Speech to the International Social Entrepreneurship Symposium

Taipei, Taiwan, September 20, 2012 By Timothy Maxwell

Manager of Business Relations The Learning Enrichment Foundation

SOCIAL ENTERPRISE: Business By And For The Community

INTRODUCTION Thank you for giving me the honour and privilege of joining you today in Taipei. I bring you greetings from social enterprises in Toronto. We are here today to explore different ways to develop and support social enterprises – in particular, social enterprises that provide training and employment for people with disabilities. In my presentation, I will focus on three areas: • A spectrum of social enterprise models and mandates • Working with people with disabilities • And finally, the money: funding, financing and fiscal politics Along the way, I will introduce specific examples of different social enterprises operating in Toronto with which I have had personal involvement. But before we get into the spectrum of social enterprises, let’s take a look at the spectrum of people who are gathered here today. Having been involved in marketing and communications for so long, I like to start by getting to know my audience. So, here is an opportunity for a little "audience participation":

Could you please raise your hand if you are a manager or an employee of a social enterprise? Thank you. These are the people who carry the message of a social mission to the edges of "the community" where it meets "the free market". It is a place where social missions are challenged and tested, not according to the needs of the community, but by the imperatives of the market. They have a difficult job to do – and we have much to learn from these people about the daily operations and the particular needs of social enterprises. And because they operate on the edges of the free market, there are things they can learn from those who are more deeply involved in the market. Could you please raise your hand if you are an owner, a manager, or a representative of a private sector business? Thank you. These are the people who have survived and succeeded in a very tough environment. They make things happen and make money doing it. They know how to successfully sell products and services – and deal very effectively with their competitors. These people can be strategic allies, mentors, champions, and customers of social enterprise – but not just because of their business acumen. They are here today because they care about something more than just profits – and that is really what makes them important people from whom we can learn. Because not everybody in business really cares about the community.

And not everybody in the community cares about other people. There are enough selfish people in the community and in the market who create a lot of collateral damage to society with their aggressive methods and their limited social perspectives. And that is where the need for regulation and governance becomes necessary and welcome. Could you please raise your hand if you are an elected representative of the people at a city, county or the National level … or if you are a manager or employee of a government body? Thank you These people have the difficult task of coping with pressures from both the market and the community. However, while their task may be difficult, they do possess the legitimacy, the authority and the responsibility to do what is best for the people. As they are able to set and collect taxes and fines, and redistribute wealth through social and administrative programs, they have the resources to do what is needed. So these are also people from whom we can learn. And then we come to academics and researchers who offer us the opportunity to develop plans and policies based on facts rather that myths or political agendas. Could you please raise your hand if you are a scholar, a researcher, or a writer? Thank you. These are the people who can help us tell our stories, help us compile the data and create an analysis that will, in turn, allow us to make compelling arguments for appropriate and necessary public policy changes. We have much to learn from them as well.

In fact we all have much to learn from each other. But the reason for this gathering today is not really about academia, government, the market or even non-profit organizations. We are here today because we want to help disabled people become integrated into society through meaningful work – and so we need to turn to them for guidance. How can we help them in a way that promotes dignity and respect, unless we seek their advice and consent? So, if you are comfortable with the idea and you want to identify yourself as a person with a disability, please raise your hand. Thank you. These are the people who can teach us everything about their needs and aspirations. In North America, there is a slogan that came out of the social movement for the rights of people with disabilities. It is this: "Nothing About Us Without Us". It is reasonable and necessary to include them as equal partners in a conversation in which they are the primary subject. Twenty-five years ago, a group of disabled people in Toronto formed a social enterprise called A-Way Express Courier Service. They were psychiatric survivors who were being pushed out of institutions so they could “integrate into the community” rather than live in mental institutions supported by public funds. Many survivors ended up living in terrible rooming houses or living on the streets. The City of Toronto, along with some non-profit housing providers, brought together some of these disabled people and asked them what they wanted, what they needed. They said they wanted meaningful jobs and reasonable wages. They did not want sheltered workshops.

25 years ago, a group of disabled people in Toronto formed a social enterprise called A-Way Express Courier Service.

