterprise is an explicit business model designed and operated to transform our communities. They promote social inclusion, economic equality, cultural diversity and environmental well being.

Social enterprise is not a market strategy. Social enterprise strives to transform the business world into a social value marketplace.

 

(Thanks to the several colleagues who contributed, especially Norman, David and Andy.)

Public Sector: The emergent early adopters in the Social Procurement Paradigm Shift!

The dominant paradigm is how we define the current standard practices, and the routine pattern of behaviour. A paradigm shift is a move to a new dominant paradigm. The change goes through several phases: first exploration, then experimentation and then the early adaptors. The identifiable presence of the early adaptors signals that the groundwork is laid, the stage is set for the surge of others to participate in a new model.

The social purchasing activities of the public sector in Canada are announcing a new procurement paradigm. Governments are strategically using their existing purchasing to create social value. Social procurement is utilizing procurement policies and practices to affect social impact. Social impact results in measurable improvements in the living standards of individuals, groups and communities.

In 2013, when I wrote a research paper “Exploring Social Procurement” it was almost entirely theoretical because of the lack of evidence, case studies and relevant research. The paper was a review of the barriers and the opportunities of public sector social procurement along with a set of recommendations to move forward. It seems the paper, commissioned by Employment and Social Development Canada, a federal government ministry, was a harbinger of a purchasing system ready to spring out of its old practices and patterns.

Today we can actually track many of the early explorers, experimenters and early adopters in the social purchasing paradigm shift.

In 2003,Vancouver’s Fast Track to Employment launched the first Social Purchasing Portal, SPP, as an early experiment in utilizing the demand side of the market place to create targeted employment. Mills Basics Office Supplies was an early SPP employer/partner and continues growing as a social values business. The Caledon Institute and Vancouver Social Venture Partners were early explorers.   In 2005 the City of Vancouver under Larry Berglund’s leadership adopted an ethical purchasing policy. Although a valuable policy, it didn’t get the traction that was expected. In 2010 the Vancouver Olympics did some social purchasing trials. The 2010 efforts influenced games related social purchasing at the Glasgow Commonwealth Games. Then there were Pan AM games employee diversity initiatives in Toronto in 2013. All of these Canadian initiatives and other isolated experiments were part of an international growing interest in social procurement and Community Benefit Agreements in Australia, Scotland, and Britain. These were the explorers and the experimenters of social purchasing, leading the paradigm shift into new territory beyond just price, quality and green.

After years of many players nourishing that supportive environment on the supply side, and others planting the seeds on the demand side, the conditions were established for a tipping point. And over the past three years there has been a dramatic acceleration of public sector social procurement activity, leading the way of early adaptors in the paradigm shift.

Our recent Buy Social Canada webinar explored the latest developments in Canada’s Public Sector Social Procurement. We can now identify activities at every level of government and in several Crown Corporations:

Municipal Examples:

Vancouver City Council endorses social procurement and Buy Social in November 2015

Vancouver puts social enterprise criteria into an RFP for office supplies in early 2016

The village of Cumberland, population 3500, adopts a social purchasing program in the spring 2016, and uses it to help select a contractor for a road construction project.

Canada’s largest municipality of Toronto passed a social purchasing program focused on creating employment opportunities in the spring of 2016

Provincial Examples:

British Columbia published the Social Purchasing Guidelines in November 2014

BC issues an RFP for security services at SDSI offices with a 20% value for social impact created through employment of persons on income assistance or disabilities support.

Ontario Government introduces Infrastructure for Jobs and Prosperity Act (Bill 6) in 2015

Manitoba puts social purchasing into their Social Enterprise Strategy, 2015.

Quebec has a social economy purchasing strategy since 2014.

Federal Examples:

Mandate letter for the Ministry of Government Procurement includes ‘social purchasing’

MP Hussen’s Private Member’s Bill 227, promotes the potential to add social value unto federal infrastructure spending. It has had an initial reading in Parliament, and moves to further debate on September 23.

Crown Corporation Examples:

BC Housing has contracted with social enterprise CleanStart for a multi-million multi-year junk removal contract after including a social enterprise emphasis in an RFP in late 2014

Manitoba Housing commits over $10million towards social purchasing that targets employment development for persons with barriers

The perceived risks of rising costs and trade agreement transgressions are being proven wrong. Rather government is obtaining even greater value for taxpayers and communities through social value purchasing decisions.

The shift is happening in the public sector purchasing that will inevitably result in their private sector suppliers to ‘figure it out’. Private sector providers will adapt their services to include opportunities for social enterprises with a demonstrated and measurable social value.

We are on the cusp of a paradigm shift to where social value is an embedded component of procurement policy and practice.

For further information or support in your social procurement process contact david@asiccc.ca and visit the Buy Social Canada website.

