Social Capital Partners (SCP) is an innovative example of a nonprofit that has aligned its business with its charitable purposes: SCP facilitates financing for private-sector companies at a competitive interest rate; in return, the companies commit to hiring staff through social service agencies.
In this win-win scenario, many of the businesses working with SCP are franchisees wanting to purchase locations and are having a difficult time getting financing. For every person hired through community services and who remains employed with the company for three months, SCP drops the interest rate charged.
Over the last six years, SCP built four successful social enterprises including a property management firm that employs women who are victims of violence in Vancouver and a renovation company that employs urban aboriginals in Winnipeg. These businesses provide jobs for 300 people hired through social service agencies, but SCP wanted to increase the scale of their impact. Working with the private sector has allowed them to do this – they have helped finance and staff more than 50 franchises, with only a 1% default rate. As franchisees have the success of the model and the excellence of the staff, corporate stores have asked SCP to help them with hiring from social service agencies and to develop customized pre-employment training, without the need for financing.
SCP Vice President and General Manager Magnus Sandberg says that in Ontario alone there are more than 1,200 community service providers. SCP creates strategic relationships and provides a single point of contact between the private sector and these social services agencies whose clients range from new Canadians to people with disabilities, aboriginal people, and women training to re-enter the workforce.
SCP’s founder, Bill Young, suggests all foundations should invest up to 10% in social enterprise programs like SCP. He notes that while green energy investments can produce as high a return as typical investments, social investing does not typically generate the same kind of return. However, Young suggests that instead of investors giving away a portion of income to charity, they can use a portion of money to invest in social financing in the first place.
SCP developed a white paper on what they learned as a nonprofit about setting up a social enterprise business – the business model, the tradeoffs, the decisions, etc. Sandberg says, “Today many nonprofits want to set up social enterprises and are often naive in what it takes.” The two crucial lessons, Sandberg says, are that a nonprofit must have a very simple business model, and must have business acumen or in-house expertise to run a successful business.
Susan Fish is a writer/editor at Storywell, a company that helps individuals and organization tell their story well. She has written for the nonprofit sector for almost two decades and loves a good story.