Social Entrepreneurship and Innovation Jamila Aman UFT FEB

Social Entrepreneurship and Innovation Jamila Aman UFT FEB 18, 2009 1

Presented by Jamila Aman, Executive Director Northwood Neighbourhood Services Jamila Aman UFT FEB 18, 2009 2

Remember • A bad idea with a champion is better than a good idea without a champion Jamila Aman UFT FEB 18, 2009 3

Workshop Purpose • Celebrate and build on success • Outline systematic approach • Earned income – – Establish business objectives/criteria Product development Product screening Risk management and readiness • Shared services (MSO) Management Service organization • Venture philanthropy, why social enterprise Jamila Aman UFT FEB 18, 2009 4

Social Entrepreneurship • Why Social Enterprise? • To generate an restricted revenue • To use an restricted revenue for advocacy) the forbidden word) • To use revenue from social enterprise it for programs/ services that are hard to cell to donor agencies • To create social purpose enterprises Jamila Aman UFT FEB 18, 2009 5

Social Entrepreneurship • Application of entrepreneurial attitudes to social sector: – – – – Change is the norm Embrace change Seek change Client focused Shift resources from low to high productivity Calculated risks Create something new Strive for Transparency Jamila Aman UFT FEB 18, 2009 6

Organisational Readiness Risk Management Jamila Aman UFT FEB 18, 2009 7

Issues • • • Fear of loss of control Resources – financial/human Risk averse culture Conflicting ends Lack of structure/governance for success Jamila Aman UFT FEB 18, 2009 8

Organizational Readiness • • • Strategy Governance Human resources Finances Operations, Products and Services Market perspective Jamila Aman UFT FEB 18, 2009 9

Strategic Management Overview C. Input Current State D. Throughput Strategic Implementation Annual Strategic Review and Update A. Output Future State Change Management 5. Current State Assessment and Business Planning Parallel Process with Key Stakeholders 4. Objective Development 2. Strategic Planning: Vision, Mission, Values B. Feedback 3. Strategic Priority Jamila Aman UFT FEB 18, 2009 10

Mapping the Future Ideal Future Vision • Formulate dreams that are worth believing in & fighting for by meeting 3 challenges. Challenge #1. Vision Statement Challenge #2. Mission Statement Challenge #3. Core Values Jamila Aman UFT FEB 18, 2009 11

Ideal Future Vision Answer all or any of the following questions: What will put you out of business? What is your ultimate vision of success? What is your ideal community vision? Answers may be - end of homelessness, hunger etc. Jamila Aman UFT FEB 18, 2009 12

Mission What is your organization’s part in achieving the vision? What do we produce? Who do we serve? How do we do it? Jamila Aman UFT FEB 18, 2009 13

Values What do board members & employees stand for & embrace? What are the rules? May include integrity, transparency, entrepreneurship, innovation etc Jamila Aman UFT FEB 18, 2009 14

Strategic Priority Development Balanced Score Card Format Consider organizational success from more than one perspective, for example: Internal Business Processes Client Financial Human Resources Jamila Aman UFT FEB 18, 2009 15

Strategic Priorities Financial Answer the question: How do you wish to appear to your owners/funders? Client Vision Mission Values Answer the question: How do you wish appear to your client/customer? Internal Business Processes Answer the question: In order to achieve your mission, what business processes must you excel at? Human Resources Answer the question: How do you sustain your ability to learn and grow? Jamila Aman UFT FEB 18, 2009 16

Earned Income Jamila Aman UFT FEB 18, 2009 17

Results in Other Ventures • 90% of successful ventures relate to the nonprofit’s mission • Planning matters • 46% of non-profits with ventures have more than one • 69% are profitable • Profitability is reached in 2. 5 years on average • Only 10% use a spin-off – cutting edge • The largest benefit is the creation of an entrepreneurial culture (58%) Jamila Aman UFT FEB 18, 2009 From a survey of non-profits operating business ventures 18

Systematic Approach Jamila Aman UFT FEB 18, 2009 19

Systematic Approach • Determine organisational – Need for innovation – Purpose • Organisational readiness and commitment • Product development – – Search for opportunities Create new services and screening Research, design, testing Launch, evaluation and revision • Portfolio approach Jamila Aman UFT FEB 18, 2009 20

Strengthens Organisations Achieves Mission • Generates revenue – Unrestricted – Greater degree of control – Enables growth beyond funding base • Supports mission and strategic plan • Create valuable new services • Enhances profile Jamila Aman UFT FEB 18, 2009 21

