Author: Rolfe Larson

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Social Impact Bonds Begin To Catch On

Group of people holding hands together

Social Impact Bonds are finally moving from idea to reality, in a few states. These “pay for results” government contracts are a new form of financing where payment only occurs if the agreed-upon social results are achieved. No results, no money. Financing comes from a private sector financing intermediary, which secures funds from private investors and selects a nonprofit service provider. Often payment is based on how much government saves if the program succeeds. If the project is successful, investors get their principal returned plus interest.

Currently only “evidence-based, proven” programs carried out by large, high-capacity nonprofits qualify, although this will probably change as more SIDs are released. So far, three states — New York, Minnesota and, believe or not, Utah — have announced or launched SIB transactions, and ten others (most notably California, Texas, Illinois, Ohio, Pennsylvania and Colorado) are in the process of exploring or developing them.

SIB map-page0001

Here’s an excellent summary of the current SIB situation by state, and what kinds of nonprofit qualify, risks and challenges, from our colleagues at Social Impact Architects. Their newsletter is also the source for the graphic in this blog.

Quick update from that article:

“President Obama launched Pay-for-Success pilots in criminal justice and workforce development through the Departments of Justice and Labor, respectively. The Department of Labor awarded fund to Massachusetts and New York; awards from the Department of Justice have not yet been announced.”

Good luck!

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Crowd Financing Debuted Last Week (sort of)

A person giving money to another person

First the good news: Starting Sept 30, US federal law allows small startup companies to raise equity on the Internet, without the expensive barrier to register the shares for public trading with the Securities and Exchange Commission (SEC). Companies can now raise unlimited amounts of capital simply by using social media sites or elsewhere on the Internet.

This will help address the problem many small business owners face by creating a mechanism to connect with investors, which until had to be done “privately” — which for many small companies meant not at all. Continue reading “Crowd Financing Debuted Last Week (sort of)”

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What is a viable social enterprise?

Group of people having a business meeting

Here’s a suggested framework from my colleague Jim Kucher (founder/managing director, Income for Outcomes).

This reminds me of our earlier blog about social enterprise sound bites. That blog can be seen at:
https://staging.management.org/blogs/social-enterprise/2013/04/18/top-10-social-enterprise-sound-bites/
Here’s what Jim wrote:

A viable social enterprise must have:

• A viable social change theory (what makes you think you can actually effect the change you seek)
• Market opportunity analysis (both social and commercial – who is in this space, what are they doing, why is that not working)
• Venture feasibility study (again, social and commercial – are there enough customers, can you price competitively, etc.)
• Match to mission (sadly, not focused on nearly enough IMHO)
• Capital access plan (ok,so who’s gonna pay for this, and what is the plan for return on investment)
• Exit strategy (not just financial but social- how will you know when you have effected the change you seek)

Therefore, assisting in developing each of these becomes our work, and the way we go about that work becomes the “code”.

What do you think?
Hope this is helpful in your work.

Good luck!

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Intrapreneurial Business Plans

A man reading a business newspaper

Entrepreneurship is as invaluable to large organizations as it is to small ones, perhaps more so. While big companies often can provide the resources start-up businesses lack, they also typically provide all sorts of bureaucracy, slow decision-making and red tape that can stifle entrepreneurial spirits. This can apply to for profits or nonprofits, or for that matter, some departments of government agencies, such as driver’s ed programs, or gift shops at national parks.

The flip side of that is an entrepreneurial person or a group (sometimes called a “skunk works” team) that uses innovative and risk-taking strategies to convert an idea into a profitable finished product in a large organization. Those people are sometimes described as “intrapreneurs” as in entrepreneurs “inside” a big company. They pursue the goals of the organization, working hard to break through the innovation gridlock that prevents many large companies from taking best advantage of their resources. Continue reading “Intrapreneurial Business Plans”

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Are “Creative” Business Plans A Good Thing?

Person in suit going through a business document

Most people agree that a rigorous business plan is a good idea. Clearly it’s best to research the market and risks as thoroughly and objectively as possible. In contrast, a “creative” plan, one that involves sketchy research, is unlikely to meet with success.

Right? Well, maybe, but perhaps a certain amount of naivety might increase your odds of success. Here’s why: Continue reading “Are “Creative” Business Plans A Good Thing?”

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Small Business Habits

Man in grey suit working on a laptop

Here are a few habits for growing your business during the early years:

  • Be Consistent With Side Tasks (create checklists, follow up on them)
  • Clean and Tidy Up (literally and figuratively)
  • Keep Books (too often overlooked or underemphasized in startups)
  • Prepare for Tax Season
  • Schedule Interviews (forSstaff) Before You’re Desperate
  • Create and Follow A Business Plan

Source

These are all very simple habits, but easily overlooked. As the old adage goes, “mind your pennies and dollars will flow.”

What do you think?