(9)New+Social+Entrepreneurs+ +Part+3+Appendices

7/29/2019 (9)New+Social+Entrepreneurs+ +Part+3+Appendices

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PART III:

APPENDICES


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As is true of all efforts of this

size, this book is the end prod-

uct of many months and many

hands. The material present-

ed herein is the result of three

levels of labor: writing, editing, and cri-

tiquing. With one exception, all included

material went through numerous rewritesby Jed Emerson and Fay Twersky. As the

senior coordinator of this project, Jed

Emerson takes full responsibility for materi-

al presented in this book, statements made,

and any mistakes or unintentional misrep-

resentations which may be discovered after

publication. In addition to the work of the

two content editors, Lydia Ely contributed

significantly as copy editor for the entire

document and also provided content feed-

back as appropriate.

The writing process which resulted in

this book took several forms. First, in somecases, grantees wrote an initial report pre-

senting their perspective on their work. This

report was then reviewed by the staff of

Harder+Company Community Research,

who wrote their own evaluations based

upon the submission of grantees, their

independent review of the written record,

and, in some instances, interviews with key

staff, program participants, or board mem-

bers. Second, specific individuals were

approached with requests to write chapters

from their perspective. Those individuals

are identified below. Third, the director of

the HEDF took this opportunity to write a

number of chapters to reflect on his learn-

ings over the past years. His work was thencritiqued by experts in the field, who are

credited below. If we accidentally did not

include your name in the following credits,

please call Jed to receive your immediate

and heartfelt apology. This has been a long

six months...

We would like to take this opportunity to

thank all those who supported this effort

over the months it took to complete. First,

we would like to especially thank the pro-

gram participants and enterprise employ-

ees who have made these businesses the

successes we feel they are. Second, wewould thank the many grantees who agreed

to honestly discuss their experiences with

us and openly reflect upon the challenges

weve confronted. In addition to the writers

identified below, each of the folks who pro-

vided feedback and comments were invalu-

able to the creation of what we feel is a

pretty good document. We thank you all!

APPENDICES3 407

Writing Credits

Appendix A


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We would also like to express our apprecia-

tion to the staff of Pacific Foundation

Services and Harder+Company Community

Research. We are grateful for the patience

and support of each of you.

Specific Credits:

EXECUTIVE SUMMARY:

JEDEMERSON.Critique by: Vickie Grove,Lydia Ely, Fay Twersky.

Part One: The Organizations and

Lessons Learned

Case Statements:

Studies:

Rubicon Programs, Larkin Business Ventures,

Oak Street House, Central City Hospitality

House, Youth Industry/Healing Kidz: FAYTWERSKY;Critique by: Jed Emerson, AgencyProgram Staff, Lydia Ely.

Summaries:Asian Neighborhood Design, Berkeley

Oakland Support Services, Community

Housing Partnership, Conard House, Career

Choice Project, Keystone Community

Ventures, Manos, InnVision, San Francisco

Network Ministries, Santa Clara Unified

School District South Of Market

Foundation, Women and Their Children

Project, Project WATCH, Oakland Workers

Cooperative Painting Project: JENNIFEREICHMAN (Harder+Company CommunityResearch),JED EMERSON, FAY TWERSKY;

Critique by: Agency Program Staff.

San Mateo Emergency Shelter Network:

CHRIS SUTHERLAND, Peninsula CommunityFoundation.

San Francisco Coalition on Homelessness,

Berkeley Ecumenical Chaplaincy to the

Homeless, The Story Of Three Vineyards:

Homeless Garden Projects: JED EMERSON,Critique by: Fay Twersky, Agency Program Staff

The Numbers:

TrueCost Accounting: A Financial Analysis of the

Non-Profit EnterpriseExperience:JEDEMERSON;

Critiqued by: Catherine Connolly(Independent Consultant), Cynthia Gair

(Keystone Community Ventures); Phil Perry

(Professor of Finance, St. Marys College);

Robert Sher (Associate Professor of Small

Business Development, St. Marys College),

Joel Ficks (Small Business Consultant), Jill

Storey (Keystone Community Ventures).