Balancing Mission and Financial Return Strong Business SECOND PRIOIRTY HIGHEST PRIORITY BUSINESS VALUE ADDED Case Weak Business Case DON’T PURSUE PHILANTHROPY Limited Advances Mission Jamila Aman UFT FEB 18, 2009 22

Product Development Process Planning for Success Jamila Aman UFT FEB 18, 2009 23

Definition of a Good Idea • • Meets a significant customer need – a market Return on investment Risk managed Competitive advantage – Cost – Performance • Leverages a strength/asset • Fits with mission/values Jamila Aman UFT FEB 18, 2009 24

Enterprises • Mission related products or services – Same product, new market: geographic or customer – Programme related products (manuals)/services (EAP) – Staff resources (training) – Public sector contracting • New product/leveraging organisational strengths – Client resources (social firm) – Soft assets intellectual property (licensing/franchising) – Hard assets (rental) • Unrelated business (Ben & Jerry’s) Jamila Aman UFT FEB 18, 2009 25

Product Creation Pre-work • Scan – Community trends and needs – Potential market opportunities – market research – Attend conferences/read magazines/annual reports/web/etc – Assess what competitors are doing • Scan – Internal capacities (swot) • Leading edge networking Jamila Aman UFT FEB 18, 2009 26

Brainstorming • Use information/knowledge/fantasy/dreams/intuition • Build on experiences of and skills/knowledge in the organisation • Lateral thinking, scramble patterns – e. g. pose a problem and only outrageous solutions are suggested • Look at data for opportunities, look at it from other people’s perspectives • Be excited, accept thoughts/play with them - have fun • Bring experts from different organisations together • Discuss with others, family, friends, associates • Generate a list of opportunities e. g. Northwood case Jamila Aman UFT FEB 18, 2009 27

Level 1 Screening Criteria Does the idea further your vision, mission, values and strategic priorities? 1=no, 2=partial fit, 3=full fit Is there a potential customer benefit? 1=none, 2=some need/some customers, 3=urgent need/many customers Are there profit potential (by third year)? 1= less than 20 K, 2=more than 20 k but less than 50 k, 3= more than 50 k What investment is required? 1 = major investment , 2 = minor investment, 3 = achieve with current resources Is there a champion? 1=no, 2= neutral 3=yes Is there risk? 1 = high risk (no known mitigation), 2 = medium risk (new strategies needed), 3 = low risk (strategies in place) Scoring: each idea will have a score of 6 -18 Jamila Aman UFT FEB 18, 2009 28

Screening Phase 2 • Create a concept statement – Describe product – Target audience and reason for buying it – When, where, how? • Product attractiveness – Financial results – Marketing issues and competitors – Risk factors • Does it fit with the organisation? • Test with sample of external experts Jamila Aman UFT FEB 18, 2009 29

Screening Phase 3 Feasibility Analysis and Priority Setting – Does the product have financial potential? – How likely is the product to implemented successfully (easy or hard)? – Is an investment required? – Is an investment justifiable in terms of financial or mission improvement? – Does the product advance mission and strategic priorities? Jamila Aman UFT FEB 18, 2009 30

The Success Quadrant High financial and social impact Low Potential Consider Later Top Priority Continue Screening Low financial and social impact Not Strategic Do Not Consider Further Long Term Consider Second Low (Idea will be relatively difficult to implement) High (Idea will be relatively easy to implement) Fit with Organisation Jamila Aman UFT FEB 18, 2009 31

First Set of Measures Product A Jamila Aman UFT FEB 18, 2009 32

Second Set of Measures Jamila Aman UFT FEB 18, 2009 Product A 33

Strength of Idea High financial and social impact Product A Low financial and social impact Low (Idea will be relatively difficult to implement) High (Idea will be relatively easy to implement) Fit with Organisation Jamila Aman UFT FEB 18, 2009 34

Screening Phase 4 Business Planning Jamila Aman UFT FEB 18, 2009 35

Benefits of Writing a Business Plan • Refines the idea • Writing it down makes it real • Creates a framework for making the idea happen • Method of external communication • Internal due-diligence tool Jamila Aman UFT FEB 18, 2009 36

Guidelines for Successful Plans • Aim for a maximum of no more than twenty pages in the main body of the plan • Be as brief and crisp as possible when explaining your idea and strategy • Quantitative • Specific • Cover what investors are looking for • Address risk and exit Jamila Aman UFT FEB 18, 2009 37

