If you compare a profitable, traditional business and a successful social enterprise, you’d probably find more similarities than differences.
Both would make and sell goods that people want to consume, with revenue flowing in return. They would have likely been led by an individual or group with the undying tenacity to uphold the operation’s core beliefs in the best and worst of times.
However, the primary difference between the two lies in what drives their existence.
“A social enterprise is a business that operates in the interest of the better good,” says Mike Shafarenko, Civic Commons ideastream
director. “It exists not just to make money, it exists to make a difference in the community, to improve the community in some way, and happens to do it as a business.”
Civic Commons ideastream is one of four lead partners of SEA Change
, a two-year-old initiative that mentors and accelerates social enterprises. The other partners are LaunchHouse
, Hispanic Business Center
and the Economic & Community Development Institute
Aside from its standing as the premier authority on social enterprises in the region, SEA Change also puts its money where the scalable social innovations are. Last April, the group completed its first full cycle by granting a combined $50,000-plus
to eight social enterprises who pitched their way past 67 other concepts.
Another group of social entrepreneurs seeking acceleration will make their final pitches in May for a piece of $60,000 in SEA Change grant money.
“[A social enterprise] could take on all sorts of forms, but so long as they have a mission to improve the community, I would consider it a social enterprise,” Shafarenko explains. Most people involved agree that the social entrepreneurs who stick to and remain driven by their missions are the ones who succeed.
“It’s really easy to get distracted and run after money and opportunities that are not central to what your objective is,” Shafarenko says. “The most successful social entrepreneurs and social enterprises are the ones that maintain their missions and stay focused and are absolutely unwavering in what their ultimate objective is.”
Like typical businesses, these companies are also about seeing results – just a different kind. For example, at Edwins Leadership and Restaurant Institute
, an upscale restaurant on Shaker Square that gives ex-convicts on-the-job training, 100 percent of the institute’s first graduating class earned jobs within the first 30 days following graduation
, with 85 percent still working in those jobs six months later.
A cornucopia of job skills
Social enterprise wasn’t a term people uttered in Lakewood or anywhere else in 1975 when Brian and Anne Daw created what is now known as Nature’s Bin
. The Daws created the grocery store because they wanted Anne’s developmentally disabled sister to receive the types of job skills and community engagement that were scarce for that segment of the population.
Erik Wells, Alison Cseh and Michael Gladyszewski - trainees in the Vocational Training Center program at Cornucopia
“They brought to this the idea that we would work together, that we would do with
and not for
,” says Mary Johnson, assistant executive director at Cornucopia, the nonprofit organization that operates Nature’s Bin. “Helping people understand how to go to work, what that means and interacting with the community – they knew if she [Anne] felt this way, then others must feel this way. So, it really provided an opportunity that was very, very outside of the thinking of the day – for people with disabilities to be in a job and contributing to a business.”
Today, Nature’s Bin is the key element of Cornucopia’s mission of providing the disabled with the confidence to succeed in a work environment. Cornucopia has expanded multiple times since its inception, adding vocational programs for clients with disabilities through various organizations. In 2012, Cornucopia purchased a McDonald’s adjacent to Nature’s Bin and converted it into the home of its vocational services.
Social enterprise is much more than just another item on a list showing the ways Cornucopia makes an impact. While Cornucopia receives revenue from donations, grants, vocational services and referrals, a whopping 64 percent of the organization’s revenue comes from Nature’s Bin sales.
In fiscal year 2014, the store generated just under $6.2 million in sales.
“We really do generate the majority of our own support, which is a little unusual for a nonprofit,” executive director Nancy Peppler says. “That’s what makes us unique."
The wrap-around effect
One of the more prominent things you see upon entering Lutheran Metropolitan Ministry
’s (LMM) still-glistening, two-and-a-half-year-old headquarters
at Superior Avenue and E. 45th Street is a tree.
Sure, it’s a fake tree, but it’s very real purpose is to show how the multiservice nonprofit is structured with equally important and connected programs.
Branches include Community Re-Entry with leaves like the Care Team, comprised of previously incarcerated people who now escort elderly public housing residents on their errands. You’ll also find the Housing and Shelter branch, under which LMM runs 2100 Lakeside, the largest men’s shelter in Ohio.
