Re: [npEnterprise Forum] Seedco Report
- Where's your sense of humor, gang? You're all taking this Seedco stuff sooo
Notwithstanding the elequent SEA responses, the Seedco report did us all a
great service busting the myth that non-profits can just throw their hat in
the ring and establish a viable, profit-making enterprise with little risk,
effort, or acquired skills.
Sure, for-profit enterprises hold great hope for the charitable sector's
ability to sustain and expand its efforts. But let's face it -- with
limited exceptions this is a new sector that hasn't worked out the kinks
yet. Why should its efforts to generate income be any more successful than
those of the majority of profit-seeking businesses that fall flat on their
Yes, with the right staff, advisors, and professional help a charity can
improve its chances, but there's no guarantee of profitability. From what I see, though, some charities are trying to use the same tactics
to start and run social enterprises that they use throughout the rest of
their efforts -- beg for donated dollars, overwork an undertrained staff,
shortcut investment in needed technology and infrastructure, then drain
those they can entice to volunteer of every ounce of time and energy they
have and then wonder why they can't give any more.
You want to go into a for-profit business? Then expect to go it like any
other business. Pay the freight. Get the best help you can. Pay them
well. Be ready to accept losses, maybe even big ones, by having enough
reliable sources of funding to keep it going while you work out the kinks
and qet over the hump -- if you can. And set some benchmarks so you'll know
when to pull the plug before you start.
Social enterprise is a wonderful idea, a concept that is starting to grow
and offer new possibilities to the charitable sector. But the bottom line
is, whether done for-profit or not, there are people out there with needs
and desires to be met. People who are struggling and suffering and
discontent with the way life is playing out for them.If serving them isn't first on your list, then why are you doing it in the
Dennison & Dennison, P.A.
Fort Lauderdale, FL 33323
- We received the following additional responses to the conversation about the
recent Seedco report:
1) From Leonardo Letelier <lletelier@...>
Interestingly, the report reads as a "failure of a business venture" +
"lessons learned for nonprofits," but the conclusion reads as "business
ventures at nonprofits fail" when it should be something on the lines of
"starting any business is tough, and not less tough if you are a nonprofit."
Apparently CCA committed a series of basic mistakes - easier identified in
hindsight, of course:
1. did not talk to/dismissed the feedback of the end consumer (parents were
more comfortable skipping work than leaving their children with strangers in
the "projects" and
2. Simply disregarded new context information (sept 11).
3. The one I do not believe in is that CCA or other nonprofits were "forced"
by funders to make bad decisions that is just bad leadership.
To succeed beyond a best efforts mindset one should leverage one's assets
(btw, deep knowledge of a need is hardly enough). If you are not closer to
customers (in an economic transaction-driven sense) or don¹t have a
significant competitive advantage, why would you believe you are going to be
more successful than the (full of flexibility) entrepreneur next door? That
applies both in the for- and not-for-profit contexts.
2) From Jennifer Flanagan <jennifer.flanagan@...>
The responses that have been posted re: the Seedco report are on target, and
we would certainly echo these thoughtsit was a poorly conceived business
plan, one that very likely should have remained squarely in the realm of
subsidized nonprofit program and never even considered as a revenue
generating venture. The failure of such a program should not be used as the
brush with which to paint the entire sector. Of course on this listserv we
are preaching to the converted, but when these articles are read by
community stakeholders who are perhaps already skeptical, or who simply
don't understand the bigger picture (so well captured by Kris Prendergast in
her response to the Nonprofit Quarterly article:
http://www.se-alliance.org/news_current.cfm#response2), these articles can
lead to a lessening of support in our communities for social enterprise and
by extension for the very real benefits that social enterprise can introduce
to organizations beyond revenue generation. All of us working to support
enterprise should take the time to educate our own key stakeholders in each
of our communities to counter the oversimplified pronouncements coming out
of these articles.
Social Innovation Accelerator
3) From Allen Bromberger <allen@...>
With all due respect, I tend to agree with those who say the report says
more about Seedco than it does about the state of social enterprise in this
country. I think the myth that nonprofits can just "throw their hat in the
ring and establish a viable, profit-making enterprise with little risk,
effort, or acquired skills" was busted long ago for anyone paying attention,
if indeed anyone ever believed it in the first place. That doesn't mean we
shouldn't keep saying it, but at some point we have to go beyond that to
explain in very practical terms the kinds of planning and research
nonprofits should do before starting any commercial venture. That is
starting to happen, but the information isn't widely distributed or read
Your point about risk is very important. I think if board members and
executive staff of nonprofits were required to loan their own money to any
enterprise their charity undertakes, you'd see a lot fewer mistakes.
Allen R. Bromberger, Esq.
Perlman & Perlman, LLP
New York, NY 10010-2202
Tel. 212 889-0575
4) From John Peppin <john@...>
The Seedco report makes a number of excellent comments. However, as with
any enterprise there is risk that has to be managed. Some failures will
occur, so a systematic approach helps, including: setting the strategic
context and identifying and leveraging core competencies and organizational
experiences; establishing purpose and balance between social and financial
return; achieving stakeholder buy-in/managing the change process; creating
evaluation criteria, identifying enterprise ideas and business feasibility
and priority setting of the ideas, business planning, marketing plans;
governance/legal issues, dealing with organizational readiness, barriers and
inhibitors; implementation; and identifying funding/investment opportunities
in support of enterprise development.
Surely we should not expect a third sector organization not to test out
their ideas, not to take calculated risks to find ways to meet client needs,
not to innovate. The article quotes a study stating that 29% turned a
profit or broke even not bad considering many enterprises are carry extra
costs such as developing client skills.
It is a shame they were not able to `identify a single example of an
entirely self-sustaining non-profit-based social enterprise'. This is
irritating as there are a number of good examples in the UK. It is doubling
irritating that a social enterprise should be condemned because it takes
grants doesn't the corporate sector also do so;
and secondly the enterprise part in many cases is profitable, it is the
social part which in most charities is subsidized by grants and traditional
fundraising that sometimes needs external support. Perhaps definitions of
sustainability have to be made clearer and fairer definitely they should
be determined during the development
process so the enterprise may be fairly judged.