Business Plan Format • • • Cover Page and Executive Summary Description of the business Industry and Market Analysis Marketing, Communications and Sales Plan Management and Operations / Launch Plan Risk Assessment and Contingency Plan Exit Strategy Financial Plan for Your Venture Supporting Documents Jamila Aman UFT FEB 18, 2009 38

After That…. • Development • Testing • Launch Entrepreneur Jamila Aman UFT FEB 18, 2009 39

Organisational Structure Jamila Aman UFT FEB 18, 2009 40

Why Separate? • • Different cultures/ends Shield non-profit from business risk Raise external capital Enhance focus on non-core markets without compromising non-profit’s purpose or funding Jamila Aman UFT FEB 18, 2009 41

Structure Business Non-profit Organisation Business Intellectual Property Enterprises Holdings Business Operational Support Purchase Of Service Investors Jamila Aman UFT FEB 18, 2009 42

Transition • • Clean break, separate entities Share resources, purchasing services Conflict of interest Sharing management Compensation Share purchasing Transition plan and monitoring Jamila Aman UFT FEB 18, 2009 43

Relationship With Non-profit • Customer/vendor/owner (major shareholder) • Separate companies – consistent vision • Some price concessions to keep charity as a customer and meet mission • Mutually beneficial for Enterprises to succeed • Negotiated and governed by contract Jamila Aman UFT FEB 18, 2009 44

Significant Key To Success • Foster a dynamic, success generating, entrepreneurial ethos • Provide support to staff who are: • • • Creative Innovative Entrepreneurial Productive Successful Aspiring Jamila Aman UFT FEB 18, 2009 45

Partnerships, Alliances Mergers, Acquisitions Jamila Aman UFT FEB 18, 2009 46

• Working together – Creating efficiencies – Enhancing quality • Allowing for a focus on services • Supporting social enterprise Jamila Aman UFT FEB 18, 2009 47

Context • Pressure to create efficiencies • Enormous duplication Jamila Aman UFT FEB 18, 2009 48

One Approach - MSO • A management service organisation (MSO) is an integration that includes the creation of a new organisation in order to integrate administrative and fundraising functions, and thus to increase the administrative efficiency and effectiveness of participating organisations. It may include co-location. Jamila Aman UFT FEB 18, 2009 49

Benefits • • Enhances quality, strengthens organisation Generates revenue: cost savings/profit Frees management time Keep up Enhances profile/reinforces advocacy partnering Reduces risk Entrepreneurial spirit Supports mission and strategic plan Jamila Aman UFT FEB 18, 2009 50

Examples of Savings and Quality Enhancement • Procurement – Average 26%, Up to 50% on certain items – One organisation – 32% savings (equivalent of a 1 FTE freed up for the organisation) • Finance/HR/IT – Higher quality, more comprehensive service – Potential for savings/minimally breakeven • Fundraising –access to focused expertise at low cost Jamila Aman UFT FEB 18, 2009 51

MSO Possibilities Management Service Organization Jamila Aman UFT FEB 18, 2009 52

Process • Creative/interactive/inclusive • Full participation of the stakeholders, leading to a strong sense of ownership • Mentoring • Idea creation and implementation process • Systematic Jamila Aman UFT FEB 18, 2009 53

Way Forward • • • Initial meeting/test concept Research/interviews/preliminary assessment Workshop/obtain commitment to the process Business feasibility and priority setting Stakeholder meeting/commitment Business planning and communication ‘Partner’ meeting/buy-in Launch/build scale Add products Add members/customers Jamila Aman UFT FEB 18, 2009 54

Process • • Refine Business Plan with Trustees Council support - letter of intent - £ 1. 25 M Identify other markets Discussions with other potential partners Fundraising Commitment from Trustees to MSO Launch MSO Early 09 Jamila Aman UFT FEB 18, 2009 55

One Final Thought Jamila Aman UFT FEB 18, 2009 56

The acid test for shared services (Tom Peters) • Are we good enough to sell this service on the open market? If not, why are we “buying” from ourselves when nobody else would buy it from us? Jamila Aman UFT FEB 18, 2009 57

Venture Philanthropy High Engagement Giving Jamila Aman UFT FEB 18, 2009 58

What is Venture Philanthropy? Capital and human resources invested in charities by various types of investors in search of a social return on their investment. VP involves a high engagement over many years with fixed milestones and tangible returns and exit achieved by developing alternative, sustainable income. Jamila Aman UFT FEB 18, 2009 59