A Cost-Benefit Analysis of EnterpriseCreation

Funding: Net Present Valueand Projected Returns:

TOM FOSTER (CALResearch), IRAJ IMAM(CALResearch); Critique by: Jed Emerson.

Part Two: Perspectives On The Practice

Of Non-Profit Enterprise

The Employee Perspective: Employee focus

group facilitator and chapter author: ANNEMURRAY (Harder+Company CommunityResearch); Critique by: Fay Twersky, Jed

Emerson

TheBoard of Directors Perspective:JEDEMERSON,based on interviews and material submis-

sions by Penelope Douglass (immediate

past chairperson, Larkin Business Ventures)

andDIANE FLANNERY (CEO, Larkin BusinessVentures); Critique by: Vickie Grove, Lydia

Ely.

TheFunders Perspective:JEDEMERSON; Critiqueby: Alvertha Penny (Hewlett Foundation),

Carol Guyer (James C. Penny Foundation).

Legal Considerations of Non-Profit Enterprise

Development: Brad Caftel, Attorney (NationalEconomic Development and Law Center,

Oakland, CA).

The Non-Profit Franchise: The Ben & Jerrys

Partnershop: CHARLES MULLEN; Critique by:Jed Emerson, Vickie Grove, Diane Flannery.

The Competitive (Dis)Advantage of Non-Profit

408 3 THEROBERTS FOUNDATION:A PROGRESSREPORT


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Enterprise: JED EMERSON; Critique by: FayTwersky

Grants, Debt, and Equity: TheNon-Profit Capital

Market and Its Malcontents: JED EMERSON;Critique by: Dan Leibsohn (National Low-

Income Housing Fund), Paul Sussman(Northern California Community Loan

Fund), Cynthia Gair (Keystone Community

Ventures); Alan Fisher (Community

Reinvestment Committee), Wendy Fleischer

(Corporation for Supportive Housing), Jill

Storey (Keystone Community Ventures).

The Positioning of Non-Profit Enterprise in

the Global Economy:

Understanding theWorld, theRegion, and the

Prospects for Non-Profit Enterprise in theNew

Century: JED EMERSON; Critique by: JimFawley (Associate Professor, St. Marys

College), Ed Skloot (Executive Director,

Surdna Foundation), Carol Guyer (James C.

Penny Foundation), Eric Hanson (Associate

Professor, St. Marys College).

Writings FromJapan, Canada and NewZealand:

NAOKI MORIKAWA, PAUL BORN, WARRENSNOW; Critique by Jed Emerson, Lydia Ely.

Understanding thefor Organizational Developmentof Non-Profit Enterprise:JEDEMERSON; Critiqueby: Vickie Grove, Lydia Ely, Fay Twersky,

Alan Fisher, and Paul Sussman.

Considerations for Individual Development:

Report by Staff of Asian Neighborhood

Design.

Self-Employment and Very Low-IncomeWomen:FAYTWERSKY; Critique by: Jed Emerson,Agency Program Staff.

Issues Concerning theEvaluation of Non-Profit

Enterprise: FAYTWERSKY; Critique by: JedEmerson.

Conclusion: Cross-Cutting Issues for theField of

Non-Profit Enterprise: JED EMERSON andFAYTWERSKY; Critique by Vickie Grove, LydiaEly.

Part Three: Appendices

Appendix A: Writing Credits

Appendix B: Recommended Readings and

Resources:JEDEMERSON

Appendix C: Recommended Listenings:

Sole responsibility ofJED...

Appendix D: Jed Lettermans Top Ten List:Final Last Words of Failed

Social Entrepreneurs:GUESS

APPENDICES3 409


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Ed Skloot, THE NON-PROFIT ENTRE-

PRENEUR (New York: Foundation

Center, 1987). This is still the bible

for the field. In a relatively brief

number of pages, Skloot presents

information on legal concerns,

organizational development, and a

number of other issues of interest tothe social entrepreneur. A great

overview document for the reader

who wants to know it all in as little

time as possible.

Michael Sherraden,ASSETS AND THE

POOR: A NEW AMERICAN WELFARE

POLICY(Amonk, NY: M.E. Sharpe,

Inc., 1991). Welfare as asset accu-

mulation. An excellent and chal-

lenging evaluation of current

welfare policy which moves the

debate away from disbursement

and toward development.