Social Enterprise represents the newest branch of the tree. LMM began growing it five years ago upon realizing that it could do even more to help clients find work.
“We got tired of always looking for an employer to give people a chance, so we said, ‘hey, we’re going to become the employer,’” says Bryan Mauk, the organization’s social enterprise director.
That chance comes in two forms – LMM’s Central Kitchen and Metro Metal Works. Workers in the Central Kitchen pump out nearly 2,000 meals per day for six shelters. Meanwhile, a warehouse across the street houses Metro Metal Works, where staff members teach people how to weld and bend pipe to construct bike racks. The racks can be found at Cleveland Clinic, a McDonald’s in Garfield Heights and at some parks in Cleveland and Cleveland Heights.
Central Kitchen is faring better than Metal Works, as it is “just about at break even,” Mauk says, but both businesses’ impact extends far beyond the money they produce. Each enterprise includes a six-month training program that provides instruction on interviewing, resume writing hard skills.
Culinary Training Program class at Lutheran Metropolitan Ministries
As a state-licensed trade school with a curriculum approved by the American Culinary Federation, the Central Kitchen program might have about 30 people enrolled at any time. Before producing any food, the trainees spend three months in a classroom learning about everything from the history of French cuisine to basic butchery and seafood preparation.
At the end of the program, all 20 hours of weekly work time are spent in the kitchen working with the equipment. The student-employees can receive a ServSafe
certification, which is a big boost in attaining employment in any kitchen.
New classes begin each month, while current students also graduate each month. Though that flow creates constant turnover, it’s much better for production than the mass exodus that typical end-of-semester graduations produce.
In discussing graduations, Mauk explains that like other social enterprises, LMM needed to “find a balance between going completely off the deep end for program participants and being financially viable.” That’s often the most difficult part of operating a social enterprise.
“We’ve got constant turnover of our trainees, which is a terrible way to run a business, it’s awful,” Mauk jokes. “By definition, as soon as one of our trainees becomes a productive employee, staff member or volunteer, we’re sending them off to somebody else to benefit from the training, and we bring in somebody with no skills or training background.”
Nobody at LMM truly believes the structure to be awful. That’s because it’s perfectly in line with the organization’s social mission. In essence, the Central Kitchen serves as a central location for LMM’s food distribution network of area homeless shelters. Its operation helps feed the hungry while providing work training and education for populations with employment barriers.
The kitchen is also a redistribution organization under the Greater Cleveland Food Bank, so the kitchen gets about two-thirds of its food donated from the Food Bank, grocery stores and individuals, which helps keep costs down.
“The really neat thing about our social enterprises, is we really add another dimension to the programming,” Mauk says. “It’s allowed us to integrate well with some of our existing programs, like Community Re-Entry with job training and employment skills, which is a huge need in that population.
“Same thing with our Housing and Shelter,” Mauk continues. “Employment and hard-skill training and feeding them are all things we can integrate into existing service and radically change the program participants’ experience. Instead of just being a shelter or case management experience, we can now tie all three of those together. It’s a whole wrap around effect.”
Help them see what they can accomplish
The women behind Black Butterflies
have sold their products at popups and boutiques like the Cleveland Flea
and Collective Upcycle
, but they make it apparent that such commerce is secondary to their mission.
As part of the Cleveland Urban Minority Alcoholism Drug Abuse Outreach Project
(UMADAOP), Black Butterflies teaches women how to create and sell garments as they are recovering from trauma associated with substance addiction, homelessness and various mental health stressors.
Housed near E. 79th Street and Superior Avenue, the skills offered by Black Butterflies can serve as a transition for women aspiring to get back into the workforce or launch their own business ventures down the line.
For project manager and instructor Jacqueline Xavier, that mission shares similarities with the reason she spent four decades as a teacher in the Cleveland before recently retiring.
“As a teacher, my passion was always to find ways to motivate kids, help them determine what they’d do after they graduate school,” Xavier says. “When I see women who have been out of the workforce or who have done things that have taken them away from whatever path they planned, my passion is to help them see what they can accomplish.”
