Faithventure Forum

I had the pleasure to present to a social enterprise gathering hosted by a fantastic new organization in our community, The Denver Institute for Faith and Work . I've been meaning to write a post on this topic for awhile so it was timely to be able to present the following: People don't like ex-offenders coming into their home The social enterprise business needs to lead the mission A lot of people enjoy talking about social enterprise but very few actual practitioners (And a bonus point) Social enterprise is hard work Be sure to check out the Denver Institute's website here . Three Things I've Learned After 20 Years of Social Entrepreneurship - Jim Reiner from Denver Institute on Vimeo .

If there is such a thing as a moment, the social enterprise movement is experiencing it right now. This approach has become very popular in the non-profit world, especially among millennials seeking to create employment training opportunities. Almost every week someone contacts us here at  Belay Enterprises  wanting to learn about our model as they develop their own start-up social venture. In the rush of enthusiasm for social enterprise, potential practitioners often overlook how hard it is to start and sustain such projects. I spend a lot of time encouraging people in the non-profit sector to start taking risks because the sector often is biased against such action because of its funding model. Leaders don't want to disappoint donors because a project didn't work out. But organizations need to take risks in order to achieve growth in social enterprise. In addition, sustaining such a project can be equally difficult. Ventures that survive the start-up phase often require ...

Scalable impact has always been the mantra of social enterprise. How can a project be organized to maximize its societal benefit for each dollar spent while being able to accommodate growth without impacting marginal costs. As I talk with aspiring social enterprises practitioners, one question consistently reappears: Do I try to build a venture that maximizes employment opportunities or do I build a venture that maximizes the impact of each position? Individual organizations will answer that question differently depending on their mission and goals.  But for enterprises seeking to create employment opportunities for people rebuilding lives from addiction, homelessness and prison, a model that emphasizes investing more resources on fewer individuals creates better results...especially for faith-based initiatives. But this belief sometimes causes problems in attracting resources from foundations that emphasize looking at the cost per person served as a measuring line for org...

The lack of investment capital for social enterprises holds back the growth of this blossoming sector. As much as social enterprises would like to set themselves apart from the giving model of traditional philanthropy, the lack of a pure profit motive when solving societal problems hampers the resourcing of new projects. In our organization, Belay Enterprises , we seek to create ventures that employ and job train individuals rebuilding lives from addiction, homelessness and prison. We are constantly uncovering great new potential projects that are only limited by our ability to fund their start-up. If a consistent social capital market were developed, it could greatly benefit our efforts. Unfortunately, that is easier said than done because social change doesn't easily pay investment dividends. So it's with great interest that I am watching the development of social impact funds by investment banks like Goldman Sachs and Morgan Stanley. They are built on the assumption that...

There is a fantastic short essay in the latest Stanford Social Innovation Review that provides lots of food for thought for aspiring social entrepreneurs. Several times a month I meet young 20 somethings who are interested in developing a particular social enterprise and want advice. I think the biggest fight they have is the internal one to grind it out when social enterprise loses its sexiness as is the case in the hard work of every start-up. I love this quote by Mathias Craig There is no app for this. You have to get out there and do it—and you have to have the staying power to be at it long enough to have a real impact. Leading people on with the idea that there is a widget or a model or a process that will short-cut this leads to quick burnouts, ineffective allocations of funds, and ultimately less impact...What seems to be lost is that creating meaningful long-term impact in the social space is still really about the people [who] are willing to stick with the hard work ...

As I have explored before on this blog, one of the big problems with unlocking the capital markets for social enterprise is the difficulty of providing adequate financial returns to reward investments with social aims. I've also written about how reducing recidivism can provide big savings to the government by reducing the cost of incarceration. In Great Britain, Big Society Capital has creatively married these two issues in a Social Investment Bond it has formed as part of its social investment bank, Social Finance. As the project reduces recidivism among its target of 3000 prisoners, the investment delivers corresponding increasing returns. This is a fascinating approach which you can learn more about in the latest Stanford Social Innovation Review available free online until the end of the month: The target population of the first SiB-funded program comprises 3,000 prisoners due to leave Peterborough prison over six years. In the United Kingdom, around 60 percent of s...

