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There is an increasing amount of buzz in the nonprofit world lately around social enterprise as a means to create a sustainable revenue stream in support of an organization’s mission. It seems, though, that this term means different things to different people. A Google search yields a variety of views that differ to some extent, but can be distilled down to this interpretation for nonprofits:

Social enterprises are businesses operated by nonprofits for the purpose of generating income by selling a product or service in the marketplace in order to deliver a social, environmental or cultural value consistent with their mission.

Examples of Social Enterprise models

Although the term “social enterprise” is new to most people, a significant number of them have been around for years; for example, Goodwill Industries www.goodwill.org. Their Business Solutions enterprise generates earnings that are used to support their mission: “We help people earn a living, improve their lives, and strengthen their families and their communities“.

Lambs Industries (www.lambsfarm.org) is another great example. They employ individuals with developmental disabilities to do full-service production, packaging, sealing and mailing services for corporate accounts, and they use the revenue to expand services to this population.

i.c.stars (www.icstars.org/services/overview.com) provides social media services to businesses and uses their profits to support technology-based workforce development and leadership training programs for low-income adults.

A few benefits to operating a Social Enterprise

• If managed well, a social enterprise will
• Help decrease a nonprofit’s dependence on government and private grants
• Generate additional funds for programming and projects or other mission related initiatives
• Give funders a greater sense of security
• Foster more rigorous strategic thinking, management and accountability across the entire organization.Better practices in these critical areas will significantly impact mission, outcomes and sustainability.
• Help differentiate the organization from an increasing number of nonprofits competing for fewer available funding dollars in these challenging economic times
• Attract additional staff, board candidates and volunteers

Should your organization create a Social Enterprise?

Although these benefits are very attractive, a nonprofit organization thinking of launching a social enterprise will first need to establish selection criteria for the model they choose, and assess their capability to successfully launch, manage and grow the enterprise.

With this issue of Synergies, we’re launching a 10-part series in which we will drill down on 10 selection criteria I use to help nonprofits identify a viable social enterprise model to support their mission. In next week’s issue, we’ll begin with the first and most important criteria:

The social enterprise must support and be consistent with your mission.

Stay tuned! And please join the conversation. Your comments and questions will be valuable to all participants!