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Rise of the hybrid: Walking the (hybrid) walk

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"Nonprofit principles can be applied to a business. I don't think of myself as an entrepreneur but a community organizer."
Lisa Moore, joint founder of the Rhizome Café, Vancouver

"After my presentation another delegate took me aside and said 'You aren't a social enterprise, you're a social purpose business.' To be honest, I don't really care, and I don't think that labels really matter to people at large."
Richard Derham, founder and general manager of TurnAround Couriers, Toronto

The first article in this series looked at how nonprofit and business principles now co-exist in organizations across Canada and the world. The second grappled with the legal and financial implications of this new reality. Although the projected billions of new social investment dollars may not yet have started to flow, hundreds of hybrid organizations are emerging regardless. Here we outline three examples of extant hybrids, the very personal journeys involved in developing them, and proof that the simple organizational labels we have used for years just aren't going to stick anymore.

Vancouver café culture, but not as we know it

Lisa Moore set up the Rhizome Café with her partner in 2006. A restaurant at first glance, but it's much more than that, Moore says. "We are a community space first and foremost, supported and sustained by the people who use it." Rhizome supports social justice struggles and helps marginalized voices be heard by hosting all manner of events (meetings, exhibitions, films, fundraisers) by community groups. These groups contribute what they can and Lisa works with them to maximize the impact of their event.

But the café also has to sell enough food and drink to meet all its overhead and pay the staff a living wage. "We have never generated a profit and never will. We invest all revenue back into making the Café more sustainable and a better place to be and work" says Moore. "Not being able to rely on outside funding makes things extremely precarious — but better that than to compromise our reason for being." This means she has done a lot of cooking and washing-up over the last five years.

"We didn't set up as a nonprofit because we knew there would be no funding. Besides, I was burnt out by grant writing," she explains, referring to her work as an organizational development consultant working across North America. "We wanted political autonomy. We decided to experiment with a new economic model, something supported by our users. I'm anti-profit and I don't think of myself as an entrepreneur, but a community organizer. But legally and practically, we are a business."

There is no board or membership, but levels of user involvement would be the envy of many nonprofits: "One thousand, seven hundred people receive our newsletter, we solicit constant feedback from surveys and can call on individuals when we need them" says Lisa. This includes creating a group to examine new creative economic models to take the business forward. Another new experiment is establishing a nonprofit branch, the Rhizome Movement Building Centre, that will further Rhizome's mission by providing direct capacity-building assistance to grassroots groups.

"I believe we have created a place where some people can feel comfortable in a way they may not be in any other place in our city," Moore explains.

"The people who come back aren't just customers, but people with a connection to our space," she says. Not quite your normal café.

A car-sharing cooperative that thrives on competition

The first car-sharing cooperative in North America opened in Vancouver in 1997, with 16 people sharing two cars. Today 7,000 members have access to 240 vehicles via an online booking system and on-board computers log the miles you have driven. The name of the organization changed earlier this year, from the Cooperative Auto Network to Modo, a name as carefully researched and crafted as its colourful new logo.

"We realized people weren't joining because they hadn't heard of us or seen us. Now people tell us they are seeing our cars all the time," explains Tanya Paz, business development director. Evolution, yes, but also a response to competition. Zipcar, a global for-profit corporation, which arrived in Vancouver in 2007, stresses similar environmental and cost saving benefits as Modo. Zipcar users pay an hourly fee, but not the one-time refundable $500 share purchase of Modo members.

What did Modo make of the competition? "It helped us, because interest in car sharing increased," says Tanya. And not shying away from the challenge, Modo adapted its own services, creating a new category of casual membership for those not wanting to join, but carrying a higher hourly fee.

A question on the importance of Modo's cooperative legal framework proved timely: "At our management meeting this morning we agreed how great it was to work for a co-op: no head office and no corporate culture. Our members also clearly state being a co-op as one of their main reasons for joining," explained Paz — although she also readily admits this does not necessarily mean they turn up at the AGM.

Anyone thinking Modo is starting to look and feel a bit corporate itself might note its investment in other car-sharing organizations across five continents, including giving away the sophisticated software it has developed. BCBusiness magazine put it thus when ranking Modo the 15th most innovative company in the province: "Giving away your core product to competitors isn't a typical business strategy, but when you're out to change the world, your number one priority has got to be expanding the market."