Sherraden also discusses Individual

Development Accounts, which holdgreat promise for the future of

wealth accumulation on the part of

low-income people. All in all, a

great and provocative read.

National Economic Development

and Law Center, TAKING THE

ENTERPRENEURIAL APPROACH: VOLUMES

I-III (Oakland, CA). One of the most

comprehensive collections of arti-

cles and resources available. Each

volume addresses another step in

the process of non-profit enterprise

creation. While some of the articles

could be updated, the fundamen-

tals presented in this collection arecritical for those interested in an in-

depth discussion regarding a wide

array of issues. A solid addition to

your library and useful resource. (At

a collective width of nearly three

inches, it is not a good stocking

stuffer, however!) (510-251-2600)


Recommended Readingsand Resources

Appendix B

Awide variety of resources are available to the

social entrepreneur in search of information.

The following are some of our favorites. If

you have all these, you are pretty much set.

If a book or resource has been particularly

helpful to you, please notify our office so we might share itwith others!


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Martin Fridson,FINANCIAL STATEMENT

ANALYSIS: A PRACTITIONERS GUIDE

(New York: John Wiley & Sons,

1991). Killer guide to tearing up

financials. Teaches you where peo-

ple hide bad numbers and how to

find them. Good to know, fun touse. You should probably not

approach this book until after you

have developed some basic

accounting and financial analysis

skills, but dont wait too long. You

should know your numbers better

than your accountant does!

David Hammack, Dennis Young,

Eds., NON-PROFIT ORGANIZATIONS IN

AMARKET ECONOMY: UNDERSTANDING

NEWROLES, ISSUES ANDTRENDS (San

Francisco: Jossey-Bass Publishers,

1993). Its a new world, and youd

better know where you fit in! This

book is a blast, covering a lot of

ground and introducing a number of

issues. Each chapter stands alone,

so you dont have read it all at one

sitting. Tons of fun.

Leonard Fuld, THE NEWCOMPETITOR

INTELLIGENCE: THE COMPLETE

RESOURCE FOR FINDING, ANALYZING

AND USING INFORMATIONABOUTYOURCOMPETITORS (New York: John Wiley

& Sons, 1995). Ethical but aggres-

sive guidance for doing just what it

says. Many non-profit managers are

great at researching public policy or

social issues, but cant find their

way out of a stack of books in the

reference section of the business

library. This book is all you need to

research the industry youre inter-

ested in entering by gathering infor-

mation on a lead player you may

wish to emulate.

Michael Thomsett,THELITTLE BLACK

BOOK OF BUSINESS MATH (New York:

American Management Association,

1988). For those of us who flunked

high school algebra and have

always hated numbers. If youre

going to run a business you have to

internalize the mantra, Numbers

are our friends. This book is a con-

cise, easy guide to learning what

you should have known years ago.

Its petite size makes it easy to stick

into your briefcase for quick consul-

tations prior to those meetings withbankers...

Jae Shim and Joel Siegel, THE VEST-

POCKET CFO (Englewood Cliffs, NJ:

Prentice Hall Books, 1992). For

where theLittleBlack Bookdrops off.

TheVest-Pocket CFO will actually not

fit in your vest, but is excellent.

Explains ratios, break-evens, and

more financial analysis tools/issues

then you will probably ever use.

Bob Stone, SUCCESSFUL DIRECT

MARKETING METHODS (Lincolnwood,

Illinois: NTC Business Books,

1995). A GREAT reference book for

the small business person sans

marketing department. Focused,

well-researched advice to get the

most out of your marketing efforts.

Robert Hisrich and Michael Peters,

ENTREPRENEURSHIP: STARTING, DEVE-

LOPING AND MANAGING A NEW

ENTERPRISE (Chicago: Irwin Press,1995). A more in-depth look at vir-

tually every aspect of entrepreneur-

ship. In this good counterpart to

the outline planning guides pre-

sented below, Hisrich and Peters

take the reader through the history,

idea, planning, financing, and virtu-

ally every other aspect of the emerg-

ing enterprise.

