Last weekend’s Regional Innovation Forum at the Portland Expo Center featured the Social Innovation Track, where social enterprise and entrepreneurship took central stage. The track was facilitated by Amy Pearl, Executive Director of Springboard Innovation*, a Portland non-profit which enables community members to solve community challenges with sustainable, innovative solutions, helping people become social entrepreneurs to envision and launch change.
According to Amy, “the traditional institutions have failed us. That leaves us. We each have a role to play.” Social enterprise aims to be “the fifth space”, an entity borrowing the best out of the first four spaces (government, business, academia, nonprofit) while avoiding their negatives.
Social ventures are said to be more than more than socially responsible corporations. Rather they’re “organized entities where the primary focus is social good”. They use an organization’s core competency for social good, to be truly transformative, and make it profitable at the same time. “Social profit is the bottom line.“
From the triple-bottom line sustainability standpoint, social ventures place social performance above other considerations. By definition, social ventures are clear winners on social sustainability. Check.
Environmental sustainability is typically brought along for the ride; by virtue of social entrepreneurs’ responsibility mindset, care for the environment features prominently in their operations. Some even place environmental concerns in the heart of their ventures, with social good resulting from environmental good; Shawn Endicott of Our United Villages/The Rebuilding Center, which sells salvaged, reclaimed, or donated construction materials and supplies at its retail location back to the community, shared his story and model at the Forum. Check.
That leaves financial sustainability, which, in addition to metrics and scalability, is one of the principal challenges for social ventures. Business models vary among social enterprises, most of which seem to be organized as non-profits. The Pixie Project, an animal adoption and pet supply organization here in Portland, which aims to “get people to stop buying, stop breeding, and start rescuing”, supports its operations through the sale of branded Adoption Option dog products. The Rebuilding Center’s closed loop business model, where the money-making operation is core, may just be the right way to go. But can all social ventures create that? Qualified check.
A new breed of financing vehicles are social investment schemes, such as South Africa Social Investment Exchange SASIX or Springboard Innovation’s planned changeXchange. These aim for a stock exchange-like oversight and reporting with social return replacing financial return. Though social investment platforms allow for very targeted action with detailed metrics, they’re in essence a new and improved way of making restricted donations couched in the social enterprise market-like jargon.
Just as entities focused on making financial profit have difficulty adopting social – and much less so environmental anymore -Â performance into their models, entities driven by social profit face the financial challenge of paying for all good produced. Because it’s hard to focus on more than one thing at a time, the solution may be in focusing on achieving the balance balance among the three bottom-line pillars. So the answer to the titular question is a qualified yes. Social enterprise is the ultimate sustainable organization provided it can make money through its core operations.
What do you think? How can social ventures better achieve financial sustainability? Do you know any social enterprises that apply and balance the triple-bottom line principles in their business models?
* Full disclosure: Springboard Innovation is a past client of my company Semiosis Communications.