Venture Philanthropy Investing In Programmes Services Infrastructure Jamila Aman UFT FEB 18, 2009 Commercial Ventures Social Enterprise 60

Elements • • Capital for growth, reliable money Human resource expertise/strategic coaching Partnering internally and externally Performance centred, results orientated Long term, exit strategy to sustainability Business case/plan Business to business presentation Management, board, cash management, impact Jamila Aman UFT FEB 18, 2009 61

Venture Philanthropy Priority • • • Significant problem Appropriate solution Enthusiasm/being with a winner Impact/building on success Innovative and entrepreneurial Fit with your values/vision Jamila Aman UFT FEB 18, 2009 62

VP Benefits – A US Example What Funders and Grantees Say • Partnering • Reliable, long term grant money • Improved organisational capacity, better: – Evaluation systems – Marketing business and strategic planning – Fundraising • Improved organisational performance/growth • For every $1 invested, $3 gained in expertise Jamila Aman UFT FEB 18, 2009 63

UK VP Activities Just Beginning • Funds – World-in-Need – Impetus – Laidlaw/Ryan • Corporate Involvement • Examples – Charity Technology Trust – Plan International – Tomorrow’s People – Help the Hospices – Shell – Diageo • VP Association Jamila Aman UFT FEB 18, 2009 64

Investor Motivation • • Apply knowledge/intellectual stimulation High engagement Joy of giving Image enhancement Social return on investment Corporate social responsibility Help business units achieve their goals Jamila Aman UFT FEB 18, 2009 65

Case Study: Corporate Venture Philanthropy Diageo plc – – Small number of very high engagement initiatives Directly led to the creation of Tomorrow’s People Board and management support Measurement and accountability • SROI evaluation • Communication of value to stakeholders in community – Exit strategy in long term Jamila Aman UFT FEB 18, 2009 66

Case Study: Strategic Partnerships New Profit, Inc. – Modelled after a venture capital fund – Significant support to few investments – CEO coach from Monitor Group – Board of Directors position – Portfolio manager – Access to other resources Jamila Aman UFT FEB 18, 2009 67

Trade Association Driven Fund Social Equity Fund – Created by trade association to further its business objectives – Special purpose fund managed by the trade association using VP principles – Invests in charities in a competitive fashion – an market place for innovation – Mechanism for member organisations to act as high engagement donors Jamila Aman UFT FEB 18, 2009 68

Trends • • Increased/new capital and expertise Impact on/leverage with other funders VP model will evolve Impact on charity behaviour Jamila Aman UFT FEB 18, 2009 69

Increased Capital • New philanthropic giving - people or corporations who may otherwise not be philanthropic • Opening up opportunities departments to access funds/expertise from the various business units • Increase the level of commitment of existing donors, reinvigorating and advancing mature funding relationships • Success stories will lead to expansion Jamila Aman UFT FEB 18, 2009 70

Leverage Outside Of Movement • Traditional grant makers will adapt some of the principles of the movement • Increase in the acceptability of infrastructure funding • Traditional grant makers will co-invest with venture philanthropists • Venture philanthropy due diligence/investment will act as a positive signal to other grant makers • Venture philanthropists will provide services to support other grant makers Jamila Aman UFT FEB 18, 2009 71

Evolution Of The Model • Partnering in a true sense - working within the mission of the organisation as opposed to driving the mission • Social return on investment evaluation will continue to be applied, leading to more efficient practices • Increase in investing in mission-based social enterprise/trading Jamila Aman UFT FEB 18, 2009 72

New Capital Structures • Funders will create blended fund portfolios – diverse funders, joint working • Charities will lead the creation of captive funds in support of their mission Jamila Aman UFT FEB 18, 2009 73

The Organisational Strategic Plan Internal Marketplace BUSINESS PLANNING Extra capacity + expertise Capital Innovation Funds Portfolio £ ORGANISATIONAL EXPERTISE Revolving Innovation Fund INVESTOR EXPERTISE Endowment Innovation Fund INVESTOR investment Jamila Aman UFT FEB 18, 2009 bidding 74

Changes In Charitable Organisation Behaviour • Charities will proactively encourage venture philanthropy and create venture philanthropists – creating an internal market • Increased emphasis on social return on investment will encourage a more efficient use of resources • Increased familiarity with business language and practices Jamila Aman UFT FEB 18, 2009 75

