Home > Uncategorized > How to create 'great' social enterprises?
  1. anne duffy
    February 12, 2010 at 13:19

    In corporate country the bottom line is profit (notwhithstanding nods at corporate responsibility and corporate/profit non profit collaboration and alliances). Companies worry about a fall in profit year on year and work on the principal that upward mobility is the only acceptable direction. We hear all the time that so’s and so’s profits fell by x percent on last year. They might still be ahead of all years prior to that, but falling on last year profits represents a failure to thrive. Enough is never enough, and more is never enough either.

    Many organisations in the non profit sector on the other hand have an evident lack of attention to measuring success, to setting key performance indicators that measure social good. McCarthy (Snip) accuses the community sector of showing no evidence of positive effect. He’s right in that there is little measured evidence, little qualitative reporting, and little local level statistical data. (the SPEAK system doesn’t capture what actually happens in the CDP sector). Social good can be difficult to measure, and it takes resources, but it is by no means impossible. But this does not mean that there is no positive effect. Just ask anyone who has been through a community centre course, drop-in service, support group, community childcare service, youth group etc.

    Social enterprise requires KPIs that measure both social good and profit. So if we are talking high performance social enterprises the high performance has to be at the social value and the profit levels.
    If the corporate sector puts profit before people, and if the non profit sector puts people before profit, maybe the social enterprise sector puts people and profit on an equal footing. (Sign me up for that!)

    Why is the non profit sector reluctant? Because we don’t measure success, we assume it’s there because we do “good work” – doing good is good enough, and believe profit and people are not compatible bottom lines. In addition, our increasing dependence on state/foundation grant aid did support community development, but may have stifled creativity in terms of community action, community enterprise, and developing self reliance. I think there is a need for a shift in thinking from despondency and dependency to open minded exploration of possibility – what have we got to lose.

    I don’t think it’s that we can’t have high potential social enterprises, I think it’s that the concept is relatively new. The GEM 2008 (p18) report says that “New research … demonstrated that participation in education or training in relation to entrepreneurship has positive effects on an individual’s preparedness and their likelihood of becoming an entrepreneur”. Our social sector doesn’t have that training.

    The following table using data from the GEM 2008 report shows that early stage entrepreneurial activity increases relative to household income, with twice as many entrepreneurs coming from the highest third bracket than the lowest third. If it is true to say that the understanding of social need is strongest where that social need exists, and that where social need exists is often where household income is lowest, then the need for training to occur as a precursor to achieving High Potential Social Enterprise that meets the dual bottom line of people and profit, is evident.

    Household Income Category % Early Stage Entrepreneurs from Category
    Lowest third 22
    Middle third 34
    Highest third 44
    Source GEM Report 2008 (p40)

    What if the question is not “why don’t we have high potential social enterprises”, but is “how can we support the development of high potential social enterprises” instead…

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