If you’re thinking about launching a social enterprise, you may want to give Tal Dehtiar a call. Having successfully launched MBAs Without Borders (MWB) in 2004 – supporting small businesses in Africa, Asia and Latin America – he recently sold that venture and started another. It’s enough for entrepreneurs to get one enterprise off the ground, but with two, Dehtiar is a force to be reckoned with. As an increasing number of businessmen and women contemplate their future steps, innovators like Dehtiar are giving the road to social entrepreneurship an inspirational boost. Of course, inspiration alone won’t make these ventures work. Challenges abound and entrepreneurs must be prepared for a fight before stepping into the ring.
Deemed the first international footwear company to work exclusively in Africa, Dehtiar’s newest company, Oliberté, is on a mission to help the continent achieve its potential. “I ran a social enterprise for five years and I saw what works and what doesn’t,” he explains. “Building schools doesn’t work, throwing away money doesn’t work; the only thing that works is creating a middle class by creating jobs.” With that in mind, shoes are manufactured in Ethiopia and, starting in January 2010, the rubber will be tapped from trees in Liberia, Already sold online, Oliberté footwear will find its way to retailer shelves by October. The response so far has been great, but to grow, Dehtiar says the company needs heightened awareness, a greater focus on marketing, and more staff on board. And that’s just the beginning.
Where’s the money
Of course, to achieve all that, an infusion of capital is necessary. But for Dehtiar and many others, it’s a lot easier said than done. Though he’s been on the social entrepreneurial scene for a while, traditional financial institutions are still wary of his intentions. “Africa is too risky,” they say, or “five years running MWB doesn’t count as real business experience.” And there are those who question the potential return on investment. It’s a valid concern; Dehtiar admits the profit margin will be somewhat compromised by his priority of job-creation and fair wages in Africa. Nevertheless, a highly respectable return is guaranteed. If anyone should doubt his motives, he makes it clear: “We’re about making lots of money; we just want to use that money to give back to the community not through charity but through paying better wages,” he says, adding, “We’re just looking for the right investor,” one who will appreciate both the social mission and profit potential.
Limited viewpoints
Sometimes it’s a matter of perception. There are those who hold onto the notion that pursuing a social mission is undermined by anything commercial, while others believe in the exact opposite extreme. “It’s challenging to find the right mix that believe in both,” Dehtiar says. The traditional attitudes not only make securing potential investors difficult, it can also be detrimental to a nonprofit’s own entrepreneurial pursuits. “One of the biggest barriers is a cultural shift has to happen throughout the entire nonprofit organization,” says David LePage, program manager at Enterprising Non-profits (enp), providing grants and resources to nonprofits launching social enterprises. Most nonprofits are designed, for example, to be risk-averse and they often wait until grants come through before taking a step forward. But businesses depend on risk and sell products to induce cash flow. A nonprofit needs to adapt to a whole new set of entrepreneurial criteria, shifting their behavioural and cultural outlook at the board, management, and staff levels.
No substitution for preparation
They also have to come to the venture with their sleeves rolled up and with a clear strategy in place. “A lot of social entrepreneurs don’t do enough homework,” says Dehtiar. “They may have a fantastic idea but not enough people who believe or support it.” As for Oliberté’s founder, he spoke with more than 200 people and went through 40 different versions of a business plan before moving forward. “You need to know your customers and donors and what they want, whether you’re a for-profit or nonprofit.”
Business skills come in handy, too, no matter your organizational structure. Just ask Keith Harding, who runs the Family Services Employee Assistance Programs (FSEAP), the enterprising arm of Family Service Toronto (FST). Providing counselling, health and wellness, and employee support programs, FSEAP may possibly hold the title of the first social enterprise in Canada, having launched in 1974.
When Harding joined the enterprise ten years ago, he brought with him an extensive toolkit derived from 30 years in the private sector. His business savvy and experience proved invaluable. “You use the same skills as in the private sector,” he explains. Skills like good fiscal management, marketing, business development and branding, among others. It’s a question of effectively conveying the message, securing the contract, and delivering on the promise, he adds. After all, “you always have to hold yourself accountable.”
But according to Stacey Corriveau, director of the BC Centre for Social Enterprise – providing technical assistance to aspiring entrepreneurs – many clients lack necessary skills and capacity. Though she’s helped a number of well-intentioned souls, “The tragedy is we aren’t finding many that actually move to launch,” she says. “I’m seeing a profound lack of business acumen, huge risk-aversion and disconnect between what the staff wants – social enterprise – and what the board allows.” Organizations need champions, adds Corriveau, people who can take the idea to the next level. And they’re hard to find.
External obstacles
Even with a dedicated champion, organizations still face other obstacles, lack of government support being one. “The government needs to step in to start implementing incentive programs,” Corriveau offers. Compared to the UK and US, the Canadian government is certainly lagging in its support, echoes LePage, though he reserves praise for the Ontario government’s integration of social enterprise into their poverty reduction strategy, calling it an important step. Getting the federal government onside remains a priority. Private sector support is crucial too. Engaging business and convincing them to prioritize corporate social responsibility in their purchasing can have huge implications, says LePage. In an ideal world, the private, public and nonprofit sector would work together to create healthy communities, and social enterprises would be seen as the model that can fill needs that private sector and government cannot.
Its role in the nonprofit landscape
Perhaps not surprisingly, while Corriveau initially saw social enterprise as “the answer,” she has since modified her view. “If you think you can both earn revenue for your nonprofit and provide robust training and employment opportunities for the marginalized [at the same time], give it up,” she says. “You can’t do both.” Social enterprises are best suited for community-based organizations that have some scale, a cushion.
Social enterprise is just another tool to achieve mission success; it’s not a silver bullet, agrees LePage. But, he adds, “In terms of enhancing the ability of the nonprofit sector to address the needs of the communities, it’s a growing solution.” One growing every day, it seems. Enp had the largest number of participants in their spring social enterprise workshop and expect even greater numbers this fall. What’s more, it recently expanded its reach, with the Centre for Social Innovation running the program in Toronto.
Then there’s the relatively new kid on the block, Social Venture Partners Toronto, investing time, expertise and money into innovative nonprofits, hoping to meet Toronto’s most pressing needs in the process. Formed in 2007, the group adopted a model with a good track record, one boasting over 2,000 partners in more than 20 cities across North America. According to founding partner and leadership committee member Daniel Tisch, part of what helps make SVP Toronto a success is a growing understanding and greater impetus for collaboration between public, private, and nonprofit sectors.
Further, when making an investment, Tisch says it’s not just about finding the best place to put one’s money; it’s also a question of where their talent and time can be used most expediently. In that way, “we could build a spirited partnership and they can use us effectively and strategically.” Tisch says the group is constantly learning and redefining their investment process, consulting with nonprofit communities and partners along the way. And while he claims there are no hard and fast rules in their decision-making process, a nonprofit with a good reputation and track record certainly helps.
As for his view on the future of social entrepreneurship, Tisch thinks it’s going to play an increasingly important role in the local economy. And that’s a good thing because, as he says, “It gives business people a better window into social issues, and people interested in social issues a better window into business.” Harding is equally positive. The time is ripe for social entrepreneurship. “It’s time to be creative, to try different things; it’s a wonderful time for people with vision.”
Elisa Birnbaum is a freelance journalist, producer and communications consultant living in Toronto. She is also president of Elle Communications and can be reached at: info@ellecommunications.ca.
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