Screening Criteria • • • Significant problem/appropriate solution Good strategy, business plan, exit strategy Good management team Do the numbers make sense? Enthusiasm/being with a winner – Building on success – Innovative and entrepreneurial – Fit with your values/vision Jamila Aman UFT FEB 18, 2009 76

SROI Elements, social return on investment • • Issue/problem Solution (product/service) Investment required Desired outcomes – Client – Organisation/enterprise – Stakeholder/investor desired outcomes • Data management/evaluation • Social and financial return on investment – Social enterprise financial performance/value – Cost savings/gains to government – Client Sources of information – Roberts Enterprise Development Fund – New Economics Foundation Jamila Aman UFT FEB 18, 2009 77

Strategic Issues • • Develop criteria in partnership Trust, partnering and control Due diligence and fit Innovation and risk taking Organisational readiness Cultural differences Exit and sustainability Jamila Aman UFT FEB 18, 2009 78

Process with a Charity • Product development/feasibility study • Finalise programme/infrastructure/commercial selection and internal fund structure • Finalise readiness issues and solutions/plans • Prepare business cases and business plans • Research, preparation and training • Launch, implementation and evaluation • Networking and business to business presentation • Follow-up and negotiation Jamila Aman UFT FEB 18, 2009 79

Identifying Potential Investors • Current supporters and their networks – Existing member/donor database – Member/donor networks – Staff/volunteer knowledge • Research – – – Competition Rich lists Trusts Media Investor groups Companies • Demographic identification and analysis • Networking/interviews/feasibility testing Jamila Aman UFT FEB 18, 2009 80

Business Case (Two Pages) • Quote • Problem/market • Solution/business idea – Right strategy – People to make it work – Exit/sustainability • The organisation and its desirability Jamila Aman UFT FEB 18, 2009 81

Success Factors in Obtaining The Investment • • • Is the proposal convincing? Did the unique value come through? Is the proposal customer driven? Was it credible? Was it enthusiastic? Would you remember the presentation? Was the presentation style compelling? • Did it catch your attention in the first minute? • Was the “ask” or proposal clear? Jamila Aman UFT FEB 18, 2009 82

Key Learning's • Build on current network, donors and investors • Research the investor • Focus on and engage the investor, think laterally • It is a sales process • Be patient/persistent, it could take up to 2 years • It is partnering, be organisationally ready Jamila Aman UFT FEB 18, 2009 83

How would you apply earned income from venture philanthropy or Social Enterprise to your Organisation? Remember a bad idea with a champion is better than a good idea without a champion !!!! Jamila Aman UFT FEB 18, 2009 84

Some Great Resources… § Fraser Valley Centre for Social Enterprise www. centreforsocialenterprise. com § Social Enterprise Alliance www. se-alliance. org § Social Venture Network, www. svn. org § Social Venture Partners, www. svpi. org § Centre for Community Enterprise www. cedworks. com § Centre for Social Innovation www. socialinnovation. ca Jamila Aman UFT FEB 18, 2009 85

More Great Resources… § Toronto Enterprise Fund www. torontoenterprisefund. ca § Aperio Consulting www. aperio. ca § Andrew Horsnell & Associates www. Andrew. Horsnell. com § Canadian Social Entrepreneurs Network www. csen. ca § np. Enterprise Forum, www. np. Enterprise. net § Sustainable Enterprise Resource Centre www. sustainabilityincubator. com Jamila Aman UFT FEB 18, 2009 86

More Great Resources… § Canadian Conference on Social Enterprise www. socialenterprise. ca § Business and Sustainable Development www. bsdglobal. com § Canadian Centre for Social Entrepreneurship www. bus. ualberta. ca/ccse/ § Canadian Business for Social Responsibility www. cbsr. ca § Sustainable Enterprise Academy www. sustainableenterpriseacademy. com § Net Impact, www. netimpact. org § www. Green. Biz. com § www. greenleaf-publishing. com Jamila Aman UFT FEB 18, 2009 87

Yippy! We Are Done! Jamila Aman UFT FEB 18, 2009 88

Jamila M. Aman 4330 Brandon Gate Drive Mississauga, Ontario L 4 T 3 K 4 Direct: 416 -618 -3041 jaman@northw. ca http: //www. northw. ca Jamila Aman UFT FEB 18, 2009 89