aps 1015 class 8 - business case for se
DESCRIPTION
This class consolidates the learning students received throughout the course. Students will build a business case for the ventures they’ve assessed using the techniques described in the course (storyboarding, business modeling, etc.), focusing on making a compelling and informed argument for why the social entrepreneur you’ve been working with should pursue the course of action you’ve determined in your analysis.TRANSCRIPT
APS 1015: Social Entrepreneurship
Class 8: Building the Business Case for Social Enterprise
Thursday, May 29, 2014
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Instructor:Norm Tasevski ([email protected]) Alex Kjorven ([email protected])
© Norm Tasevski
Agenda
• Marketing for social enterprise• Break• Operational considerations• Legal Considerations
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Marketing for Social Enterprises…
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© Norm Tasevski
A caveat…
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“Social Media”
“Social Enterprise”
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A Second Caveat…
Marketing
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Sales≠
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Where does Marketing Fit?
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© Norm Tasevski
Some Definitions• Social Marketing is the systematic application of marketing, along with other
concepts and techniques, to achieve specific behavioral goals for a social good.– The primary aim of social marketing is "social good", while in "commercial marketing" the aim
is primarily "financial". This does not mean that commercial marketers can not contribute to achievement of social good.
Wikipedia• Cause Marketing (or cause-related marketing) is a mutually beneficial collaboration
between a corporation and a nonprofit in which their respective assets are combined to (1) create shareholder and social value, (2) connect with a range of constituents (be they consumers, employees, or suppliers), and (3) communicate the shared values of both organizations.
Jocelyn Daw (Marketing Consultant)– Cause marketing differs from corporate giving (philanthropy) as the latter generally involves a
specific donation that is tax deductable, while cause marketing is a marketing relationship generally not based on a donation.
Wikipedia• Sustainable Marketing is the process of planning, implementing and controlling
the development, pricing, promotion and distribution of products in a manner that satisfies the following three criteria: (1) customer needs are met (2) organizational goals are attained, and (3) the process is compatible with ecosystems.
Donald Fuller (Sustainable Marketing Consultant)– Sustainable Marketing encourages the process of innovation by turning the marketing process
into an experimental, iterative process that has close ties to the customer. Individuals and interactions on a daily basis are important. Customer Collaboration over customer transactions. Responding to change over blindly following a plan.
Ivan Storck (founder, SustainableWebsites.com)7
© Norm Tasevski
Social Marketing
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Deliver Satisfaction
Realize Aspiration
Practice Compassion
ProfitAbility ReturnAbility
SustainAbility
Be Better Differentiate
Make a Difference
Individual
Social Enterprise
Mind Heart Spirit
Mission
(why)
Vision(what)
Values(How)
© Norm Tasevski
Examples of Social Marketing…
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© Norm Tasevski
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Examples of Cause Marketing…
One of the first…
1983 – American Express & the Statue of Liberty Restoration Project
2006 – Bono & Product (Red)
Another…
2010 – Pepsi & the Refresh Project
Most Recently…
© Norm Tasevski
Sustainable Marketing…
© Norm Tasevski
Sustainable Marketing…is tricky…
http://www.youtube.com/watch?v=p6aSlb_lies
© Norm Tasevski
Sustainable Marketing ToolkitChecklist 1
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Sustainable Marketing ToolkitChecklist 2
© Norm Tasevski
Sustainable Marketing ToolkitChecklist 3
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Break
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HR Considerations…
© Norm Tasevski
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Where does HR Fit?
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© Norm Tasevski
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A Caveat…
Think of your HR from the perspective of “running a business”, not “running a charity”
© Norm Tasevski
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A Second Caveat…
Your HR Strategy must align with your business model and align with organizational values
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What if you were a…
Product-based Social Business…
Tethered Social Enterprise…
Employment-Based Social Business…
Accessibility-Based Platform…
© Norm Tasevski
A business/business model that providesproducts or services with social benefit.
1. Product-Based
© Norm Tasevski 2. Employment-Based
A business that hires marginalized people in good employment opportunities.
© Norm Tasevski 3. Tethered An enterprise started by a charity or non-profit
that generates revenue for the organization.
© Norm Tasevski
A business that maintains a purposely low profit margin to make their products accessible.
4. Accessibility-Based
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Other HR Considerations…
• Who/what do you need?
• How do you find the right people?
• How do you define what they do?
• How (and from where) do you pay them?
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Operational Considerations…
© Norm Tasevski
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DAY 1
What do you do first?
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DAY 180
What does your average week look like?
