ASU Lodestar Center Blog

Current nonprofit sector research and recommendations for effective day-to-day practice from ASU faculty, staff, students, and the nonprofit and philanthropic community.

Tuesday, December 29, 2020 - 8:16am

Innovation

Illustration by Jocelyn Ruiz

posted by
Alyssa Huntley
Spring 2020 Alumna, ASU Master of Nonprofit Leadership & Management

While it might seem contrary to the type of organizations nonprofits are, they must earn some money to fund the good work they hope will be sustainable community solutions. Typically, that money comes from donations, grants, or foundations tied to limited projects or programs, which limits the longevity the funding actually has and limits how long the organization can sustain a solution. Social enterprises, however, could help solve this problem.

Social enterprises are when money-making endeavors aim to have a social impact. This can be an existing business opting to start working toward a social mission, a business partner with a nonprofit on a social issue, or a nonprofit deciding to create a money-making venture of their own to fund a community solution.

Risks and rewards

With all things come risks and rewards. Social enterprises are not cheap and financial investments of this size, particularly in the nonprofit world, can make executives and leaders hesitate. These endeavors are also a huge investment of time. With nonprofit staffs often stretched thin, it can be hard to see where you might begin to find the time to start one. However, if you can answer all of these risks, there is a huge payoff to be had.

Nonprofits can be pushed by social enterprise to keep moving forward at a more rapid pace. Berzin and Cameron warn nonprofits that they must keep moving in this way or risk getting “run over” in the process. Social enterprises also create new and diverse revenue sources that can be used with more flexibility than grants often can be.

Making solutions sustainable

Perhaps most importantly, social enterprises can help create sustainable solutions for communities if properly managed.

Mata-Lima explained sustainable solutions as solutions that last over time without having a negative impact on the community they are aimed at serving. It’s a simple concept, but one that requires quite a bit of adaptability. Communities are constantly changing, and no one solution is going to be the answer forever. New issues may become the top priority as old issues become less of a problem. A sustainable solution needs to keep up with these changes.

In order to do this, leaders must take some time to get on the right path, and make sure they stay on it.

A pathway from social enterprise to sustainable solutions

To get on the right path, you need to first find out where you’re going. Fowler, Coffey, and Dixon-Fowler explain that the first step toward a meaningful solution is finding out what the community needs. It’s important to keep in mind that this isn’t what you think they need. In order to be sure you’re understanding the community properly, you need to take the time to talk to them. Go out into the community and meet people. Survey them about community issues. Collect that data and then use it to inform the solution you want to put in place.

Once you have a plan, it’s time to start building it. This will often require an investment of time and money. At this point, finding a partner can be incredibly beneficial. Consider another nonprofit, or business working in the same field who can help ease financial burdens and offer new insights and ideas as you start the heavy lift of building up a new enterprise.

As your enterprise is founded and starts to grow, you’ll need to be able to measure your success. For a social enterprise, this is twofold: measuring the money, and measuring the social impact. To measure profits, using traditional bookkeeping and financial metrics will be acceptable. Measuring social impact is a bit more difficult. Rossi, Lipsey, and Freeman suggest using program evaluation to measure the strengths and weaknesses of your social impact. Do these evaluations frequently so you can catch if you’re heading down the wrong path or simply need to find a new route as priorities change. This will help you adapt which will encourage sustainability.

In order for your enterprise and its solutions to be sustainable, you will need strong leadership to guide it. I strongly recommend reviewing Jim Collins’s concepts and seek out or become a leader who follows his five part framework toward greatness. There’s a plethora of information on his website.

If you are able to take the time to discover what the community truly needs, find a partner who can help you succeed, measure your progress toward your goals, and become or find a leader who will push you toward greatness. You absolutely can build up a social enterprise that will develop sustainable solutions for community issues.

Explore More:
Program Evaluation
Jim Collins

Alyssa Huntley is a graduate of the Master of Nonprofit Leadership and Management program at Arizona State University. Huntley is a web content specialist at the American Council on Education and earned her bachelor’s degree in English and history at Mount St. Mary’s University in Maryland. She lives in Washington, DC, with her husband, Kevin, and their half-tailed cat, Ellie. 

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