Social entrepreneurs use market-based strategies to build social businesses dedicated to solving problems and creating lasting, positive change. These “hybrid” enterprises combine the best of capital market practices with non-profit principles and represent a growing field of interest for entrepreneurs from both sectors who are seeking to effect large-scale social change.

The Academies for Social Entrepreneurship (ASE) is a California based non-profit organization that promotes the development of sustainable business (social enterprise) models to support such charitable endeavors.  Through its Social Enterprise Academies, ASE provides a collaborative ecosystem for leaders of mission-based businesses and equips them with the training and skills they need to grow strong social enterprises.

It is widely known that the non-profit world has suffered significant setbacks in philanthropic and government funding. Across the nation, nonprofit service providers and philanthropic networks alike face difficult economic realities such as the following:

  • Corporate Foundation giving remained flat in 2008, yet 51% of corporate foundations responding to the an annual forecasting survey said they expect to reduce their giving in 2009, with three-quarters of these funders anticipating reductions of more than 10%
  • Three out of four foundations across the nation saw their assets decline by 25% or more.
  • Government agencies in at least 19 states are delaying payments promised by existing grants or contracts.

Additionally, the Nonprofit Finance Fund Survey: America's Nonprofits in Danger surveyed 986 nonprofit leaders in markets nationwide to capture the financial state and particular challenges facing these organizations.  The survey found among other things:

  • Only 12% expect to operate above break-even this year.
  • 31% don't have enough operating cash in hand to cover more than one month of expenses, and another 31% have less than three months' worth.
  • 52% of respondents expect the recession to have a long-term (2+ years) or permanent negative financial effect on their organizations.
  • In 2009, 43% of respondents expect a decrease government funding; 62% expect a decrease in financial support from foundations; and 49% expect a decrease in contributions from individuals.

Despite the difficulties they are facing, the non-profit sector plays a critical role in addressing the numerous social challenges with which we are faced today. To succeed, we suggest that their passion for solving social problems must be linked with more market driven strategies that are typically found in the private sector.

Donor dependency is both constraining programmatically and financially. When an organization has products and services which someone wants to buy, that organization broadens their constituency, increases their impact and operates from a position of strength rather than scarcity. One need only look at universities and hospitals to realize that social enterprise is a proven business model.   That said, it is a business strategy for which many non-profits are unprepared. The Academies recognize this as a significant barrier to progress and designs programs to help organizations overcome it.

Foundation Center Press Release 5/11/09.
Alliance for Children and Families Press Release 5/30/09.
“Nonprofit Finance Fund Survey: America's Nonprofits in Danger.” Nonprofit Finance Fund Press Release 3/26/09.
Solution- Social Enterprise Academies

Social Enterprise Academies promote the cross sector exchange of ideas and practices, creating more efficient and effective approaches to society’s biggest challenges.  Designed for 15-20 organizations, each Academy utilizes private sector expertise to blend market-based approaches into traditional philanthropic models for social change.  This training and mentoring yields new revenue streams and creates entirely new competencies that promote organizational viability and long-term success. 

The goals of Social Enterprise Academies are:

1. Equip high impact non-profit organizations with the skill sets and resources that will enable them to attract growth capital.

2. Create market-based solutions to social problems that will ultimately enhance organizational effectiveness and viability while increasing revenue from earned, rather than donated income.

3. Build a stronger community by developing social entrepreneurs, sharing lessons with the local non-profit community and engaging local business leaders in solving the community’s most pressing problems.

Drawing on proven practices from business schools and angel venture funding networks, Academies guide non-profit entrepreneurs through the development and presentation of a business plan for their social enterprise--which is often a revenue-generating arm of their non-profit--that will help them to more effectively deliver on their mission and to become more self-sufficient. For many, this is their first venture into for-profit endeavors and the professional guidance they receive is critical.

This guidance is provided by highly skilled business leaders from a select network of affiliations that include local angel and social investor groups and management support organizations such as Tech Coast Angels, Social Venture Partners and local universities.

The rigorous program leads to a business planning competition where winners are awarded cash prizes and the opportunity to work with a pro bono team of seasoned business advisors to complete their planning, secure financing and launch their enterprise.

To date, our unique combination of training, mentoring and “fast pitch” plan competition has expanded capacity in 129 non-profit organizations, producing millions of dollars in new investment and earned income streams.