The women who have received instruction from Xavier and Black Butterflies are introduced to the business through Mary’s House, UMADAOP’s support center for women in active addiction or early recovery. Xavier says the idea initially arose from UMADAOP executive director Jessica Horne’s desire to find a workable way to leave women with useful skills as their journey continued.
Barely two years old, the group began with six women, but has since dropped to four. Some of them arrived with no idea how to even use a sewing machine, Xavier says, but guidance and perseverance eventually led to belts, blankets, towels, aprons and pillows being sold around Cleveland. Many of the materials used to create the products were donated through the St. Clair Superior Development Corporation
“The project is beautiful and very motivating,” working partner Monica Malik says in a Black Butterflies video
as she holds up a dress she sewed. “I’ve always loved the fashion world, so this is an honor and a privilege for me and for them to take the time to teach us how to sew, and for us to be a part of it is beautiful. I know it’s going to be very big, and I’m grateful to be a part of it.”
While Black Butterflies has completed some contract orders for Upcycle referrals and generated some funds through pop-up shop appearances, it’s far from a booming venture. That’s why they’re actively looking for investors who are on board with its social mission. At that point, the operation can expand and also incorporate more machinery to produce more products. They’re also working on formalizing business plan training for the women through UMADAOP programming.
As the team works to turn those goals into realities, Xavier will continue her decades-long task of bettering lives.
“Once they’re trained, they can choose to continue as part of Butterflies or do something on their own because now they have the skills to be self-employed,” she says. “I’m just continuing what my passion has been for years, and helping people find success using a skill to better themselves.”
Characteristics, conduits and failed attempts
As a social entrepreneur, Ph.D candidate and nonprofit research fellow at the Business of Good Foundation
, Jimeka Holloway is, at the very least, a social entrepreneurship expert. The exploration of her own curiosity is part of what led to these and many more accomplishments.
“I wanted to find out in areas we consider to be disadvantaged, what caused the entrepreneurial spark,” Holloway says. “There’s low income, a variety of socioeconomic issues, but how does an enterprise still thrive and impact socially?”
Holloway interviewed 33 social entrepreneurs around the country and discovered that many credited various intermediaries and brokers with helping their ideas make a social impact. Like the entrepreneurs themselves, these brokers also had a few common characteristics, Holloway found.
“That person is usually not taking credit for what’s happening, and they see the enterprise as an asset, so that’s what makes it unique,” she explains. “These are individuals who are somewhat invisible sometimes because their ego is low and their empathy is high, but they’re doing what they have to do to make things happen.”
As part of her research, Holloway has developed three Cs for social entrepreneurs to succeed: Constituent voice, Co-creation and Cooperative advantage.
“Those are three strange words, but really what it means is that if you don’t include the ongoing feedback of the people you want to impact – get close to them, develop relationships with them, value their knowledge that they have from their own lived experiences – then your enterprise isn’t going to be as good,” Holloway explains. “It’s not just about listening in a focus group here, a survey there, but bringing them to the table in helping to develop the product itself and looking for opportunities where they can be included.”
Even if a prospective social entrepreneur connects with the best conduit in town and is as open about collaboration as possible, he or she better be prepared to fail, Mauk says.
“I learned far more from the 10 failed ideas I had than the two successful ones,” Mauk says.
That goes for Mauk’s ideas before and during his time with LMM. Before settling on Central Kitchen and Metro Metal Works, LMM tried a few other concepts that didn’t work out, he says.
Thoughts on the future
Social enterprise stakeholders will make it clear that some showing of impact needs to be present to consider a social enterprise successful.
“I think the ultimate goal with all of this is to support, coach and invest in the enterprises that have the greatest chance of making an impact on our community,” Shafarenko says. “At the end of the day, when we look at the sum of all the things we supported, helped and accelerated, we’re hoping to see that there’s been a significant change in the community as a result of our support and investment in these enterprises.”
The increasing popularity of social enterprises may force many nonprofits to see if they can find the experts to assist them in entering markets that could earn them more revenue. Their existence may depend on it.
“Foundations typically don’t want to support an organization forever,” says Shafarenko. “They don’t want to keep making grants over and over to the same organization all the time, they’re increasingly looking for ways for all these organizations to have a means of generating revenue. I think social enterprises, by default, are going to become more and popular for that reason.”