This class will cover some of the key considerations social entrepreneurs face when launching and growing their social enterprise. Emphasis will be placed on operational, human, legal and marketing considerations. Students will also develop a basic financial analysis for their enterprise to determine the financial feasibility of their venture.

1. APS 1015: Social Entrepreneurship
Class 8: Considerations for Social Enterprise
Monday, October 28, 2013
Instructor:
Norm Tasevski (norm@socialentrepreneurship.ca)
Assaf Weisz (assaf@socialentrepreneurship.ca)
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2. © Norm Tasevski & Assaf Weisz
Agenda
•
•
•
•
•
•
Storyboarding - Recap
Marketing for social enterprise
Break
Operational considerations
Legal Considerations
What did we learn – today?
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3. Storyboarding Recap
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4. © Norm Tasevski & Assaf Weisz
What is Storyboarding?
A set of images/graphics displayed in sequence as a
means of pre-visualizing a process or sequence of
events
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5. © Norm Tasevski & Assaf Weisz
The Importance of Storyboarding
• From a business perspective, it provides clarity on
how the business will work (e.g. how value is
created, how revenue is generated)
• It helps identify gaps/flaws in the business model
• If can provide a foundation for a
communications/sales campaign to customers,
investors, etc.
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6. © Norm Tasevski & Assaf Weisz
An Example – “Here’s How it Works”
1st
ID office building
to serve as a
“Delivery Hub”
2nd
3rd
ID merchants within
the “Delivery Zone”
Merchants market
the service to
customers
We
Deliver!
Professionals in Sick
Kids will have access
to the delivery service
Professionals at Sick Kids can receive
deliveries from the hot dog vendor, Subway
and Starbucks, but not Freshii or Tim Hortons
An SSO delivery
person picks up
and delivers
the food to the
professional
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7. © Norm Tasevski & Assaf Weisz
A 2nd Example – “Here’s How it Works”
1st
First time youth drug
offenders referred to
Peacebuilders
2nd
Youth participate in
Restorative Circles &
Business Training
Peacebuilders work with
established relationships
with the federal youth
prosecutor at the youth court
at 311 Jarvis
Through this process, we build a trust
relationship and empower youth to
genuinely change their lives and break the
cycle of violence and poverty
3rd
Youth placed in
kiosks/venues to sell
products
Youth sell in controlled
environments, with
Peacebuilders/Venture
Deli staff support
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8. Marketing for Social Enterprises…
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9. © Norm Tasevski & Assaf Weisz
A caveat…
“Social
Media”
“Social
Enterprise”
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10. © Norm Tasevski & Assaf Weisz
A Second Caveat…
Marketing
≠
Sales
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11. © Norm Tasevski & Assaf Weisz
Where does Marketing Fit?
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12. © Norm Tasevski & Assaf Weisz
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.
–
•
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.
–
•
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
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.
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Ivan Storck (founder, SustainableWebsites.com)

13. © Norm Tasevski & Assaf Weisz
Social Marketing
Individual
Social Enterprise
Mind
Mission
(why)
Vision
(what)
Values
(How)
Heart
Deliver
Satisfaction
Realize
Aspiration
Practice
Compassion
ProfitAbility
ReturnAbility
SustainAbility
Be Better
Differentiate
Make a
Difference
Spirit
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14. © Norm Tasevski & Assaf Weisz
Examples of Social Marketing…
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15. © Norm Tasevski & Assaf Weisz
Examples of Cause Marketing…
One of the first…
Another…
Most Recently…
1983 – American
Express & the
Statue of Liberty
Restoration Project
2006 – Bono &
Product (Red)
2010 – Pepsi & the
Refresh Project
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16. © Norm Tasevski & Assaf Weisz
Another Example of Cause Marketing…
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17. © Norm Tasevski & Assaf Weisz
Sustainable
Marketing…

18. © Norm Tasevski & Assaf Weisz
Sustainable Marketing…is tricky…
http://ww
w.youtube.
com/watch
?v=p6aSlb_
lies

19. © Norm Tasevski & Assaf Weisz
Sustainable Marketing Toolkit
Checklist 1

20. © Norm Tasevski & Assaf Weisz
Sustainable Marketing Toolkit
Checklist 2

21. © Norm Tasevski & Assaf Weisz
Sustainable Marketing Toolkit
Checklist 3

22. Break
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23. HR Considerations…
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24. © Norm Tasevski & Assaf Weisz
Where does HR Fit?
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25. © Norm Tasevski & Assaf Weisz
A Caveat…
Think of your HR from the perspective of “running a
business”, not “running a charity”
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26. © Norm Tasevski & Assaf Weisz
A Second Caveat…
Your HR Strategy must align with your business model
and align with organizational values
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27. What if you were a…
Product-based Social Business…
Tethered Social Enterprise…
Employment-Based Social Business…
Accessibility-Based Platform…
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28. 1. Product-Based
© Norm Tasevski & Assaf Weisz
A business/business model that provides
products or services with social benefit.

29. 2. Employment-Based
A business that hires marginalized people
in good employment opportunities.
© Norm Tasevski & Assaf Weisz

30. 3. Tethered
© Norm Tasevski & Assaf Weisz
An enterprise started by a charity or non-profit that
generates revenue for the organization.

31. 4. Accessibility-Based
© Norm Tasevski & Assaf Weisz
A business that maintains a purposely low profit margin
to make their products accessible.

32. © Norm Tasevski & Assaf Weisz
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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33. Operational Considerations…
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34. © Norm Tasevski & Assaf Weisz
DAY 1
What do you do first?
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35. © Norm Tasevski & Assaf Weisz
DAY 180
What does your average week look like?
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36. Legal Forms Applicable to Social
Enterprise…
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37. © Norm Tasevski & Assaf Weisz
A Caveat…
There is no defined (national or provincial) legal form
for social enterprise in Canada
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38. © Norm Tasevski & Assaf Weisz
A Second Caveat…
Form follows function
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39. For-Profit
Corporation
Non-Profit
Corporation
Partnership
Charity
Sole
Proprietorship
Co-Operative
Corporation
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40. © Norm Tasevski & Assaf Weisz
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”
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41. © Norm Tasevski & Assaf Weisz
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/foundatio
n/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”
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42. © Norm Tasevski & Assaf Weisz
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
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43. © Norm Tasevski & Assaf Weisz
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) risktaking
• 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”
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44. © Norm Tasevski & Assaf Weisz
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
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45. © Norm Tasevski & Assaf Weisz
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)
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46. © Norm Tasevski & Assaf Weisz
Talk to a Lawyer!
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47. Legal Innovations…
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48. © Norm Tasevski & Assaf Weisz
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
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49. © Norm Tasevski & Assaf Weisz
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
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50. © Norm Tasevski & Assaf Weisz
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.
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51. © Norm Tasevski & Assaf Weisz
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52. © Norm Tasevski & Assaf Weisz
What did we learn?
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