An Academy is always delivered in collaboration with other capacity building organizations who share our passion for helping social sector organizations become more sustainable. These Strategic Partners assist in recruiting, training and coaching participants. Academies also promote new involvement options for local philanthropists and socially responsible banks.  Thus, Academies work with four main constituents:

  • Foundations, businesses, educational organizations and trade associations that comprise the local eco-system of support
  • local non-profits that seek to enhance their impact by developing for-profit competencies;
  • highly skilled business leaders who provide training and mentoring;
strategic, socially-minded investors who seek to achieve leverage and long-term, measurable social impact.
Competition / Marketplace

The Academy model is unique. Several organizations provide services with some similarities but also with notable differences. For example, Community Wealth Ventures offers 10-14 month business planning process that helps 6-10 high-performing nonprofit organizations develop and grow social enterprises.  However they do not build an ecosystem by involving other organizations and business mentors or offer business planning competition designed to attract investors.

There are numerous business plan competitions to promote for profit social purpose businesses. Many are associated with business schools and require student involvement. Most are designed to vette new businesses. Very few encourage or even allow submissions by existing non-profit organizations.

There are several organizations such as Tap Root, Executive Service Corp, Social Venture Partners that recruit active and retired business professionals for a range of nonprofit consulting assignments. Since they are often looking for placements for their members, they often serve as Academy Strategic Partners and help to recruit potential mentors.
Unlike most investments that are directed at programs that have a one-time impact or will require annual infusions, an investment in an Academy has a “multiplier effect.” Sponsorship of an Academy funds ongoing capacity building, engagement and hands-on training that expands the participating organizations’ ability to deliver on their missions for the long term. Additionally, because Academies draw on pro bono expertise from private sector entrepreneurs and trigger new sources of income, the ROI is typically about 10:1. Academy sponsorship is truly a high-yield investment in community building and capacity development.

Betsy Densmore is Founder and President of Academies for Social Enterprise. Formerly an officer with the Social Enterprise Institute, she has worked with hundreds of non-profit organizations on how to grow mission-related earned income ventures and improve their business acumen. She is also a popular workshop leader on social enterprise development.
ASE’s Advisory Board is made up of people whose professions and passions help to build the eco-system each Academy needs for maximum community impact:

Bob Greenberg, Graham/Greenberg Financial Advisors
Christine Hershey, Hershey/Cause Communications
Don Kasle, Tech Coast Angels and TriTech CDC
Dan McQuaid, Volunteer Center of Orange County (invited)
Kathleen Paylor, Conscious Capital

Three Profiles of Success and Sustainability

The non-profit BikeStation reached a crossroads in late 2007. Founded in Long Beach, Calif., in 1996 to design, build, and manage bike transit centers, the 10-employee organization couldn't handle all the calls coming in on its $300,000 budget.

CEO Andréa White-Kjoss used the Institute’s Academy business planning process to create a plan for opening new bike stations in 5-10 cities in the near future, and to recruit “angel” investors to help fund it as a for-profit wholly owned subsidiary. Shares of Mobis Transportation Alternatives, the for-profit venture, are owned by BikeStation and by those who are investing $750,000 in seed capital.

This year BikeStation has increased staff from 10 to 14 and opening four new transit hubs this year, bringing the total to 16. They are expanding beyond its traditional customers—cities and transit agencies—to market to universities, corporate campuses, and other developments. "We're able to do what we've wanted to do for a long time," says White-Kjoss.

Working Wardrobes
Working Wardrobes, which puts people back to work after a life crisis, wanted to grow their business so that they could serve more people but, as a non-profit, neither the staff nor the board had the business skills or orientation to foster such growth. Through the Academy, Working Wardrobes received training that enabled them to create a business advisory committee, revamp accounting and operational practices, and conduct market research to justify expansion.

The resulting business plan enabled them to obtain a $300,000 bank loan, providing the seed capital for opening two new thrift stores and a career center.  In three years Working Wardrobes has seen a 94% increase in revenues with 78 % of that coming from earned income. Perhaps most important, they have more than doubled number of clients served.

The Supervised Visitation Program at L.A.-based Bienvenidos is a social enterprise venture that expanded a government funded program for low income families to offer services to those who can afford to pay. Bienvenidos used the Academy to create a structure and business plan. Within 3 months of start up, the program was working with more than 60 families, with additional sites and expanded visitation planned. Not only is the program furthering the agency's social mission, it is projecting first year revenue of $200,000 that will increase to $500,000 by year three.  According to President  & CEO, Ritchie Geisel, “The Academy jump-started this whole process of social enterprise formation.”

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