Social-profit enterprises: stop debating and get them going

 

Paul Penley

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Paul Penley

Paul Penley

The wall between non-profit and for-profit organizations is crumbling in the US legal structure with the recent creations of B-Corps, L3Cs, and now FlexC’s. In actual practice, the social sector moved beyond the value of such distinctions long ago. I think it’s time to move forward into the ‘era of social-profit enterprises’ whose mission outweighs the funding model. It’s time to put more energy into finding ways to help organizations succeed who hold society’s best interests in mind. And that is exactly what Praxis is doing.  

In the same vein as Echoing Green and the Unreasonable Institute, Praxis launched its first year-long accelerator programme in 2011 to mentor young social entrepreneurs and accelerate their success. The 2011-2012 class of Praxis Fellows includes 12 innovative organizations. Through a sequence of three events and 25+ mentors, Praxis aims to scale up and improve initiatives with a current budget under $1 million. Praxis believes the right network and knowledge can accelerate each organization’s mission to advance the common good.

Why do I mention one tiny initiative in a world of overwhelming need? Because I’m tired of debating what a social enterprise is, rather than participating in and improving what is being done.

Profit structures don’t matter any more

There are a number of voices in the debate about what it takes to transform societies through real and sustainable solutions. Matthew Bishop and Michael Green argue in Philanthrocapitalism that philanthropy needs to function more like business. Michael Edwards fires back in Small Change: Why Business Won’t Save the World, arguing that businesses must function more like grassroots civil society movements rather than invading the non-profit sector with market-based approaches. The debate is complex. Both sides have valid observations about the value of competitive market-based approaches in some situations and cooperative civil solidarity movements in others. There is no one-size-fits-all solution to social problems. For societies to improve in diverse sets of circumstances around the world, social entrepreneurs have to structure their organizations in whatever way best achieves their social mission.

The Praxis Accelerator Program recognizes the supreme value of the social mission over a particular profit structure. The social entrepreneurs that Praxis selected for its 2011-2012 programme represent a mix of organizations, some structured to scale from profits and others from increased donations. They have virtually eliminated the moral and social distinction between non-profit and for-profit organizations. The 25+ mentors reflect the same mix. Successful business leaders are mentoring non-profit founders, and experienced non-profit CEOs are coaching business start-ups. It is facilitating the exchange of best practices that social entrepreneurs in both sectors often miss.

How can we get social enterprises going?

Every enterprise needs seed capital of some sort, but that is only one piece of the puzzle. The Praxis Accelerator programme promises four core deliverables:

  • mentorship & customized expertise
  • action-oriented education & planning
  • peer networking
  • access to capital sources

Praxis wants every Fellow to leave the programme with a better plan, a set of peers and mentors, and better access to capital sources. If your model or investor pitch or organizational structure is holding you back, Praxis wants you connected to the right person to show you the next best steps. 

From what I hear, it isn’t one big party for the cause. As one Praxis Fellow noted in a recent phone interview: ‘As a Fellow, you get a critical review of your organization from mentors who want you to succeed. It’s not just a pat on the back.’ That fellow may be changing his organization’s funding model as a result. He noted with others that the opportunity at each event for one-on-one mentoring each morning gave him great input for the way forward.

Is that the secret recipe for improving and scaling social enterprises? We can’t answer that question yet. We do know Praxis is emulating programmes that have built an ecosystem of successful social entrepreneurs (eg Echoing Green Fellowship and the Rainer Arnhold Fellows). Amazingly, the programme costs non-profit leaders $6,000 and business leaders $10,000, but Praxis still attracted an ample supply of applicants from which to select the 12 Fellows for the very first year of operation. It suggests a high perceived value that will hopefully be realized in the years to come.

If you know anyone who fits the bill to become a Praxis Fellow, they will be looking for recommendations and applications for the next class of Fellows in a few months. If you have an interest in learning more about what the Fellows are doing for the purposes of funding or investing, I’m sure they would love to hear from you. No matter what you do, I hope this quick look at a new social enterprise accelerator gives you a concrete avenue to stop debating and get involved in their success. Let’s stop caring so much about where the money comes from to scale and start focusing on the social missions that supersede profit structures.

Paul Penley is director of research at the philanthropic advisory firm Excellence in Giving and creator of IntelligentPhilanthropy.com

Tagged in: Business Charity law Peer learning Praxis Social entrepreneurship


Comments (5)


Paul Penley

I should also mention that Praxis has $100,000 of prize money that will be awarded in 3 grants to the top 3 nonprofit social enterprises at the end of the program this year. The for-profit social enterprises get the opportunity to be introduced to investors in the social impact investing space after they have improved their deck. It does take financial investment to accelerate the most promising social enterprises!


Cliff Southcombe

One of the models promoted by Social Enterprise Europe is the Surplus sharing model developed by Dr Rory Ridley Duff from Sheffield Hallam University http://www.prlog.org/10449870-new-social-enterprise-model-rules-adopt-surplus-sharing-philosophy.html


Cliff Southcombe

Social Enterprise Europe Ltd have always seen the not - for profit as a red herring and a barrier to growth of social enterprise. Please see our definition of social enterprise http://www.socialenterpriseeurope.co.uk/pages/what-is-social-enterprise.php


Robert Ashton

Bravo! Yes, we need to dismantle the wall between for profit and non-profit. It's now an unhelpful barrer, reinforced by outdated governance structures and clung to by people who fear change.


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