Today, they have about 70 staff, including almost 40 couriers that serve a customer list of more than 1,800 individuals and organizations.

www.awaycourier.ca

After exploring many different options, A-Way Express was born: a same-day courier service that delivers documents and small packages by public transit. While A-Way is supported by non-profit organizations, private sector businesses and government, it is an independent business run on a daily basis by disabled people. They have about 70 staff, including almost 40 couriers that serve a customer list of more than 1,800 organizations, individuals, private sector businesses and government departments. There are no nurses, doctors, psychologists, social workers or psychiatrists among the staff or management of A-Way Express. Those professionals are simply some of their customers. A-Way is not the only survivor-run business. When I was A-Way's Marketing Manager, I also coordinated a local network of consumer/survivor initiatives, which included other businesses run by survivors: Parkdale Green Thumb Enterprises (a landscaping business), FreshStart Cleaning and Maintenance, Out of This World Café and Catering, and The Raging Spoon Café and Catering. All of these businesses have operated successfully for more than 10 years.

www.spentoronto.ca

I also served as A-Way’s representative to the Social Purpose Enterprise Network (SPEN) of Toronto. SPEN is made up of many different kinds of businesses. In addition to the consumer/survivor enterprises, there are businesses that serve other disabled or disadvantaged people, such as youth, immigrant women, and aboriginal people. As SPEN is not incorporated, The Learning Enrichment Foundation (LEF), where I now work, serves as administrative trustee, as well as a leading member.

The Learning Enrichment Foundation is a charitable non-profit organization. We employ almost 350 people at a number of different locations in the poorest neighbourhoods in Toronto. LEF runs 15 childcare centres and 17 before- and after-school programs. We provide language instruction and settlement services for newcomers, career training and employment services, and we also provide many youth programs. In addition to being a provider of traditional community services for over 30 years, LEF is also a national leader in Community Economic Development, or CED.

www.lefca.org

The Canadian CED Network, of which LEF is a member, defines community economic development as: “…action by people locally to create economic opportunities and better social conditions, particularly for those who are most disadvantaged. CED is an approach that recognizes that economic, environmental and social challenges are interdependent, complex and ever-changing. To be effective, solutions must be rooted in local knowledge and led by community members…” In addition to supporting the development of social enterprises at LEF and through SPEN, our CED work also includes the development of small businesses operated by poor people through our Emerging Entrepreneurs program.

SOCIAL ENTERPRISE MODELS AND MANDATES In 2010, I came to Taiwan for 5 weeks and met people from many different community-based organizations. I had the opportunity to visit social enterprises and talk with managers and employees. I must say that your government seems to be much more consciously engaged with social enterprise than our governments back home. I cannot present a complete picture of all social enterprises in Canada, but I can discuss a spectrum of social enterprises with which I have had involvement.

A Spectrum of Social Enterprise This spectrum begins at one end in communities of disadvantaged people who are seeking ways to improve their situation with some form of economic activity. It ends at a point where “community” becomes subordinate to notions of individualism and entrepreneurship, and where the discourse and the development of social enterprise becomes dominated by the professionalism and perspectives of a more privileged segment of society.

A SPECTRUM OF SOCIAL ENTERPRISES

 ×  The  Community                                                                                                                                                                                                                                                              The  Free  Market  Ø

A. Worker-Run Social Purpose Enterprise: What you might call “affirmative businesses”, we would call “social purpose enterprises”: a business or income-generating activity with the specific purpose of providing training, work opportunities, and reasonable wages to disadvantaged groups of people. A-Way Express is this kind of social enterprise. However, on the spectrum of social enterprise, it stands at the end that is closest too and most firmly grounded in “community”, as it not only employs the people they aim to serve, but is actually controlled by them on a daily basis. The other survivor businesses I mentioned earlier are also in this part of the spectrum.

A. Worker-Run Social Enterprise  The  Community                                                                                                                                                The  Free  Market

B. Supported Self-Employment Initiatives: Common Ground Co-op is a charitable non-profit co-operative of 120 community members that supports the establishment and long-term success of self-employment initiatives for people with developmental disabilities. They operate Lemon and Allspice Catering, The Coffee Shed, and Clean Able. The enterprises are owned and operated by adults with developmental disabilities who are business partners of Common Ground. The business partners are offered the assistance of job coaches and are given ongoing administrative support from Common Ground. Sistering is a women’s agency serving homeless, marginalized and low-income women in Toronto. Sistering established Inspirations Studio, a women’s craft and artisan collective providing homeless women with an opportunity to participate in meaningful economic activity. Inspirations obtains bulk orders from organizations and corporations for gift items, which are sub-contracted to the members of the studio collective.

B. Supported Self-Employment Initiatives  The  Community                                                                                                                                                The  Free  Market

C. NPO Social Enterprise Initiatives: Now we come to social enterprises that are programs or initiatives of non-profit social organizations where control rests with the NPO. The Salvation Army operates Gateway Linen Services. They also operate five homeless shelters in Toronto. They hire residents of the shelters for six month periods, pay them, and train them in the linen industry. They have a relationship with a local linen company that hires the graduates of this program. Through our Career College at The Learning Enrichment Foundation, we provide many different training programs and courses, some of which lead to directly to social enterprise. For example, we consider our Childcare Services to be “social enterprises”, as they serve an important social need, they generate income, and they employ many graduates of our Early Childhood Assistant program. Most of our graduates come from poor communities.

