Mike Rowlands gives two very different examples of social enterprise, and in doing so raises the question: are charities and social enterprises really that different?
Social enterpise, as a model and a movement, has the potential to catalyse progress on a number of fronts: It is finding new ways to feed disadvantaged populations; winning awards for looking beyond corporate norms, and uniting community needs with business success. Wherever you look around the world, there’s a new generation of socially responsible leaders aiming to unite the issues that challenge their minds and move their hearts.
From Africa to South America; inner cities to ancient farmlands, it’s less about the methods than the motivations. Indeed, we find unique models of social enterprise, united only by their commitment to a purpose beyond profit – a mission that drives engagement and motivates the passion all stakeholders.
Working across three continents we often feel like we’ve seen it all, only to be disproven when we connect with our next client. The further we go and the further we look, the more we’re introduced to new models, new ideas and new entrepreneurs. They’re missions and goals are distinct, but their motivations stitch them together. Often the greatest lessons are drawn by comparing and contrasting them. Certainly, this is true of two of our current clients.
On the eastern edge of Vancouver’s downtown core, sits the poorest postal code in Canada. It is notorious for gang activity and drug dealers, and the last destination of the region’s downtrodden and disadvantaged. The downtown eastside is the last place you would expect to find a thriving enterprise, but it’s the first place Irwin Oostindie considered when he planned the W2 Media Café. W2 is a community centre with a difference, where programming is designed by the community, for the community.
By contrast, the high-tech perspective and work of Everyclick, in London works directly with the UK’s favourite charities, and the individuals who support them. Where W2 faces the mean streets, Everyclick’s Give as You Live application focuses on the information superhighway, where billions of pounds in commerce can create millions in commissions and incentives. The business is premise is to redirect some of that commission to the consumer’s favourite charity.
Both cases are remarkable studies in success. W2 is creating a ‘welcome mat’ for the community – a place where the disadvantaged can connect with programs, ideas, and new friends in a supportive environment that fosters the simple belief that everyone has a right to learn, live and lead. Give as You Live is creating opportunities for every individual who shops online to build a strong, giving relationship with their favourite charity. Once their account is set up, a user need only shop as usual, and a portion of their online purchases will be donated automatically to the charity of their choice. Both great ideas but it is in the contrasts that we see the diversity and capacity of social enterprise.
Command and control
Centralised authority and clear chains of command are the tenets of traditional management, learned from a military tradition, and espoused by business texts for decades. And such is the structure of Everyclick, and the Give as You Live team. Certainly, there’s space for learning to percolate back up from the front line, especially customers, to the leadership team but essentially Everyclick’s CEO calls the shots. Hers is the vision and the decisions rest with her. As a result, the firm moves quickly, responding at Internet speed to market feedback, data-driven insights and the judgment call of a centralised group of experienced advisors.
W2 Media Café couldn’t work that way. Its authority rests in the willingness of the community around it to work together in the best interest of the common good. To take charge would be to betray the community’s interest (at least that’s how it would be seen), so decisions are made on the consensus of a significant group of community stakeholders. The board of directors is comprised of leaders from eight widely respected non-profit and advocacy groups. Together with community members who are interested in particular learning or programming, they decide W2’s direction and plans.
The two leadership models couldn’t be more different, yet each of them work and neither is better than the other. Deciding which style to pursue is less about the definition of social enterprise and more about how you can achieve your organisation’s vision.
To profit, or not to profit?
On the face of it social enterprise appears to be charity by another name. While the lay public may still be learning the meaning of the sector, questions continually arise as to the ‘right’ governance model for social enterprises. The decision between using a for-profit or non-profit model is often foremost in the minds of new entrepreneurs.
W2 Media Café, located in an historically working class community, is structured as a non-profit (though the actual café at the front of the community centre is for-profit and channels excess revenues into community-driven programmes). As a non-profit overall though, W2 can seek grants from a number of branches of government and donations from various corporations, whose social responsibility plans include engagement in the downtown eastside. They’re open to these collaborations because their leadership style is open and perhaps most importantly, their non-profit status gives them credibility that they wouldn’t enjoy as a for-profit.
Everyclick and Give as You Live, on the other hand, is unabashedly a for-profit company. The complexity of their business model isn’t tailored to grant-makers or high-net-worth individuals so neither would be effective funding models. But the sales model that drives charitable donations also lends itself to equally marginal contributions to the top line: If one per cent of the purchase price goes to your favourite charity, perhaps five per cent goes to Everyclick, to pay for staff, to fuel product development, and to expand the business’s reach to new audiences. This is how Everyclick accelerates its impact.
There are those who might say that to profit off charity is intolerable – even unethical. There are two ways of looking at this. The more complex response focuses on the philosophy of money, and whether it’s inherently bad or not, and whether the entrepreneur ought to be trusted to shepherd funds responsibly. There will always be an important conversation to be had along this thread. The simple answer is that Everyclick in particular doesn’t profit from charities. They simply take a portion of the commissions that fly across the internet every day. In so doing, they also deliver a portion of that commission to your favourite charity: everybody wins.
Expansive reach, or a relentless focus?
Everyclick reaches across the UK, engaging retailers, wholesalers and countless charities, so no matter what you want to buy, you’ll find it and see a portion of the purchase price sent to charity. Their expansive reach is fundamental to the effectiveness of their business model.
Not so for W2. They’re focused on serving the best interests of the small downtown eastside community. Theirs is a clear, concise demographic: a working class citizen, who probably lives alone, but may have a small family and is eager to learn new skills, connect with like-minded people and take advantage of the power of a connected community. W2’s programmes are most successful because they’re utterly focused on the needs of the local community as communicated by community members themselves.
Myriad models but a one movement
The differences between Everyclick and W2 are significant, as are the offerings of their organisations and the customers they serve. Nonetheless, both are thriving and positive social enterprises. Both are delivering unquestionable value to their most important stakeholders – the beneficiaries of their associated charities.
Implicit here is the great paradox of the social enterprise movement: The finest social enterprises are both remarkably effective in mission and wildly successful at the bottom line. As countless mission-minded individuals with not-for-profit mindsets move into social enterprise, they’d do well to shift their perspective on profit-making. Profits aren’t inherently bad; how the social entrepreneur chooses to reinvest profits is the mark of a successful individual and enterprise.
Mike Rowlands is a principle at Junxion Strategy
This article first appeared in The Fundraiser magazine, Issue 11, November 2011