SEV FunLogo.TIFSocial Enterprise Case Study



This case study represents the far-reaching benefits of a social enterprise program such as Expedition™.  Not only can this result in a business plan for earned income, but other lasting benefits can occur such as leadership developed, team work realized, barriers broken, formal and informal collaboration models and mutual support systems established, management skills strengthened, discipline, programming, new understandings of market needs and market trends, enhanced stakeholder communication, and a more efficiently and effectively managed nonprofit organization that can welcome and embrace change.


The Participants: 

Nine independent regional 501(c)3 heritage/tourism organizations with a single large federal/state funding source.  Individual  organizations have executive directors, small staff and independent local boards of directors.

The Situation:

Anticipated large reduction or total loss of primary state/federal funding by end fiscal year 2013 (up to $75,000 per organization). 


The Social Enterprise Journey


Session One, September 2011.

Representatives from both board and leadership staff of all nine organizations first met in September, 2011, to explore opportunities for earned income to sustain their organizations in response to the threat of funding reduction or total loss.


While the organizations had usually communicated and cooperated, they had never fully collaborated on a single venture. Certainly, issues of turf, control and even confidentiality were likely to surface.


The first day-long meeting, facilitated by Jean Block, president of Social Enterprise Ventures, led the independent teams to explore their missions, core values and then to  identify their individual organization’s knowledge and physical assets.  The work was directed by the Expedition™  training program modules.


Throughout the meeting, there were forays into discussions of whether to remain independent or to find a way to build a new business model that would combine resources under one operation.  While the discussions were lively and honest, the result was an informal collaboration moving forward.


Session One Outcomes.


1.       A Guiding Vision statement was developed to encompass the purpose of all organizations on the road to sustainability: All Texans can connect with their roots and all visitors can experience the Texas story.

2.       An inventory of state-wide organizational assets was developed.

3.       Teams were established to begin market research with stakeholders, sharing the research results among all teams.

4.       Each organization was to propose potential earned income ventures at the next meeting.


Session Two, February 2012.

Again, the second day-long meeting was facilitated by Jean Block. Research was shared and several potential earned income ventures were proposed as a result of the initial stakeholder research.


Objective decision-making criteria were agreed upon to assess the initial feasibility of the potential ventures which leveraged the individual and collective organizational assets.


There was further discussion about the feasibility of remaining independent or establishing a formal collaboration to achieve the goal of sustainability. No decision was reached. As expected, some of the discussions revealed some discomfort and unwillingness as to division of labor, a sense that historically, some players had done more than others and a sense from some participants that a true formal collaboration could not likely be achieved.


Session Two Outcomes.


1.       Agreement was reached to continue an informal collaboration on earned income, while each organization would also continue to explore an individual income opportunity

2.       Ground rules were established for participation in research and feasibility studies and even further, establishing  agreement that any participating organization could drop out of the process without rancor.

3.       Based on the objective decision-making criteria, 31 potential income ventures were reduced to three for research and feasibility and three cross-organizational teams were established and team leaders identified to carry forward with feasibility studies, using the Expedition™ workbook and guided homework, facilitated by Jean Block:

a.       Tours, tour support, collaborative efforts.

b.      Media network

c.       Administrative fee for service


Homework and Internet Meetings Between Session Two and Three.

As expected, some teams and team leaders progressed quickly through the research and feasibility studies, while others lost momentum and focus. Several live Internet team meetings were facilitated by Jean Block to assist in focusing efforts and achieving results.


Throughout this interim period, there appeared to be a new and open spirit of collaboration between the original nonprofits. At this point, one organization opted to pull out of the collaborative effort and to explore its own earned income opportunities, without a negative stigma.  Also during this time period, one of the original executive directors left her organization to pursue further education, reducing the total participating members to seven of the original nine.


The remaining teams and team leaders progressed with research to verify the feasibility of the three earned income venture ideas.


Session Three, May 2012.

Board and staff representatives of the seven independent nonprofits met for their final meeting facilitated again by Jean Block. 


The three cross-organization research teams presented results of research findings on the three venture ideas and verified the potential feasibility of all three earned income ventures, although the research had modified some of the initial ideas to some extent.  Additionally, all teams discovered valuable information that will be incorporated into their current operating structure, programs and services to better serve their missions and to take advantage of their changing marketplaces.


No separate organizational ventures were developed or proposed at t his point.


The media team was sub-divided into two teams to continue research into two or more media-related ventures.


Clearly, the last hurdle to be overcome was developing a business model for the three earned income ventures:

·         Would one of the nonprofit organizations be paid to manage the businesses?

·         Or, would management be divided?

·         How would the business expenses be divided? Profits divided?

·         Could these new business ventures succeed under the current independent organizational structures?


It was clear to all participants that a new business model would have to be established and that formal collaboration was required to achieve the initial financial goals set several months prior.


Session Three Outcomes.


Total and enthusiastic agreement resulted in agreement to establish an LLC to complete the business plans for the three earned income ventures and manage the business ventures going forward. 

·         Expenses and profits would be shared equally among the founding LLC partner/members.

·         Initial investment of $5,000/agency would be confirmed by the participating organizations’ boards of directors by July 1, 2012, and first year investment (2013) of up to $5,000 per partner/member was required.

·         An RFP would be developed by the LLC to contract with a business manager and to explore contracting with an independent business consultant to facilitate completion of the three or four  initial business plans.


Summary and Conclusions


Initially, nine independent nonprofit organizations were forced to consider new revenue sources and funding paradigms in response to serious threats to their existence as a result of potential losses of up to $75,000 each from their traditional funding source.


While the independent organizations met often, there existed a sense of competition, some level of mistrust and historic reticence to share assets and resources, some ‘score keeping’, and no history of formal collaboration.


Additionally, while these organizations shared an over-riding mission and purpose of promoting and sustaining heritage and culture, their programs were regional and only collaborated sporadically.

There existed a type of entitlement mentality, reinforced by the funder, who had not prepared the independent organizations for the drastic changes required if/when funding levels decreased dramatically or were discontinued all together.

Quote from a participating Executive Director

“Although my board and I realized that we needed to address our long-term sustainability, we were uncertain as how to proceed.  Moving through the Expedition training modules was work and required a dogged determination, but it was well worth it.  I cannot overemphasize the value of the process itself.  While we are now enthusiastically optimistic about our future and a couple of business opportunities, we now have tools to assist us with future “expeditions” and understand the real value of constituent feedback and solid market research.”


The Expedition™ training program was developed in 2006 by Jean Block, president of Jean Block Consulting, Inc.  and Social Enterprise Ventures, LLC,  to provide a focused, guided method for nonprofit organizations to explore earned income opportunities and develop a well researched and feasible business plan, leveraging organizational assets.


Jean Block

June 2012