Through our Cooks Training, we provide meals for homeless shelters and drop-ins, and provide a catering service. We have another kitchen that prepares the food for our childcare centres, which we are considering making available to our Emerging Entrepreneurs in the evenings. Through our Bicycle Assembly and Maintenance (BAM) training, we developed a partnership with a private sector business known as Bixi. Bixi rents out hundreds of bicycles 24 hours a day, 7 days a week, through 80 automated stations all over Toronto. We now have a social enterprise that repairs and maintains the Bixi bicycles and holding stations. This enterprise employs some of our BAM graduates. Through this work, and our settlement services in the community, we were also able to help a group of young people establish Weston Wheels, a bicycle sales and repair shop – operated by youth. As LEF has grown, so has the number of events that we hold throughout the year. We have a very creative and experienced Events Department that we “rent out” to other organizations when they aren’t busy with LEF events.

C. NPO Social Enterprise Initiatives  The  Community                                                                                                                                                The  Free  Market

D. NPOs Incubating Entrepreneurs Moving along the spectrum toward the more “entrepreneurial” end, we find the Centre for Social Innovation (CSI). It is itself a non-profit social enterprise that functions as an incubator for both non-profit and for-profit enterprises dedicated to social innovation. CSI defines a social innovation as “a new idea that has been put into practice for the public good.” There are more than 300 organizations that call CSI their home. While CSI members do seek to improve society, a large number of them tend to be middle class, university educated people who are neither stigmatized nor excluded from society.

D. NPOs Incubating Entrepreneurs  The  Community                                                                                                                                                The  Free  Market

E. Social Venture Capitalists At the end of the spectrum, there are the Social Venture Capitalists and organizations like MaRS. A non-profit corporation, MaRS was established by the government to connect with the worlds of science and business. It is a public-private partnership with a mission “to create global enterprises that would contribute to Canada’s economic and social development”. I have had many conversations with people involved with MaRS that always began with social enterprise, but then moved swiftly through social entrepreneurship, social innovation and social finance, ultimately to end up at profit-making social ventures. MaRS promotes a form of legal incorporation known as B Corporation. This class of business is found in the United States of America, where it was specifically created to “enable corporations to define themselves to consumers and investors as socially and environmentally responsible business entities”. Canadian corporations may also apply for this certification – in America. There are almost 200 B Corporations in the United States, “representing over 31 industries in a $1 billion marketplace.”

This is where private capital, rather than the community, begins to decide which social causes are most worthy of “impact investment”. Within the world of social venture capital, there are also the Angel Investors of the free market. Groups such as the “Investors Circle” use the language of social enterprise in promoting profit-making ventures. The Investors Circle is the oldest and largest early-stage impact investing network in the world. However, they only invest in for-profit companies that “address social or environmental issues”.

E. Social Venture Capitalists  The  Community                                                                                                                                                The  Free  Market

F. Social Entrepreneurs Some social entrepreneurs have a CED background. They are often consultants, trainers, and champions of non-profit social enterprises. We need to recognize and applaud these committed individuals who personally struggle to maintain a social mission in the context of the free market. They are a minority among a multitude of business people who now call themselves social entrepreneurs. Most are business people who simply address issues that may broadly be defined as social. Individual social entrepreneurs may decide to hire only disabled people – but if they are incorporated as a privately owned profit-making business, they don’t have to. They may intend to address social issues, but their social mission is ultimately dispensable. There are some good corporate citizens who have a strong sense of Corporate Social Responsibility (CSR) and we applaud them too for their genuine concern for the community. They are our friends and allies in the market. At LEF, we strive to nurture our relations with such companies and encourage them to engage with the community, for they too are a minority. Global market forces have created a world of precarious work and long-term unemployment for millions of people – and permanent unemployment for most disabled people. It is unrealistic and unfair to expect a small group of social enterprises, social entrepreneurs, and enlightened capitalists to resolve a problem created by far greater forces. The free market has already shown that it will not accommodate the disabled in significant numbers.