 

 

 

“Peers and Turkeys” help us see the real Social Enterprise Challenge/Opportunity!

Social enterprise is the business model used to create a social value marketplace and provide the economic foundation for healthy and inclusive communities. We often refer to social enterprise as a verb, as a route to a desired end.

With that design and goal in mind, we realize our biggest challenge is not the oft mentioned, ‘get to scale’ expectations. But in fact the real social enterprise challenge is the threat it poses to the current dominant economic system. Rather than designed to extract private capital for shareholders, social enterprise is designed to contribute and build wealth and capital within the community.

The last 300 years of a purely economic based marketplace has become the dominant culture and practice of business. Social enterprise disrupts that traditional model by focusing on building a new culture and practice based upon accruing social values and community held capital.

And recently our real challenge was eloquently expressed in an episode of Downton Abbey.

Downton Abbey is a television show set in England 100 years ago, and watches the transition of an aristocratic family within the dramatic social and cultural reforms of the time. Violet Crawley, Dowager Countess of Grantham, or ‘granny’ is the matriarch of the Crawley Family, and spokesperson and protector of all things traditional. Granny epitomizes resistance to change when she says: “A peer (royalty) in favour of reform is like a turkey in favour of Christmas!”

I think we can understand the fundamental message from Granny’s viewpoint: the dominant ‘social and economic system’ will not engage in and change or innovate if the change is not directly serving their perceived needs, or protecting and serving their current status and values. Why would an aristocrat wish to share property ownership with the tenants or share decision-making with the peons? Obviously, no more than a turkey would wish to convey its own death sentence by celebrating Christmas dinner!

How does this principle of ‘peers and turkeys’ apply to the potential growth of social enterprise? Because one view is that social enterprise directly challenges the dominant business model of private wealth generation and shareholder supremacy.

While trying to build a social value marketplace we are challenging the dominant market culture and behaviours of solely using a financial measurement of success.

But let’s take a step back and consider; do we in truth aim to undermine the historic foundation in its entirety through social enterprise? Or do we seek real growth in a preferred model of socially enterprising economy and a social value marketplace?

On the macro scale, there might indeed be the opportunity to use an “economy of choice” to influence the dynamics of the hitherto established economy, for consumers and service users looking for a grounded and value adding alternative.

Social enterprise, seeking to use a business model to create social impact, challenges the standard business model value to maximize financial return. And this challenge to the standard model can bring social enterprise as a principle into conflict with those of the traditional “school”. Or – we can identify a space of influence and voice, bring a demonstrable alternative and model an economy “of moderns”….as Downton’s Granny might have said! We know that today’s society does indeed identify increasingly with the need for a more modern way.

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Building business skills in the social sector and social values into business schools turns traditional curriculum and learning models upside down. This can but doesn’t have to bring conflict – and it certainly does bring innovation through social enterprise – most often at a furious, exciting pace.

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When organizational purchasing seeks to include a social value in the decision making process, it challenges the merits of merely getting the lowest price possible. Social enterprise introduces “modern”, added value and sustainable dimensions into the marketplace; values which multiply and propel whole communities, and their enterprises forward.

So whilst there is a real challenge presented by social enterprise to the traditional economy, should we lift our eyes from that page and see also the opportunity that sits alongside it? And use the innovation so innate within our sector to craft and strongly shape the social economic platform that inspires and dramatically shifts the traditional economy, levering all the opportunity that such a position affords?

Granny didn’t foresee or appreciate the global crises of 2008, neither its causes nor its aftermath. But today’s society does indeed identify increasingly with the need for a more modern way in the wake of these economic tsunamis and ongoing social crisis.

In 2016, consumers, service users and institutional purchasers are increasingly highly discerning. They are actively seeking value. They are actively seeking a value added choice. They know about and look for social and environmental sustainability.

So is the real challenge in fact, right back to our social enterprise community, and for us to provide the resilient avenues and real time alternatives for these choices to be fulfilled?

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David LePage, Principal, Accelerating Social Impact CCC

david@asiccc.ca

Rachael McCormack, Director, Lanarca

rachael@lanarca.co.uk

 

Social Enterprise Reflections: 2015 Hope and 2016 Challenges…

Pollster Doug Miller in his recently published book, “Can the World be Wrong?” predicts social enterprise ‘as the next big thing’ as we face “the ever-increasing pressure on business to act better in society’s interest…”[1]

His prediction just might be confirmed by the amazing shifts and developments in the social enterprise arena across Canada in 2015. We have witnessed public policy changes, market growth, increased social impact reporting and emerging new partnerships all contributed to a more vibrant social enterprise sector.

Some of what we’ve witnessed in 2015…

In government policy we saw some major steps in new supportive directions, examples include: Social Purchasing Guidelines in BC, Social Enterprise strategy policy initiatives in Manitoba, Ontario, Newfoundland / Labrador, Quebec, and Nova Scotia; and most recently five Federal Government Ministerial mandate letters supporting areas of social enterprise, social finance and social purchasing!