Rodolpho Carrasco has written an article Ministries of Social Entrepreneurship on urban faith ventures that highlights Belay Enterprises , Homeboy Industries and Central Detroit Christian at Urban Faith : America’s economic woes have made grassroots urban ministers open to new ways of doing things. Fundraising has always been a challenge, and now more so. Common conversation topics in urban ministry circles include cutting positions, scaling back programs, and working more efficiently. One topic stands out. The idea of starting a business to fund an urban ministry is not just hallway conversation or Facebook chat fodder. People really want to know. Even people who are critics of Big Business or Capitalism are hungry to make private enterprise work for their cause. If you are thinking about launching a business to supplement your ministry’s bottom line, it’s important to understand both the concept of social entrepreneurship and the management capacity of the typical ...

A recent segment on CPR's Colorado Matters highlights Colorado Correction Industries , the organization that runs several enterprises that employ offenders in the state prison system. The various ventures include farm-raised fish, forest fire fighting, office furniture assembly, and buffalo milk. I was particularly interested in the radio host's line of questions pertaining to perceptions in the community that the prison projects were hurting existing businesses. This is a complaint that on occasion surfaces whenever community organization start operating businesses. Numerous examples exist of nonprofit ventures receiving such criticism from for-profit competitors, especially college bookstores and hospitals. To lessen such criticism, social enterprise leaders need to focus, focus, focus on their mission. They must actively sell what benefit they provide to the community as a whole and carefully work to avoid the perception of unfair advantage by not taking unfair advantage...

I find it frustrating when business and non-profit leaders cling to the misconception that the American economy is a zero-sum game. For each winner in the economy there must be a corresponding loser according to this line of thinking. Unfortunately, this view misses that a growing economy with expanding efficiencies arising from new innovations allows for a growing pie of opportunity. One reason I've been such a fan of social enterprise over the last 12 years is because this sector disproves each day the idea of a zero-sum economy with its innovative activities. But then interest group politics trots out the tired argument of the zero-sum pie once again. This time, the California Association of Nonprofits worries about legislative efforts to create new hybrid corporate structures that combine what social enterprise has always been about: social good with profitable enterprise. The nonprofit and for-profit sectors are already blending and a new corporate form would help governme...

Traditional economic theory argues that the chief aim of business is to maximize value for its investors. A capitalist economy achieves the best use of its resources when businesses increase their economic value. In the era of Wal Mart and the outsourcing of jobs it’s easy to see this idea at work in our economy. But I believe there is a quiet revolution occurring in the background that is challenging how we think of economic value and providing tremendous ministry opportunities for innovative followers-of-Christ. On the one hand, non-profit organizations are discovering the value of earned-income ventures to support mission. Instead of relying totally on financial donations, these non-profits are entering the world of income earning businesses discovering that in many ways these ventures increase the effectiveness of their mission activity. Some non-profits are exploring purchasing franchises and others are developing new ways to access capital through their own investment securit...

Two years ago, I read in the Wall Street Journal that the IRS was planning to audit more charities operating business ventures. “Hmm,” I thought to myself, “wouldn’t that be a lot of fun.” A few weeks later, I received a letter from the IRS and the good times started rolling with our own nonprofit audit. I wasn’t worried because we pride ourselves in operating with the highest ethics and transparency. Sure enough, we passed with no deficiencies a few months later. But the audit raised a couple of interesting issues for social enterprises and faith ventures . The IRS was most interested in collecting the Unrelated Business Income Tax which is required if the nonprofit is operating a business that is “not substantially related to furthering the exempt purpose of the organization.” Over and over, they asked us to show that our businesses served our social mission verses just being an unrelated income source. My favorite moment was when the agent asked one of our project direct...

Earlier this year, some friends of mine in New York City with a desire to create a social enterprise that employs ex-offenders hosted an idea contest that received over 125 entries. On Monday, they announced their five semi-finalists: Jurrien Swarts – Farm fresh food prepared into microwavable meals for locovores and people living in “food deserts” Heather Burkman – Digitizing small business records and storing hard copies off-site Nickalas Goettling – Seal coating asphalt roads and parking lots Kendra Pierre-Louis – Restoring brownfields through phytoremediation Michael Cozzolino – Manufacturing decorative architectural wood wall panels On June 1, 2011, Spring Into Action will announce the finalist, a task I do not envy in light of the five excellent finalist ideas. At first glance, all seem to fill innovative and sustainable market niches while providing rich opportunities for employing individuals rebuilding lives.  I am especially intrigued by the architectural w...