Mike McKeever, HOW TO WRITE A

BUSINESS PLAN (Berkeley, CA: Nolo

Press, 1992). A friendly, informative,and very useful business planning

guide. Excellent for folks with little

business development background.

Nolo Press publishes some of the

best business and legal self-help

material in the country. Their cata-

logue includes many dynamite

offerings. (510-549-1976)

Keith Schilit, THE ENTREPRENEURS

GUIDE TO PREPARING A WINNING

BUSINESS PLAN ANDRAISING VENTURE

CAPITAL (Englewood Cliffs, NJ:

Prentice Hall, 1990). An excellent,

concise guide that takes the reader

through a step-by-step process ofwriting a business plan.

BIZPLAN BUILDER (Mountain View,

CA: JIAN Tools, 1995). Living by the

motto, To do great important tasks,

two things are necessary... a plan

and not quite enough time, BizPlan

provides you with a set of template

electronic word processing and

spreadsheet files. This computer-

ized business planning resource

asks you questions; as you answer

them, your business plan almost

writes itself. You still need to have

the information, but BizPlan is a

good resource for those unsure of

how to begin or in need of someone

to ask the right questions. (415-

254-5600)

THE NON-PROFIT RESOURCE CENTER

(7731 Belle Point Drive, Greenbelt,

MD, 20770, (301)507-6247). The

Resource Center provides one, two

and three-day trainings for non-profit managers and accountants

regarding the ins and outs of unre-

lated business income tax, IRS reg-

ulations, and general non-profit tax

reporting. Non-profits entering the

enterprise development arena

should seriously consider charging

one key board member and one

staff person with the responsibility

for tracking all tax and regulatory

issues for the organization. The

Resource Center workshops and

materials provide the best orienta-tion to these topics I have seen in

terms the average CFO or Treasurer

will immediately grasp and be able

to use. The Center also provides

direct tax consultation with non-

profits in addition to several publi-

cations and newsletters.

APPENDICES3 411


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THENATIONALECONOMICDEVELOPMENT

AND LAWCENTER (Oakland, CA, (510)

251-2600). The NEDLC serves as a

national clearinghouse on commu-

nity economic development. In

addition to an excellent resource

library, the Center offers legal con-sulting to non-profits involved in

community development, manages

a sectoral analysis project, and

sponsors a regional economic

development initiative, among oth-

er activities.

THE NATIONAL CENTER FOR SOCIAL

ENTREPRENEURSHIP,(Southgate Office

Plaza, Suite 975, 50001 W. 80th St.,

Minneapolis, MN, 55437, (617)831-

5506. Jerr Boschee, President and

CEO.) An excellent organization

providing workshops and consulta-

tion for the emerging entrepreneur.

Good for groups at the front-end of

the process and in need of a generaloverview. Definitely worth a call to

get their resource listing and see if

theyre doing anything in a town

near you!

Two additional resource books

which will be helpful to the non-

profit enterprise manager come

from the practice of economic

development in the Third World. AN

INSTITUTIONAL GUIDE FOR ENTERPRISE

DEVELOPMENT ORGANIZATIONS pro-

vides practitioners with an excellent

overview of organizational develop-

ment stages, such as strategic plan-

ning or self-evaluation, and is

presented in an easy to follow for-mat. MONITORING AND EVALUATING

SMALL BUSINESS PROJECTS: A STEP

BY STEP GUIDE FOR PRIVATE

DEVELOPMENT ORGANIZATIONS is a

second publication covering the

fundamentals of small business

evaluation. Very good stuff. Both

can be ordered through PACT, 777

United Nations Plaza, New York, NY,

10017.



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APPENDICES3 413

It seems as if every day one hears about yet one more

home page or Internet service which might be worth

surfing to. Not surprisingly, a variety of efforts are

underway to tap this resource to the benefit of non-

profits in general and non-profit entrepreneurs in

particular. While excellent resources are available at

some sites, these offerings require users to access infor-

mation through fairly expensive on-line providers.

However, other sources are increasingly available to

those surfing the free resources of the Net.