F. Social Entrepreneurs  The  Community                                                                                          <          Local          <          Free  Market          >          Global          >

Individual Social Entrepreneurs

WORKING WITH PEOPLE WITH DISABILITIES Consistently high unemployment among the disabled is proof that the free market has an aversion to hiring people with disabilities. The fact that Taiwan had to pass a law requiring companies to hire the disabled makes it quite plain. The fact that many companies prefer to pay a fine or fee rather than hire the required number of people with disabilities clarifies the situation beyond a shadow of a doubt. Accommodating the disabled isn’t just about ramps and accessible washrooms, or a token position on staff. It is about treating people in a respectful and supportive way. But the management practices of most private businesses, which usually embrace an obsession for greater productivity, efficiency and conformity, will not “accommodate” anyone – disabled or not. We need to treat people as human beings, not as human resources. At A-Way Express, the basic needs of employees are concretely addressed with a food program and a kitchen, where workers cook, eat and socialize together, even after work. They are encouraged, and provided with the means, to build community among themselves and to be engaged in the broader community. If things get a little rough in their personal lives, or their doctor changes their medication, and they need time off work to adjust, they can take a leave of absence and come back to their job when they are ready.

One of the more challenging positions at A-Way can often be that of the Personnel Manager, who tries to balance the personal needs of more than 40 couriers with the customer service needs of the business through a flexible and often changing work schedule. Some couriers can only do a couple of shifts a week, while others are able to work each day. Part-time couriers at A-Way have become managers and even Executive Director. And yet, at staff meetings, management team meetings, and on the Board of Directors, non-management employees have voice and vote – and hold the balance of power. So, you have to win people over to an idea, consulting with them. Just giving orders will not work – a dialogue is required, to be sure that the people we intend to serve are indeed being served. Survivor-run businesses like A-Way Express are more effective at challenging the stigma of mental illness than most public education campaigns. They provide great examples of what people with disabilities can do. They are also an excellent illustration of how the private sector needs to change their management approach to truly accommodate and motivate people – whether or not they are disabled.

THE MONEY: FUNDING, FINANCING AND FISCAL POLITICS

In the International Journal of Urban and Regional Research, September 2006, James Defilippis, Robert Fisher and Eric Shragge describe quite well the kind of political situation in which we find ourselves in Canada when they say: “There has been a major shift in the provision of social services and the meeting of basic human needs in Western political economies. The public sector (government) has, by and large, been in a protracted process of removing itself from the provision of basic services. This began in the late 1970s and early 1980s, and has continued largely uninterrupted in the period since then. This has meant that a whole host of human needs are increasingly being met by public–private partnerships and the not-for-profit sector. … The deliberate withdrawal of the public sector from social services has occurred in the realms of housing, workforce development, health, and even income and in-kind assistance. Community is implicitly, and sometimes explicitly, expected to fill the gaps left as the state retreats.” Ironically, just as you began to exploring new social and political approaches in Taiwan in the mid-1980’s, western capitalism was pursuing Reaganomics and Thatcherism, turning away from the political discourse and the social programs developed in the 1960’s and 1970’s. So, when you looked at how our communities were dealing with social needs, you found us exploring social enterprise more by necessity than by choice.

Non-profits are still trying figure out what will or will not work – and trying to stay on mission while running businesses. And we are not the only ones trying to understand and define social enterprise. There are a lot of people studying us. Judging by the number of studies that come out every year, there appears to be a significant number of people employed in the enterprise of studying social enterprise. In Toronto, managers of social enterprises of all types were being inundated with requests to complete yet another survey about social enterprise. Finally, the Social Purpose Enterprise Network decided to do our own survey. We thought it best that we, the practitioners of social enterprise, should "define social enterprise" before someone else did it for us. So with the help of academics at Carleton University in Ottawa, we launched our own study.

SPEN Study of Social Enterprise in Toronto The purpose of the study was to investigate revenue, cost, human resource and growth patterns of SPEN members and other social enterprises in the Toronto area. Our research confirmed that many social enterprises are generating a significant amount of income from earned revenue, yet the majority continue to seek out multiple sources of external funding and support, including grants and in kind and voluntary support, to offset the costs associated with their social missions.

The complete report is available online, so I’ll only touch on a small selection of observations from the study: • The vast majority of social enterprises are structured as embedded enterprises within a

parent organization (64%), while another third or 33% are standalone enterprises. • Many enterprises in the Toronto area have been operating for a decade or longer, though

new social enterprises are emerging, business capacity seems to maximize or plateau at about the 5 year point and stay there.

• 81% of managers believe their social enterprise fundamentally differs from a similar for- profit business. More attention is paid to ensuring positive outcomes for the specific population groups served by social enterprises.

• Typical social enterprise Budget: $200,000 Cdn.(A-Way, the highest, is $2 million Cdn.)

