Notes of Note from John F. Ince

Archive for the ‘Social Enterprise’ Category

7 Tips for Social Enterprises Looking to Raise Capital – Don Shaffer

What does it take to succeed? Based on my experience as an entrepreneur and now a social enterprise funder, these seven strategies–a mix of fundamental business building and savvy approaches to fundraising–will put your enterprise in the best position to get the capital it needs to realize its vision.

1. Build a stellar management team. Just as real estate is about location, location, location, raising money is about management team, management team, management team. The first question funders have is “Who is running the business and what do they bring to the party?” Do a ruthless assessment as early as possible. And if you have a gap, say so. Don’t force funders to hunt for weaknesses in your organization–it makes you look bad.

I recently met with a potential borrower that gave us no information about the management team other than their names. They have a couple million dollars in revenue and it’s a pretty complex business for the size–and they botched their financials to us. The business was a perfect fit for us, but it made us nervous that they not only didn’t seem to have a finance person, but also didn’t seem to understand that it was a problem.

2. Ditch the 70-page business plan binder. Funders don’t want to plow through that, and they won’t. Go with a one-pager that focuses on the top questions on the funder’s mind: Are you addressing a real problem? What’s unique about your business? Why you? Is this a growth business or a lifestyle business?

via Don Shaffer: 7 Tips for Social Enterprises Looking to Raise Capital.


Why Is It Difficult to Align Strategy with Social Impact?

In Michael Porter’s 1996 article “What is Strategy?”, he defined a company’s strategy as differentiating its activities from competitors to create a unique and valuable market position.  This article was framed from the perspective of a for-profit company seeking competitive advantage and profit.  However, Columbia Business School’s 2012 Social Enterprise Conference is asking how we can re-frame this narrow definition of strategy and build strategies within and across sectors to make social impact and tackle major social and environmental issues.There are several challenges to creating coherent strategies across sectors that will align numerous organizations.  First, the desired outcome is not obvious. For-profit companies can rally around maximizing shareholder value as the indisputable goal, but it is difficult for organizations fighting poverty to determine which outcomes could be measured to signal success.  Second, it is arguable which activities will most effectively lead to a desired outcome to reduce poverty or improve public health.  This continues to be true though organizations are using innovative data approaches to measure their outcomes. Finally, even with a game plan, financial incentives generally don’t exist to propel various organizations to execute on a single strategy.  In addition, the sources of funds and the priorities of funders can dictate the substance of many strategies.

via Why Is It Difficult to Align Strategy with Social Impact?.

The Revolution at Home – Nilofer Merchant – Harvard Business Review

Through the financial crisis in the later part of 2008, far too many people have lost their homes and their jobs, with the banking industry paying bonuses to the executives involved. Umair Haque describes what we are experiencing, as a “metamovement, an increasingly resonant reverberation of people challenging a brutal state of malfunction, challenging the Great Splintering of institutions and social contracts.” As Tom Friedman puts it, were not entirely clear what exactly “it” is, but somethings happening here.Whatever is happening, there are economic and moral challenges involved. And it creates new challenges for businesses.In their 2009 book The Spirit Level, Richard Wilkinson and Kate Pickett argue that gross inequality tears at the human psyche, creating anxiety, distrust and a range of mental and physical ailments. They back up their argument with mountains of data. Most every measure of well being — from life expectancy to mental illness, violence to illiteracy — is affected less by how wealthy a society is on average, and more by its level of income inequality. Societies with a bigger gap between rich and poor are worse for everyone in them, including the well off. And America now has the widest gap in income inequality of every developed country measured.Inequality undermines the trust, solidarity, and mutuality. And yet these elements of trust, solidarity, mutuality are the core of a culture of innovation. When anyone discounts the human stuff that enables people to create together, all the quantitative business stuff gets harder. Business performance goes up when engagement and collaboration go up.Engagement and collaboration sit at odds with extreme inequality. When only a few titled leaders set direction and the rest of the talent are meant to simply execute, organizations end up with a culture in which people wait to be told what to do. Ultimately, this slows the companys growth velocity and hurts every aspect of performance. This is the subject of my first book. When we open up the spigot of an organizations talent, and combine it with a culture that lets all people contribute to innovation, we can and will come up with endless ways to create a better prosperity. Some are calling this direction a human economy, which captures a certain truth.Many question if this set of protests mean anything, or if anything will change. But there is an undercurrent worth listening to, of people seeking a shared narrative that will unite more than divide. Whatever you choose to call it, the point is this: together, we win. More often, and better. We no longer live in a world where a few create and the rest do. We no longer live in a world where we are talked at. This shift means were all responsible for co-creating what comes next.

via The Revolution at Home – Nilofer Merchant – Harvard Business Review.

Bill Gates backs Tobin tax, G20 unconvinced | Reuters

(Reuters) – Microsoft founder Bill Gates on Friday backed a controversial financial transactions tax to aid development in poor countries but France acknowledged that most G20 countries did not like the idea.