Founded in 1995, Impact Onlines (IO) mission is to

use the Internet to reach and support individuals who

want to make a difference in their communities. In opera-

tion only one year, IO has received significant recognition

for its work, including The Point Communications award

as one of the top five percent sites on the Internet, the

Whats Cool listing at Netscape, the Tripod Tools for Life

Award, and Best Site of the Week Award at America

Online.

Impact Online encourages its surfers to volunteer,

make donations, and make socially responsible product

purchases. Their goal is achieved through publishing

information about social issues and non-profit organiza-

tions on the Impact Online World Wide Web site.

Of greatest interest to social entrepreneurs is IOs

Web page promoting homeless economic development

organizations. In addition to current offerings, it is

planned that by late 1996, copies of this report will also

be available at the Impact Online Web site:

http://www.impactonline.org.hedf/.

Impact Online attempts to serve the non-profit com-

munity by acting as a resource for reliable and compre-

hensive information. IO has done extensive work

analyzing strategies for electronic community outreach

and has explored innovative methods of on-line fundrais-

ing. IO makes this knowledge available to non-profit

managers through workshops, an on-line course for non-

profits, lectures at conferences nationwide, and Web

development services specifically aimed at meeting the

needs of non-profits.

The Impact Online Web site is located at

http://www.impactonline.organd, with 25,000 hits rep-

resenting some 2,000 visitors daily, is thought to be one

of the highest volume non-profit Web sites currently

operating.

Beyond the offerings of Impact Online, a wide array of

non-profit and small business resources may be found on

the Internet. The Enterprise Foundation and others are

taking the lead to establish electronic libraries from

which practitioners may download files on a variety of

issues. The Small Business Administration and

Department of Commerce both offer a wide range of

information and resources.

For practitioners located within the state of

California, a potentially valuable on-line resource worth

exploring is TeamCalifornia Online (800-55-CAL35).

Once you have received the free software and registered,

TCO provides access to economic development libraries,

files and on-line conferences with professionals, eco-

nomic development corporations, educational institu-

tions, and others involved in the field. This is a

completely free service sponsored by Southern California

Edison Company and definitely worth checking out for

news, ideas and professional support.

The cost of on-line service is decreasing with eachpassing day, and there is little to stop the inquisitive

entrepreneur from surfing her way to greater knowledge

and information. If you are not on-line and you are inter-

ested enough to be reading this book, you should consid-

er getting wired today!

IMPACT ONLINE


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Anything by Fugazi, but especiallyIn On TheKill TakerorSteady

Diet of Nothing.

Bleach, by Nirvana. If you own theNirvana,MTVUnpluggedCD,please discard it immediately.

Anything by Husker Du. Ourtoken representative from theeighties, Husker Du laid muchof the foundation for thealternative scene which wasto spring forth in later years.

Doo Bop, by Miles Davis. Milesmeets Hip Hop. How can yougo wrong?

Viva Zapata, Seven Year Bitch. RiotGrrl music at its best.

Odelay, Beck. White Boy Rap forPunks.

Anything by The Pixies, but weespecially likeBossanovaand

ComeOn Pilgrim.

Dear You, by Jawbreaker, an SFfavoritegreat live...

Demo Tape, Baby Snufkin, BayAreas best World-Beat Punkmusic...David Byrne meetsIggy Pop...

Meantime, by Helmet. Seriousheadbanging music for whenyou arent sure if your motiva-

tion is monetarily or sociallybased...

Roots, by Sepultura. SouthAmerican Heavy Metal meetsindigenous Brazilians...

Anything by The Melvins, but weespecially recommend

HoudiniandStoner Witch.

Easter, by Patti Smith. The seven-ties memories come floodingback. A gesture to the past...

Salt Peter, by Ruby. When you fin-ish your business plan andare ready to dance...

Dry, by PJ Harvey. All her materialis great, but the first time outwas especially fun.

Foo Fighters, Daves life after

Nirvana...

Dilate,by Ani DiFranco. Folk-punk

for the nineties...one of the

best CDs of the year...

Remember: If its too loud, youre too old!

(and, of course, were all getting older...).

Recommended Listenings

Appendix C

W

hile it is widely known that our officereceives a good number of calls fromnon-profit managers in search of infor-mation and resources to assist them inoperating social purpose businesses, a

lesser known fact is that we also receive a number ofinquiries regarding what music is the most appropri-ate soundtrack to support the dialogue of the NewSocial Entrepreneurs.

