Step One in Building Scale: Commit to Learning – Ben Thornley

There are many outstanding social enterprises focused on creating jobs for people with barriers to employment.

These are vibrant businesses like CEO (the Center for Employment Opportunities) in New York, Chrysalis Enterprises in Los Angeles, Innovative Packaging Solutions in Minnesota, Reworx in Atlanta generating millions of dollars in revenues by contracting with large private and public sector clients. They have developed innovative models for supporting their employees, literally transforming lives. And they are experts at telling their dual-purpose story to key stakeholders: about providing competitive, high-value services to customers, and delivering unmatched, evidence-based impact for typically philanthropic or public sector funders.

So how far has this gotten the field of social enterprise?

My first answer is a fair distance. There are at least 80 organizations focused primarily on workforce development reporting to the Great Social Enterprise Census, with revenues of over $400 million, creating thousands of jobs. And because the Census is limited in its reach, the reality is larger still. The AbilityOne program alone supports the employment of over 130,000 people affected by blindness and significant disabilities annually, through over 500 affiliated nonprofit providers.

My second answer is not far enough. Clearly there are way too many people locked out of employment who are perfectly capable of working and desperately want jobs, including those affected by disability, homelessness, incarceration and addiction. This is precisely why REDF is focused on building scale in the market. Social enterprises currently employ tens of thousands. For the good of America’s social and economic wellbeing, we need them to employ exponentially more.

One challenge with the idea of scale, however, is that we gravitate towards familiar ways of getting there, for example by exposing more private sector buyers to the power of social enterprise, thereby increasing the number and size of these business relationships, or playing a more active role in local politics, as Robert Egger has suggested.

To be sure, these are promising strategies that many social enterprises know well and are ideally positioned to leverage. But in addition to building on what social enterprises do know, it’s essential that we embrace the exact opposite: what they don’t. If the status quo on employment for people with barriers is unacceptable, then it follows the status quo must change.

There were a number of discussions focused on the areas in which social enterprises are lacking knowledge or expertise at REDF’s Leadership Convening in May:

  • Marketing and branding remains challenging. The whole concept of “social enterprise” in the US lacks the cohesion and recognition it deserves;
  • There is little attention paid to the national policy environment (and movement building) beyond existing programs like AbilityOne, which is not surprising given most social enterprises are place-based, with deeper local connections;
  • Capital markets and the emergence of new tools like pay-for-success are extremely unfamiliar and vaguely threatening; and
  • Most social enterprises employing people with barriers are non-profit organizations. The for-profit model is less common.

For all we know, there may be some good ideas and opportunities in these areas – some momentum to be gained from a more compelling sector-level identity, another national policy initiative to match and build on AbilityOne, the utilization of growth capital through impact investing (i.e. loans or quasi-equity), or the different approach that incorporating as a for-profit necessitates.

Make no mistake. The actual products, services, or programs being delivered at scale need to be grounded in proven practices. Why would anyone pay for them otherwise? Yet there is more flexibility to experiment with how these services are being procured, funded, and structured.

The answer to where exactly this experimentation leads the field can only come with time. For now, social enterprises should commit to the learning exercise, summoning all of their creative energies and courage in the face of the unknown.

– Ben Thornley is a Strategic Advisor to REDF on the Pathways to Scale project – an ambitious, year long research initiative showcasing the power of social enterprise and the practical steps that have enabled outstanding organizations to flourish. He is also the founder and managing director of ICAP Partners, a consultant and collaborator on the business of impact investing. Ben was previously a managing director (and remains a strategic advisor) at Pacific Community Ventures, a nonprofit Community Development Financial Institution. He is the coauthor with Cathy Clark and Jed Emerson of The Impact Investor: Lessons in Leadership and Strategy for Collaborative Capitalism (Jossey-Bass, October 2014).

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