The first phase focused on investing time and money into “purpose-built” social enterprises. After demonstrating hybrid models could succeed on both fronts, SCP entered its second phase. Hoping to increase impact, they turned to the private sector and worked at establishing a “cookie cutter” approach, financing franchisees, with entrepreneurs agreeing to hire employees facing employment barriers in return.
Now, with a scalable, proven model in tow, Bill Young and his team have entered phase three: altering the face of human resources. Adopting social hiring programs, the idea is that businesses will help those facing employment barriers enter the workforce. Young sat down with SEE Change to discuss this exciting next phase, his view of social entrepreneurship, its challenges and future prospects.
You decided to incorporate as a nonprofit. Why? What are the advantages and disadvantages?
We actually tried to be a charity way back when, and I’m kind of glad we didn’t because we have way more flexibility as a nonprofit. The nonprofit status allows us a bunch of great things. For example, we’re able to tackle more with our resources because of our relationship with the Monitor Group, who gave us pro bono help, and that’s a huge value to us. In this phase three, they helped with research, our business plan, and looking at things we didn’t have resources or sophistication to look at.
The nonprofit status has a reasonable amount of strategic flexibility, which you wouldn’t have with charitable status. But you still have the ability to say, “Look, we’re not doing this for any private gain whatsoever, so you as a corporation can feel comfortable about providing resources knowing you’re doing it for a community benefit.”
But our regulatory structure here in Canada needs dramatic change and it doesn’t make it easy for hybrid models. No matter what form you take, whether it’s charity, nonprofit or for-profit, you’re going to be swimming against the tide a little because we haven’t created a tide for these hybrid models. So, with the caveat that no structure was good in terms of what we chose, a nonprofit at least allows us more flexibility from a strategy standpoint.
Unfortunately, the current structure discourages people like me from doing this kind of stuff. We should be trying to figure out a way to harness the creativity, help entrepreneurs apply their business backgrounds in trying to figure out new ways to solve some of our structural social challenges. We just don’t create an enabling environment to do that.
How can Canada be a more enabling environment for social entrepreneurs?
I would love to see tax change; the US and the UK have shown that tax incentives help a lot, but I just don’t think it’s practical. Whereas, I think there’s more hope of doing something that doesn’t cost anything. They created a different kind of company in the UK – the CIC. Even though they don’t think they got it completely right, I would love to be criticizing the model that we come up with rather than criticizing the fact that we don’t have any model whatsoever.
And I don’t think we do enough to create new capital pools. In the US, they have the Community Reinvestment Act, and if I was a regulator I would make it so that foundations had to use some of their investment assets to invest in social businesses, whether affordable housing, social enterprise, microfinance.
You also want to figure out ways to create new kinds of structures. There are blueprints for that, whether B Corporations or L3Cs in the US, or CICs in the UK, where you can invest without thinking you’re offside on any regulatory issues or that you’re not getting a charitable receipt. In our social investment world, we only have one financial instrument, which is program grants. And we have one financial value proposition to an investor, which is, “Here is your charitable receipt.” That’s a hugely limiting way of finding new and innovative ways to address these things.
That’s what the enabling environment should be thinking about: how to create capital pools, how to create new value propositions, and acknowledge these hybrid forms of organizations as new creative ways to solve some of these challenges in more sustainable ways. The good news is some of that is happening. It’s slow, but it’s happening.
What are some of the lessons we can learn from the UK and their blueprint for social entrepreneurs, as inspired by Ronald Cohen?
What I liked most was not necessarily that it was a perfect blueprint but I loved the way they did it. They put forward five recommendations only, not 195, not 434 pages of a white paper with a litany of things that make it easy for government to bury and say “Yeah we did 2 of those 612 recommendations”. And it was also really smart that they didn’t abandon the task force after the recommendations; they had to report each year on what happened to them. It held the government to the fire.
And, by getting Cohen, a high profile businessman, it meant it was on the front pages of mainstream business press. In Canada, none of our five main banks really have any clue about this whole thing. So the recommendations were good but it was the way they did it that was brilliant. And it spawned a whole bunch of other stuff.
We need someone of that profile, in the mainstream business world who is willing to say, “I will step forward because I get this and it’s really important and I can leverage my talent to create a whole new social finance field in Canada. We have so much creativity, here’s a huge opportunity for someone with imagination and desire to leave a legacy; that’s what Cohen got and captured.
You said you’d want to see a social investment bank in Canada. How far are we from that and what else does the future hold for this field?
I may not be the right person to create social investment bank because I don’t have 30 years of corporate finance experience but I know my way around finance enough that I could see the opportunity and could probably get on my soap box and get others to do it.
I do think it’s possible we’ll get one here. In some ways optimism is the fuel you need to carry on but I do see a real sea change in the Canadian context from nine years ago when I started. There’s a lot more people talking about these issues. There are political interests at the bureaucracy, policy, HRDC etc., all exploring this social investment area. We’re just way behind and that’s what’s frustrating. And this should be right up Canada’s alley, this whole notion of finding different ways of caring. You look at our political history and who wins top Canadian? It’s Tommy Douglas. Why are we so far behind? It’s crazy. We should be figuring out how to lead as opposed to catching up.
Name three things every social entrepreneur should have in their arsenal?
These are probably related to the top three skills any entrepreneur should have. The first is a zealous kind of optimistic persistence, a resilience, a strong belief in the idea. One can’t be fazed by the fact that there will be lots of obstacles in the way. Second is a willingness to adjust as you go. Some entrepreneurs stick so to the original idea despite the fact that there are data points that are saying it may be a bit wrong. On some things you have to be zealous and persistent but sometimes you can get blinded by the original vision. And third, do some real thinking about the people who can help the most and that you need as a stakeholder. “Where are the levers out there and how do I make a compelling case to those levers so they can get my vision and get as excited as I am about this.”
In many ways, a lot of things can lead to success. That said, there is a wheel of fortune that spins for us. Sometimes you’re in the right place at the right time and sometimes you’re not.