Many practitioners recognize that while some sort of

musical accompaniment is called for, the music of the six-

ties is boring and the mainstream music of the seventies

and beyond seems simply a misguided effort to commu-

nicate the meaningful degree of angst and rage suitable

for the dawn of a new breed of mutant manager living in

the constant tension of a non-profit/for-profit world. To

do our part to assure every New Social Entrepreneur has

at least the basics of a decent CD library for the new cen-

tury, our office humbly offers the following collection of

must have items for any truly engaged, emerging New

Social Entrepreneur. These recordings are provided to

you, the reader, in no particular order, at no extra charge,

and with only a modicum of humor, since we take our

tunes extremely seriously:


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APPENDICES3 415

10. After the Sizzler folks moved out, we thought it

was a perfect opportunity to start a community

restaurant.

(If a site is churning, dont start the same business

as others who have failed, betting that since youre a non-

profit you can do it for less. They couldnt and youwont. There are REASONS businesses in your neighbor-

hoods have failed. Usually its location, location, loca-

tionand the fact that it was the WRONG BUSINESS! In

the case of Larkin Business Ventures, it took over 11

months of searching before an appropriate site was

found. If you are dead set on a previously identified loca-

tion, consider ventures which move product out of the

neighborhood in exchange for capital which is brought

into your neighborhood.)

9. $5,000 should have been plenty of money for our

planning process!

(There are certainly those businesses which have

been developed on the backs of envelopes, and others

which were started on a few hundred dollars. Yours will

not be one of them! Converting a non-profit social ser-

vice organization into a social entrepreneur organization

involves time, which means money. You can do a great

deal with volunteers and program participants, but you

will need a staff person who is charged with giving this

project the highest priority. Give yourself adequate time

to establish a venture committee, design a common time

frame, agree on measurable goals, and make an organiza-

tional commitment to the process. Once the doors are

open you cant return to a planning mode. The greatest

luxury you have is the period before you launch your ven-ture when you can analyze your organization, prepare the

board/staff/clients, decide on an enterprise, raise as

much of the money as you think you will need, and then

add more time and money to your planning budget.

Adequate planning dollars alone will not make the differ-

ence, but will provide you with the cushion you need to

plan your attack).

8. But there was such a NEED for an organic produce

grocery...

(Non-profits are developed to identify and respond toSOCIAL NEED, not MARKET DEMAND. Be sure you are

clear on the difference. The fact that a neighborhood may

need quality organic produce is one thing; whether or not

community residents can afford to pay for organic pro-

duce is another. Do significant market and pricing

research to know who your customers are and what their

ability to pay is. Build from there in order to assess your

ideas viability.)

Jed Lettermans Top Ten List:FAMOUS LAST WORDS OF

FAILED SOCIAL ENTREPRENEURS

Appendix D


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7. Our goal was clear: Create meaningful employ-

ment; provide $10 an hour wages; generate

$500,000 a year for our agency; engage in envi-

ronmentally friendly commerce; provide personal

growth opportunities for our employees; be some-

where for neighborhood kids to go after school...

(As you go through the process of a start-up, under-

stand one thing: you are not going to end poverty in

America, you are not going to create a cash cow, and you

are probably not going to be able to create a utopian work

environment. If you are lucky and the business gods

smile upon you, you will manage to stay in business, pro-

vide decent transitional work opportunities for folks you

care about, and hopefully not take more than three years

of subsidy from your parent organization. Maintain your

focus: Your first goal must be to identify a demand in the

marketplace and provide the highest quality service or

product to your consumer at the most competitive price

you can. PERIOD. The rest is icing on the cake and will

come only when you achieve the first goal of profitability.)

6. We have such a great causehow could they NOT

buy from us?

(The fact that you employ formerly homeless/low-

income folks is a DISINCENTIVE in the marketplace! In

our evaluations of consumer satisfaction, the fact that

ventures were operated by a non-profit employing for-

merly homeless people came in fourth, fifth, or sixth as

an issue of concern. Primary consumer issues related toquality, the demand for the product or service, and price.

