What Comes First – The Social, or The Enterprise?

I know what you are thinking. They come together. That’s what social enterprise is all about. A business model that ties in social outcomes with the business operations in perfect harmony. The two are inextricably linked; otherwise it would be a charity that trades, or a business that does corporate social responsibility.

I would like to argue that there is another way. The journey to social enterprise can be a process, and we should encourage and celebrate that. When does a charity with a trading arm become a social enterprise? And how much social value does a business have to add before it can be called a social enterprise?

We have some answers for some of these questions. Some people say that a business is a social enterprise when at least 50% of the profits go towards social improvement.

Having coached and supported more than 250 social enterprises for more than half a decade, and through running my own business, I can tell you that in the early months and years, every pound of cash flow is vital. Without adequate cash flow for maintenance of operations and growth, any business, or charity will cease to exist.

I’ve seen many startup social enterprises struggle with this when getting started. It can be extremely hard to give away that much in the early days when you need it for sustenance of your own life and enterprise. The UK has a great social investment sector, but what about those entrepreneurs that don’t want outside investors?

I think there is another path that isn’t talked about enough. That is the path of gradually incorporating social values and benefits in your entire business as you grow.

It is within this category that some of the largest contributors of social value sit. Small social enterprises are great. But if we want growth in the sector, we need large social enterprises.

I don’t mind if you started off as an enterprise, and added the social later, and I don’t think anyone else should either. I believe that if enough socially minded people build businesses, they will eventually put the “social” in their enterprises when they can.

I don’t think we should expect people to build perfect social enterprises from day one. It’s just too hard most of the time. I’ve seen it. People sacrifice salary for social benefit. That’s not sustainable. Build a business that works, and add the social values as you grow. Trying to get everything perfect from day one will kill you.

It’s just too hard for most new bootstrapped businesses to have a completely social supply chain, carbon neutral offices, organic, fair trade and locally sourced everything.

So go out there. Be a business for a bit. Get some money coming in. Know your purpose and your goals, and don’t worry if you are not perfect yet. You can be perfect later. For now, just get started, and keep going. We need your ideas in the world.

See the world. Meet the people.

I’d like to thank Thom Reinhard, who heard about Inspiring Adventures, and pointed this quote in my direction.  It’s from Adam Smith’s Wealth of Nations.

Smith describes that we can intellectually understand the opportunities and crises happening around the world, but it’s by making it real and in front of us that we really start to know what it means to us.

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Over to Smith:

Let us suppose that the great empire of China, with all its myriads of inhabitants, was suddenly swallowed up by an earthquake, and let us consider how a man of humanity in Europe, who had no sort of connection with that part of the world, would be affected upon receiving intelligence of this dreadful calamity.

He would, I imagine, first of all, express very strongly his sorrow for the misfortune of that unhappy people, he would make many melancholy reflections upon the precariousness of human life, and the vanity of all the labours of man, which could thus be annihilated in a moment.

He would too, perhaps, if he was a man of speculation, enter into many reasonings concerning the effects which this disaster might produce upon the commerce of Europe, and the trade and business of the world in general.

And when all this fine philosophy was over, when all these humane sentiments had been once fairly expressed, he would pursue his business or his pleasure, take his repose or his diversion, with the same ease and tranquillity, as if no such accident had happened.

The most frivolous disaster which could befall himself would occasion a more real disturbance. If he was to lose his little finger to-morrow, he would not sleep to-night; but, provided he never saw them, he will snore with the most profound security over the ruin of a hundred millions of his brethren, and the destruction of that immense multitude seems plainly an object less interesting to him, than this paltry misfortune of his own.

See the world.  Meet the people.   

Social Entrepreneur Profile – Leonardo Letelier and sitawi, Rio De Janeiro

Leonardo Letelier is the founder and CEO of sitawi, the first social enterprise fund in Brazil. He was previously Ashoka’s full economic initiative director in Brazil and a senior engagement manager at McKinsey & Company

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I met Leonardo Letelier when I was working at Oxford Jam – the “unconference” for social entrepreneurship.  Leonardo was attending the Skoll World Forum (SWF) on Social Entrepreneurship happening next door at the Oxford Business School, but like many of the SWF delegates, came to Oxford Jam for the interactive, fun, and lively talks that were taking place long into the evening.  I recently wrote this blog post about the value of the connections that come from attending events like this.

My conversation with Leonardo was engaging, entertaining and also very useful – It was obvious he knew what he was talking about when it came to social enterprise and finance. He told me about sitawi, the social finance not for profit organisation he had set up in Brazil.

He started it with a mission to develop financial infrastructure for the social sector. In pioneering the concept of social finance in Brazil, sitawi created the country’s first Social Fund – multiplying the impact on some of the most vulnerable people, communities, and ecosystems. It wasn’t as easy as that makes it sound, and the story of the first year, and the first few loans really show Leonardo’s entrepreneurial flair.

Since 2009, sitawi has lent over US$1 million to 10 organisations and sitawi won IADB’s beyondBanking award for socially responsible investments in 2011 and was featured in Stanford’s Social Innovation Review magazine. ssireview.org/articles/entry/journey_into_brazils_social_sector

I encourage you to read that article, as it was written by Leonardo and gives an insight into his personal journey through the University of Sao Paulo, an MBA from Harvard Business School, consulting at Mckinsey, director at Ashoka to founding sitawi.

Join the first Inspiring Adventure to Brazil in October 2012!

I’m gathering people who are interested in joining inspiring adventures.  I will organise these adventures for us, and we will all be part of creating the adventure, and the inspiration.  

 

The first inspiring adventure is planned for Brazil in October 2012.  If you’d like to join this trip, be involved in it’s creation, or find out more information, sign up to the newsletter list now.  All the detailed information, booking instructions and latest information will run through that.  

 

The plan, which is subject to change based on subscriber suggestions, is:

 

Two nights in the amazingly positive and energetic Rio De Janeiro visiting the sights, the beaches and inspiring social enterprises like Fight for Peace

 

Two nights in the vibrant Sao Paulo, visiting places like the Hub Sao Paulo, a community of social entrepreneurs, and perhaps meeting the curator of the Sao Paulo Museum of Modern Art 

 

Two nights visiting the incredible Iguassu Falls on the border with Argentina, and visiting one of the biggest bird parks in Brazil, run with social and ethical values. 

 

And for those of you truly interested taking a crash course in social enterprise, tickets are now available for the Social Enterprise World Forum taking place on the 16-18th of October 2012 in Rio.

 

This, along with each others company, conversation and stimulation, will provide the perfect situation for inspiration and adventure.  

 

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