Social Enterprise: A New Way to Enhance Corporate Social Responsibility
Occasionally, we include guest columns with topics of interest to public companies and those that serve them. Here is a guest column by my partner, Terri Krivosha. Terri is the Chair of our Business & Securities Practice Group and leads Maslon’s innovative social enterprise practice.
Many public companies are developing policies of Corporate Social Responsibility (CSR) as a means to encourage a positive impact through a company’s activities on the environment, consumers, employees, communities, stakeholders and other persons. CSR is a means to include the public interest in corporate decision-making. Often companies focus on a double or triple bottom-line approach, meaning “profit, planet and people”.
The burgeoning field of “social enterprise” complements these efforts by public companies. Social enterprises are organizations that combine mission and market-based strategies to achieve a social purpose. They can be organized as non-profits, for-profits or hybrids of the two. The cover story of the May edition of Inc. Magazine, “How a Business Can Change the World,” features several companies that are at the cutting edge of this sector.
Many such companies combining money and mission are organizing as for-profit entities and seek investors with “patient capital” who are willing to invest but also understand the social mission of these projects. In many cases, public companies would have the opportunity to provide funding to these projects, and after the initial phase, many of these projects could become self-sustaining and might even pay a return on the investment of the parties that provide funding. Such investments can represent the best kind of partnership between for-profit enterprises and non-profit motives. This type of relationship can be more organic to the company than simply making donations through a private foundation.
On April 29, I participated in a conference sponsored by Maslon called “Social Enterprise: Structure and Story”. The purpose of the conference was to explain the various structures that can be used in the area of social enterprise and give attendees an opportunity to hear the stories of those who have successfully organized social enterprises. For example, one participant, Jeff Tollefson, the executive director of the Twin Cities branch of Genesys Works, a national non-profit organization that is more than 95% funded by earned income. Genesys coaches at-risk 11th graders to become IT employees. In their senior year of high school they are employed by Genesys, and Genesys contracts with companies to place the youth in paid internships. At the end of their senior year, these students have work experience that has helped them to better understand that they can succeed in the workplace.
This area is evolving, and social enterprises are rightly struggling with the tensions between mission and money, etc. The CSR effort involves similar tensions, and companies should be involved in this ongoing dialogue. Using the Genesys Works model described above as an example, a public company might choose to support Genesys through its foundation, but then could use Genesys as a source for expanding its talent pool by hiring interns to assist in its IT department.
Public companies can get involved in the developing area of social enterprise in several ways. Two organizations with chapters in the Twin Cities, Social Venture Partners and the Social Enterprise Alliance, offer assistance in connecting companies to social enterprises with missions that align with their corporate goals. These organizations sponsor events, such as the Engaged Philanthropy Conference to be held in Minneapolis on June 16, 2011. Investigating what these organizations have to offer is a perfect place to start to better understand this new field.
- Terri Krivosha
