Social Enterprise (SE) is the new buzzword and it is certainly something to buzz about. Although it has been around for decades, SE has recently begun to surge in popularity. For entrepreneurs, there is a lot to be said for taking a look at this business option.

Traditionally, the business of “doing good” has followed two dominant models; the non-profit model and the corporate social responsibility model (or CSR). In the non-profit model an organization is founded with the express purpose of addressing a social problem. By law, a non-profit is run by a volunteer board of directors and there are restrictions on the activities and services that a non-profit can undertake. In the CSR model, a for-profit company dedicates a portion of their resources to social causes and is relatively unrestricted. Companies have the advantage of more sustainable revenue streams; however, they are often faulted for their short-term approach to social responsibility.
In response to the shortcomings, a third option has emerged; the social enterprise model. The idea behind this model is to use commercial strategies to generate profit for social causes. This model blends both non-profit/charity and CSR approaches and there are several different examples of successful businesses that can serve as guides.

Quebec is home to a variety of successful social enterprises. Innovative businesses such as Robin Des Bois (a restaurant in Plateau Montreal where fine cuisine is served by volunteer waiters, and all the profits go to local charities) show how social enterprises can work to support local non-profit and charitable organizations. Other models, such as Streetsuds (a laundry service providing work experience to the formerly homeless, run by the St. James Drop-in Center) flip that model. Here, the enterprise is housed within the existing charity. Project founder Kelsey White notes that this allowed Streetsuds to sidestep some of the funding risks that can plague new start-ups as they were able to access funding from both government and private foundations.

“Finding funding is an issue”, notes Benjamin Prunty, one of the co-founders of the co-operative “HIVE Café”. Many lenders and venture capitalists are not familiar with social enterprise models “so opportunities for funding may be less available”. It is important to look carefully at the funding options for different models before you register your enterprise. For instance, if your initiative starts, as Streetsuds did, within a non-profit you may have access to grants and other programs for which a corporation wouldn’t be eligible but there are restrictions on how much revenue you can generate from goods and services. Going the more corporate route gives you different options, from classic business loans to co-operative membership sales, and opportunities for growth, but cultivating donations and grants can be more difficult.

An increasing number of funders are recognizing the value and potential of social enterprises. As with any start-up, a good business plan and careful planning are essential prerequisites for success. YES, a non-profit organization that provides entrepreneurship support programs for Quebecers, has recently launched a series of workshops to provide social entrepreneurs with guidance on how to succeed in this growing field. April will be Social Entrepreneurship Month at YES, so check them out online to learn more about the activities that will be available to you.

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