Often, the fact that you are a non-profit doing good will

go against you and be something you will have to over-

come in your relationships with the business community.

And, finally, most formerly homeless people do not

appreciate being used as marketing vehicles. The people

you most care about will probably not want you to men-

tion their past difficulties at all in your marketing and

promotional materials. Dont use the crutch of being a

non-profit to try and win a foot race.)

5. Our board president always wanted us to open a T-shirt shop...nows our chance!

(Again, be clear on your purpose: to stay in business

and create jobs for your folks. There is no room for per-

sonal agendas or pet ideas. If the numbers in your

assessment dont support the degree of risk, dont do it,

regardless of emotional or political investment of

board/staff or participants.)

4. Were losing our federal grant...wed better start a

business soon!

(The goal of starting a business should be consistent

with your mission. While anticipation of future cutbacks

may be a motivation to re-assess your organizations

place in the community, creating a business is not thefirst appropriate response to impending funding cut-

backs and will almost always create more problems than

it will solve. First revisit your mission, evaluate your val-

ues, and then conclude whether or not a venture is con-

sistent with who you are as an entity. DO IT FOR THE

RIGHT REASONS! NOT BECAUSE YOU GOT A BUSI-

NESS PLANNING GRANT OR BECAUSE YOURE LOS-

ING A PROGRAM GRANT! While necessity may be the

mother of invention, successful enterprises evolve 75%

out of passion, and 25% out of desperation.)

3. If we only had more money, we would have done a

better job...

(Mainstream businesses are usually said to fail for

two reasons: lack of management expertise and lack of

capital. Social Entrepreneurs fail for one reason: lack of

management expertise. The Homeless Economic

Development Fund came in under budget each of its first

three years because the director could not find organiza-

tions he felt had the capacity to successfully execute

enterprise development. Most non-profits have a poor

grasp of financial accounting, dont understand the mar-

kets they are entering, misread their consumers, haventanticipated staff/board opposition to the idea of creating

a business, and on and on. Do your homework! Develop

your capacity first, create the business idea second and

the money will follow).

2. But they SAID they would pay us by the end of the

month!

(Also known as: May I have a bite of your sandwich?

Someone just ate my lunch... Non-profits think they

know a great deal about competition for money, and as

far as public funding goes, many have great skills. Privatesector markets are another matter. Its a jungle out there.

Businesses compete brutally, both with ethics and with-

out, and they compete to win. Your customers are feel-

ing the pinch in trying to find the absolute lowest price

with the highest value. Your suppliers are feeling the

pinch in moving inventory and balancing cashflow.

Sitting between these two forces, you will feel the pinch,

too. Realize it now and plan accordingly. Build in


12/13

APPENDICES3 417

allowances for bad debt, missed projections, equipment

breakdown and anything else you can think of which may

affect your bottom line. Remember: If you slip, you will

fall and if you fall, you will fail. Make strategic alliances

which complement your weaknesses and anticipate the

problems you will have, since you will have to deal with a

hundred problems you never thought of. Dont be taken

down by the obvious problems you should be able to see

from the starting line. Protect yourself and play to win.)

And now....the Number One Famous Last Word of

Failed Social Entrepreneurs:

1. But were a NON-PROFIT! Were not supposed to

make money!

(Social workers (and their sympathizers) are raised by

experience and training to distrust money, business and

capitalism. We develop a mind-set that views money as

evil. Grow up. Money is valueless; Its what people do

with money that counts. Your job is to get as much of it

as you can so you can stay in business, hire people in

need, pay a good wage, contribute funds to your pro-

gram, and stabilize your community. Greed may not be

good, but money is. After all, there is no glamour in

poverty. Go out there and get your piece of the pie and

then feed it to the masses. If you arent comfortable with

that idea, dont start playing the game. Or else you willfind your last words on this list!)


13/13

THE HOMELESS ECONOMICDEVELOPMENT FUND

c/o The Roberts FoundationBox 29906

San Francisco, CA 94129-0906

(415) 561-6533

OR E-MAIL US AT

[email protected]

[email protected]

CAPITALISM FOR A CAUSE.

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(9)New+Social+Entrepreneurs+ +Part+3+Appendices