The Gates Foundation was tasked by French President Nicolas Sarkozy to examine ways the Group of 20 leading economies could raise new money for the world’s poor, including plugging an estimated $80 billion to $100 billion funding gap to tackle climate change.

In a report presented to a meeting of G20 ministers in Washington on Friday, the billionaire philanthropist proposed taxing financial transactions, tobacco, and shipping and aviation fuels, according to details of the report obtained by Reuters.

With Western donors in Europe and the United States under pressure to cut their budgets, and a euro zone sovereign debt crisis escalating, developing nations are desperately seeking new ways to lift themselves out of poverty.

Gates’ point, according to a draft technical note on the report, is that if African countries maintain current average growth rates, their economies will double by early next decade and GDP per capital will rise by more than 50 percent.

The Gates’ report said a financial transaction tax could raise “substantial resources” for developing countries. By some estimates a financial transition tax could generate as much as $250 billion if derivatives contracts were included.

But the report suggests even a small tax of 10 basis points on equities and 2 basis points on bonds could bring in about $48 billion from G20 member states, or $9 billion if only adopted by larger European countries. A basis point is one one-hundredth of a percentage point.

The levy, commonly dubbed a “Tobin tax” after the U.S. economist who proposed the idea in the 1970s, has been mooted at regular intervals to raise funds, but has always struggled to get off the drawing board because it is easy to avoid unless all countries impose it.

“Tonight nobody can say that such a tax on financial transactions is not technically feasible,” French Finance Minister Francois Baroin told a news conference after a G20 meeting on development issues. “We are making progress on the technical coherence of this project,” he added.

via Bill Gates backs Tobin tax, G20 unconvinced | Reuters.

Bill Gates To G20: Financial Transaction Tax Could Raise Aid For Poorer Nations

A report by Microsoft founder Bill Gates to Group of 20 ministers on Friday proposes raising new funding for poorer countries by taxing financial transactions, tobacco, and shipping and aviation fuels, according to details of a G20 report obtained by Reuters.

The Gates Foundation was tasked by current G20 chair, France, to look at how the governments of its member countries could raise new money for aid to developing nations, including plugging an estimated $80-100 billion funding gap to help the poor adapt to climate change.

With traditional Western donors in Europe and the United States under pressure to cut their budgets, developing nations are looking at news ways to raise resources to develop their growing economies.

Gates’ point, according to a draft technical note on the report, is that if African countries can maintain current average growth rates, their economies will double in size by early next decade and gross domestic product per capital will rise by more than 50 percent.

While countries in Africa are looking increasingly toward China and India for support, there is also pressure on Western donors to keep their commitments to aid impoverished nations.

World Bank President Robert Zoellick this week warned that the European crisis was already affecting developing economies through declining demand. He said budgets of poor countries have not yet fully recovered from the double shock of the 2008 global financial crisis and a food price crisis.

via Bill Gates To G20: Financial Transaction Tax Could Raise Aid For Poorer Nations.

Banking on the big society | Social enterprise network | Guardian Professional

With the plans for the development of a “big society bank” endorsed on Monday, government has never put social enterprises so squarely at the heart of its policy-making. This year alone, the big society bank will receive an unprecedented £260m to invest in intermediary organisations, compared to the £360m that was injected into the social investment market by the Labour government over 13 years. Despite this, growing a social enterprise that covers its costs and genuinely helps vulnerable people remains an almighty challenge.The Big Society Bank is clearly good news but obstacles still remain and social enterprises will need to pick fights judiciously if they are to respond to the tough problems facing society. The bank will enable intermediaries to offer cash as capital investment not revenue.

via Banking on the big society | Social enterprise network | Guardian Professional.

Nobel Laureate Muhammad Yunus Fights To Keep Job At His Microfinance Bank

DHAKA, Bangladesh — Nobel laureate Muhammad Yunus filed an appeal Wednesday with Bangladesh’s highest court in a final attempt to keep his job at the microfinance bank he founded.

Last week, Bangladesh’s central bank ordered 71-year-old Yunus out of Grameen Bank, saying he was violating the country’s retirement laws. A High Court upheld that decision on Tuesday.

An outspoken government critic, Yunus has said his dismissal is illegal and alleged that the government is trying to take control of his bank.

The appeal is Yunus’ last legal option in his bid to remain Grameen’s managing director, a post he has held for nearly 30 years. At issue is whether the central bank was properly consulted when Grameen exempted Yunus from its mandated retirement age of 60.

Supreme Court judge Syed Mahmud Hossain said arguments on the appeal will be heard March 15.

Yunus and Grameen Bank pioneered the practice of using tiny loans to help lift people out of poverty, inspiring such lending throughout the developing world. The concept won Yunus and the bank the 2006 Nobel Peace Prize.

via Nobel Laureate Muhammad Yunus Fights To Keep Job At His Microfinance Bank.