Social Enterprise in the Modern World: Navigating Monetary Profits with Social Change – Senator Kevin Murray

Social enterprise, which has become a more prominent part of our social zeitgeist lately, has actually been around for a very long time. Its origins can be traced back to organizations like churches, Goodwill Industries, and other non-profit thrift shops. Some were designed simply to add funding to support the mission of the sponsoring organization, while others were designed to provide training and/or employment for their needy clients; others tried to do both simultaneously.

As a charitable strategy, social enterprise appeals to people across a broad spectrum of ideologies. Its charitable goals appeal to liberals, its self-help approach appeals to libertarians, and its entrepreneurial spirit appeals to conservatives.

Given this dynamic, there is much discussion now about how to make social enterprises self sustaining and scalable. Much like any other business, the solution is relatively simple: SALES. Almost any problem that confronts a business can be survived with revenue. This is not to say that issues of talent, training, and expansion, among others are not significant, but revenue keeps the doors open. Even the often-cited challenge of access to capital for expansion is largely solved by generating revenue, which could support the debt service of capital.

The challenge then becomes how to generate sales in a competitive marketplace. In many cases, social enterprises provide services or make products using employees that either have disabilities or personal barriers that are less appealing to employers and their customers. There can be a perception by consumers that choosing to buy from a social enterprise is inherently less reliable than the relatively safe bet of an existing for-profit company.

In order to overcome this initial challenge 360 Degree Solutions, Weingart Center for the Homeless’ pest control social enterprise, engaged our colleagues in the Homeless Services world to support us in our endeavor. I am happy to say that our colleagues provided overwhelming support. In addition, REDF supported 360 Degree Solutions through the start up phase, and the refinement of our operations, and today we provide a quality, competitively priced service. But those sales are not enough to sustain our business for the long-term. We attempted, with some limited success, to expand our sales efforts to commercial customers. In order to achieve success in commercial pest control, we usually compete against a well-entrenched incumbent that might be a well-funded multinational corporation. This limited success is still not enough for long term sustainability.

[It should not be lost on any of us that as we pursue our social enterprises we are competing against and taking sales away from existing companies that also provide significant jobs and other benefits to their communities.]

Our next plan of attack for sales growth will be to approach government entities where the leadership may have an affinity for our mission, but this approach can require additional resources to follow the proper protocols. Something that would greatly help this approach is to promote legislation similar to that done for
Disadvantaged Business Enterprises, which could provide incentives to businesses that contract with social enterprises.

Another approach that we should consider is to market ourselves more aggressively as social enterprises with social benefits to the community. Corporate marketing is now awash in touting the environment benefits of products and attempts to wrap their company in a halo of social consciousness and community engagement. The most successful effort recently is the rise of Tom’s shoes. The idea that every sale sends a pair of shoes to a needy place is driving consumers to purchase their product.

Together with REDF we continue to hone our approach to marketing and growing our business, developing people, helping them overcome barriers, and delivering great products and services.

–Senator Kevin Murray (ret) is the President and CEO of the Weingart Center for the Homeless in Los Angeles. Previously Senator Murray served twelve years as a member of the California State Assembly and State Senate.

–This is part of REDF’s Accelerating Social Enterprise Growth blog series.