• Typical percentage of budget gained through earned income: 54% • Typical percentage of budget gained through external sources of funding beyond earned

income: 45% • Enterprises often have multiple sources of funding, including funds from government

grants, corporate and foundation support, individual donations and charitable fundraising.

• Percentage of social enterprises that require some form of external source of funding beyond earned income: 88%

• Debt financing is not a common strategy used by social enterprises in Toronto to capitalize their businesses. Those that do seek financing often make use of non-traditional forms of financing, for example loans from private donors with zero-interest rates. The other debt-financing strategies cited were lines of credit to cover staff salaries or for the emergency purchase of goods.

Almost all social enterprises are established and maintained through government support and other grants and donations. And so they should be. They are doing the government's work and doing it with fewer resources than the government would require. We are always being asked to do more with less. We are constantly being told there is less public funding available and that we should pursue Social Financing or Social Venture Capital. Many governments around the world are seizing upon this as their escape route, so they may continue their retreat from social service. The whole discourse and practice around Social Finance and Social Return On Investment (SROI) is becoming more and more professionalized and specialized, with consultants and entrepreneurs working as middlemen between social enterprises and the actual sources of money. Most managers of social enterprises already have business experience, but now it seems like they are going to need an MBA or a doctorate to keep up with developments. This focus on business practices and financing models now dominates many internal and external discussions among NPOs and social enterprises, taking the focus away from our mission and the community we are supposed to serve. As well, the increasing professionalization of our operations threatens to make our organizations less accessible to disadvantaged people.

Among the three primary sectors of society, we all have a lot to learn from each other. One of the most important things we need to learn is where we really have common ground and where our interests and perspectives may come into conflict. We need to be knowledgeable and respectful about both our commonalities and our differences. We also need to recognize our different capabilities and responsibilities – and not develop unrealistic expectations of each other. Let the private sector and government hire the MBA’s, accountants, lawyers and other professionals – and then lend them to us as advisors, volunteers and champions when we need their help. But don't send them in to tell us what do. While NPOs obviously need to maintain good relationships with government and the private sector, it needs to be as equals. And when it comes to making decisions that affect our operations, decisions should be arrived at by consensus.

NEEDS OF THE PEOPLE

GOVERNMENT

BUSINESS NON-PROFITS

Different interests and different approaches

Community Benefit Consensus can also be reached on a larger scale. Rather than telling us that there is not enough money, involve NPOs in the discussion of how public funds are spent. Let us come to a consensus on how the expenditure of public funds can always result in the greatest possible public benefit – rather than the lowest possible cost? Scotland has developed a framework around Community Benefit which we are beginning to examine in Toronto. In Scotland, government contracts with the private sector include community benefit clauses that are determined in consultation with relevant community organizations. In this way, government purchases of services and products can result in tangible benefits to the community – some may be training and employment opportunities for disadvantaged people, while others may be the purchase of goods or services from social enterprises.

The following is a translation of Confucius’ Ideal of a Commonwealth State, – a Great Utopia Li-Yun-Da-Tong. It was compiled by Shih-Ming Hwang "When the Great Dao (perfect order) prevails, the world is like a Commonwealth State shared by all, not dictatorship. Virtuous, worthy, wise and capable people are chosen as leaders. Honesty and trust are promoted, and good neighborliness cultivated. All people respect and love their own parents and children, as well as the parents and children of others. The aged are cared for until death; adults are employed in jobs that make full use of their abilities; and children are nourished, educated, and fostered. Widows and widowers, orphans and the old without children, the disabled and the diseased are all well taken care of. Every man and woman has an appropriate role to play in society and in the family. They hate to see resources lying idle or cast away, yet they do not necessarily keep them for themselves. They hate not to make use of their abilities, yet they do not necessarily work for their own self-interest. Thus intrigues and conspiracies do not arise, and thievery and robbery do not occur; therefore doors need never be locked. This is the ideal world – a perfect world of equality, fraternity, harmony, well-being, and justice. This is the world called “Da-Tong (Dah-Torng)”. Dr. Sun Yet-sen, founding father of the Republic of China, pursued similar ideals and articulated them in The Three Principles enshrined in your constitution and repeated in your national anthem. I believe that they are still important principles, and I have a particularly strong interest in the principle regarding the well-being of the people.

Regardless of the different approaches we may take, I believe our concern for the well-being of the people is our common ground. For it is a shared responsibility, not just the

responsibility of the non-profit sector or the community.

Moreover, the solutions to our problems will not be found only through social enterprise or social entrepreneurship,

The solutions will be found through fundamental social change.

謝謝 (Thank You)

I thank you for your time and your consideration.