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Re: [npEnterprise Forum] Seedco Report

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  • John Dennison
    Where s your sense of humor, gang? You re all taking this Seedco stuff sooo seriously! Notwithstanding the elequent SEA responses, the Seedco report did us
    Message 1 of 6 , Jun 26, 2007
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      Where's your sense of humor, gang? You're all taking this Seedco stuff sooo
      seriously!

      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
      own faces?

      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
      first place?

      John Dennison
      Dennison & Dennison, P.A.
      Fort Lauderdale, FL 33323
    • Michael Whitehead-Bust
      We received the following additional responses to the conversation about the recent Seedco report: 1) From Leonardo Letelier
      Message 2 of 6 , Jul 5, 2007
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        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 thoughts—it 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
        social
        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.

        Jennifer Flanagan
        Venture Advisor
        Social Innovation Accelerator
        Pittsburgh, PA

        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
        yet.

        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.
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