The sector is reaching new business and market share levels. Here are some Vancouver area achievements: CleanStart won a major three-year competitive contract with BC Housing; EMBERS Staffing Solutions is consistently employing over 150 people weekly; and Common Thread expanded their customer base to include sewing contracts with local boutique designers and is launching a training course to meet commercial sewing demand. The same stories could as well come from Halifax, Toronto, London, Manitoba, or just about anywhere.

More and more evidence of sector social impact across the country is emerging. Just take a few minutes to read through the Social Enterprise Sector Surveys. – www.sess.ca; review the stories on the enp-Canada newsroom, www.socialenterprisecanada.ca; or scan the recent Demonstrating Values reports, www.demonstratingvalue.org.

Social purchasing initiatives, like the Toronto Social Purchasing Project and the emergence of Buy Social Canada, www.buysocialcanada.ca are focusing on creating greater demand for social enterprise products and services and building a Canada based social enterprise certification program.

2015 also saw some encouraging new initiatives. To maintain and build upon the core learnings developed by enp-Canada and others the on-line Social Enterprise Institute is under construction, www.socialenterpriseinstitute.ca. The planning for a social purchasing partnership and marketplace between Chantier de l’Economie Sociale and Buy Social Canada is underway. ESDC issued an LOI for the potential funding of a collaborative social enterprise intermediary.

But with the hope of each 2015 advancement, comes a whole set of challenges for 2016!

Social enterprises will have to be even more business savvy and impact conscious to meet the growing demand as social purchasing is imbedded into corporate and government supply chains. Operating in the larger commercial market requires providing competitive products and pricing along with social impact!

As social enterprises grow and scale, they face financing needs along the way. Social financing tools, such as new forms of equity-like patient capital, that fit the evolving growth and needs of non-profit and hybrid social enterprises will have to emerge.

Expanding the social enterprise markets and financing requires supportive and effective intermediaries that can create and nurture new supply chain systems and relationships; mediate financing arrangements; and provide advanced business capacity.

Governments will have to move from the initial strategy and policy level of support, to implementing services that create a ‘level playing field’ for social enterprise businesses.

The private sector and government need to move further along in the process to integrate social value into their supply chains and procurement practices.

As blended value becomes the standard of business success, reporting we will need financial and social impact measurement that is simple, accessible and effective.

And finally, creating a supportive social enterprise ecosystem means greater collaboration within the community sector and externally with the public and private sectors. Collaboration like we have never seen before will be the backbone of any significant steps forward.

Here’s to hoping we meet the challenges of 2016 – which just might move social enterprise further along the path to being ‘the next big thing.’

 

 

[1] “Can the World Be Wrong? Where Global Public Opinion Says We’re Headed”; Greenleaf Publishing, 2016, p. 160-161

Social Enterprise Definition Debate: Is tweaking capitalism enough?

I admit that I have been on both sides of the debate about the definition of social enterprise: sometimes staunchly defending it as critical and essential, and at others times avoiding it as not pertinent and a waste of our time.

But now I realize it is important that we do define social enterprise. Because the argument is not about the meaning of social enterprise itself, it is not just about describing an alternative business model. Defining social enterprise is all about determining the values of the marketplace we wish to create.

In his new book Robert Reich, Saving Capitalism: For the Many, Not the Few helped me focus on the social enterprise debate. He argues that “The central choice is not between the “free market” and government; it is between a market organized for broadly based prosperity and one designed to deliver almost all the gains to a few at the top.” His goal to adjust the prosperity gap is great, but his method that if we change the rules, and let government direct the market then we can level the playing field, falls short.

Taxing the wealthy, limiting the power of banks, establishing a living wage, annual guaranteed incomes, and many other schemes for adjusting the current wealth distribution through government interventions are all valuable objectives, in the short term. But only using government rules and regulations to adjust the controls and influence the current private-wealth focused market will not offer an enduring solution.

Building a social value into the marketplace requires establishing the foundations of a business model that exemplifies a social impact principle. So insuring that the definition and measurement of social enterprise success includes both social impact and capital re-investment becomes emblematic of a dramatic shift in why and how we trade; and implicitly directs a social value result into our marketplace transactions.

Relying on government rule changes or letting any ‘good’ business be a social enterprise is just tweaking the underlying values the current marketplace. And in the long term, just tweaking the wealth-driven marketplace of capitalism will do as much good as assuring that the food banks are all well stocked!

To substantially and permanently address issues of poverty, social exclusion, and employment challenges requires adjusting the value base of the market itself.

We have to decide– will we regulate morality in a market that is based on trading in the pursuit of private wealth or use social enterprise to stimulate and fashion a market that creates a healthy local economy?