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Legal Forms Applicable to Social Enterprise…
© Norm Tasevski
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A Caveat…
There is no defined (national or provincial) legal form for social enterprise in Canada
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A Second Caveat…
Form follows function
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For-Profit Corporation
Non-Profit Corporation
CharityPartnership
Sole Proprietorship
Co-Operative Corporation
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For-Profit Corporation• Incorporated under the Business Corporations Act (Ontario) (the “OBCA”) or
the Canada Business Corporations Act (federal) (the “CBCA”)• With share capital
• Most flex in terms of profit-making activities
• Can access all forms of investment (debt, equity, etc)
• Provides clarity of purpose (i.e. the financial bottom line)
• Limited personal liability
• Pay corporate tax• Cannot access grants• Cultural/psychological
barriers with operating a “for-profit social business”
© Norm Tasevski
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Charity• Incorporated via Letters Patent under the Corporations Act (Ontario) or
Canada Corporations Act (federal)• Without share capital
• Don’t pay corporate tax on earnings
• Can issue tax receipts
• Can access many government/foundation/corporate grants
• Least flex in terms of profit-making activities
• Limited in the types of investments you can access (e.g. equity)
• Time-consuming!• Psychological barriers
with operating a “social business”
• An aversion to “risk taking”
• Can lose status if “too successful”
© Norm Tasevski
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Sole Proprietorship• Registered via Business Names Act (Ontario) or Canada Corporations Act
(federal)• Without share capital
• The simplest (and quickest) legal form
• You have full control of business decisions
• Flexibility to make business decisions quickly
• No separate filing for income tax
• Unlimited liability!!• The business is the
entrepreneur• Hard to find investors• Limited creative input
(i.e. you’re the only one with ideas!)
• Less “professional” than other forms
© Norm Tasevski
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Non-Profit Corporation• Incorporated via Letters Patent under Corporations Act (Ontario) or Canada
Corporations Act (Federal)• Generally without share capital
• Can access grants• Can access debt
financing• Tax exempt as long
as organized and operated for defined social/community benefit
• Some NPs are more open to (limited) risk-taking
• Can’t issue tax receipts
• Limited in the types of investments you can access (e.g. equity)
• Psychological barriers with operating a “social business”
• Can lose status if “too successful”
© Norm Tasevski
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Partnership• Registered under the Partnerships Act (Ontario)• With or without share capital• Usually organized using a Partnership Agreement
• Similar benefits to sole proprietorship
• Combines skills/competencies of two people
• Can sign contracts and borrow money in its own right
• For most partnerships, unlimited liability! (at least in Canada…)
• Acrimony between partners is common
• Difficult to find investors
© Norm Tasevski
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Co-Operative Corporation• Incorporated under the Co-Operative Corporations Act (Ontario) or Canada
Cooperatives Act (Federal)• Wither with or without share capital
• Well-established structures
• Integrates the concept of “community benefit” already
• Cannot issue tax receipts
• Generally not exempt from paying tax
• Psychological barriers with operating a “social business”
• Difficulty making decisions (too many people at the table)
© Norm Tasevski
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Talk to a Lawyer!
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Legal Innovations…
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Legal Innovation: CIC (UK)• Established to trade (goods or services) for the
community good• Requires “community interest statement”
application to the CIC Regulator. Publically-available annual reports required to confirm (adherence to) community interest requirement
• May issue shares in order to raise capital• Cap on returns (dividends paid) set by the Regulator• Subject to an “asset lock”
– Assets and profits must be permanently retained by the CICs for community benefit, or transferred to another CIC subject to an asset lock, or to a charity
• Taxed in the same manner as other businesses
© Norm Tasevski
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Legal Innovation: L3C (US)• Variation on American Limited Liability Companies (LLCs)• LLC investors are members rather than shareholders• Terms of the operating agreement guarantee the public
benefit nature of the entity’s work• Like LLCs, L3Cs are not subject to federal income tax
themselves, but the income they pay to members is taxable according to the rates applicable to each member
• Able to attract private capital through the sale of shares and other securities, various forms of loans, or other commercial financial arrangements.
• Ability to receive Program Related Investments from foundations
• No asset lock and no dividend cap
© Norm Tasevski
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Legal Innovation: B Corp (US)• To be certified as a B
corporation under the B Lab system, the corporation must:– Achieve a minimum score of
80 (out of 200) on the B Ratings System, a tool to assess a company's social and environmental performance.
– Agree to make legal changes to its articles of incorporation to expand the responsibilities of the company to include consideration of stakeholder interests.
– Pay B Lab an annual licensing fee.
– Recertification is required every two years.
© Norm Tasevski
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© Norm Tasevski
What did we learn?
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