Competitive business, social service and money saver for government

Richard Derham had a successful corporate sector career in Toronto. Returning from work he regularly met young street people: "Articulate and switched on….they just needed a bloody break," he said. Derham decided to do something about it and in 2002, TurnAround Couriers was born.

The company hires only at-risk youth as couriers and back-office staff. They gain the experience, confidence and the financial means they need to turn their lives around. But as their website spells out, "the company is not a charity — it is a competitive business with a heart." Coming from the for-profit world himself, Derham felt most comfortable using a business model for his experiment in social hiring. "People can be cynical of charities — it's simpler to say we are a business," he says.

Simple yes, but profitable, no. An angel investor helped early on, but Derham and his family have sacrificed a lot to keep TurnAround Couriers alive. The small salary he once drew was reduced to zero for 18 months and more recently he started to use his old professional skills part-time.

For all the political excitement around social enterprise and double bottom lines, Derham doesn't think much more private or public funding is available than it was in 2002. He would love to provide services to the government, but they have yet to respond positively to his repeated pitches for business.

This wouldn't be much to ask, given that between 2002 and 2008 TurnAround Couriers saved the government $432,000 (as calculated with Social Capital Partners in a Social Return on Investment Report, representing the savings in shelter costs, income support and employment service support).

Derham thought others might copy his model, but is thankful they haven't. "The courier business is immensely competitive and a declining industry — without our social mission we wouldn't have a lot of the clients we have. We do good and differentiate our business in the process."

Making a living while giving back

Derham and Moore have made tremendous personal sacrifices for social good. Paz's skills would be welcomed in countless for-profits. All could have made good money in far less demanding careers. Their drive, determination and deep concern for social causes more than match many of the volunteers and staff who populate the nonprofit sector.

In years gone by, nonprofit or for-profit was a well-defined career choice. Not any more, says Allyson Hewitt advisor, social innovation and director, social entrepreneurship at MaRS, in Toronto. She believes the current generation is looking at things differently: "They want to make money and change the world, to live their values and not get poor."

Paz says she regularly has MBA students who are impressed by Modo banging on her door, something she didn't really expect.

But are there enough jobs to go around? If not, all indications are they'll make their own, or find some kind of compromise they can live with. It's clearly up to the employers — however they are defined in the new hybrid world — to attract and retain this new pool of talent, whose philosophies may differ from their own.

A final example and a personal conclusion

And what about the consumers? The last example comes from my own experience and reminded me that new legal forms, definitions of social enterprise, theories of hybridity and the finer points of social investment don't matter much when individuals have personal and urgent needs.

Last month my dad fell out of bed at his house in the UK. The injuries he sustained, combined with his existing Parkinson's, make it impossible for my mother to now care for him at home.

Handed the list of approved private care providers, she began to visit them with a heavy heart. Most homes had prohibitive monthly fees that would need her to sell her home of 40 years (care of the elderly having been largely privatized in the UK). Only one within regular visiting distance had its fees covered by the state subsidy. So how could it provide the high quality of nursing care to meet dad's needs?

Its website provided the answer. The organization espouses classic business principles and makes clear its reliance on fees — but these fees are minimized by fundraising and the use of volunteers. Linked to a charity of 150 years' standing, the umbrella organization owns three homes and also campaigns to improve the quality of care for the elderly.

Hybrid, social enterprise, double bottom line, cutting edge 21st century economic model? Mom couldn't care less. "They seemed very nice — I think he'd be happy there."

Further Reading

Enterprising Non-profits has detailed case studies available, or visit clearlyso.ca, a resource hub for social business, enterprise and investment.

David Evans is a nonprofit consultant based in Vancouver. He has worked as a director with UK, European and international nonprofits and is particularly interested in appropriate education and training for the sector. David can be reached at Evansdn@aol.com or 778 883 7951, or via his website at davidnevans.weebly.com/index.html.

Please note: While we ensure that all links and email addresses are accurate at their publishing date, the quick-changing nature of the web means that some links to other websites and email addresses may no longer be accurate.

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