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Winnipeg's Marty Donkervoort at the ceremonial circle of the Urban Circle Training Centre in the city's north end. Mr. Donkervoort's social enterprise company Inner City Renovation (ICR) renovated the building for the social organization. ICR employs people from the fringes of society that often would not be considered employable. (JOHN WOODS/GLOBE AND MAIL/JOHN WOODS FOR THE GLOBE AND MAIL)
Winnipeg's Marty Donkervoort at the ceremonial circle of the Urban Circle Training Centre in the city's north end. Mr. Donkervoort's social enterprise company Inner City Renovation (ICR) renovated the building for the social organization. ICR employs people from the fringes of society that often would not be considered employable. (JOHN WOODS/GLOBE AND MAIL/JOHN WOODS FOR THE GLOBE AND MAIL)

Giving changed

New breed of company blurs lines between charity and business Add to ...

Brian Pollock spent decades “wandering” from one province to another, working at a string of low-paying, temporary jobs. It was a life marred by instability — no job security, no benefits and no way of planning for the future.

That all changed when he landed at an unusual construction company in Winnipeg's north end.

Inner City Renovation isn’t a typical profit-driven business. It is what’s known as a social enterprise — an increasingly common type of business that blends a social mission with a drive for financial sustainability. Inner City's purpose is to employ people at the fringes of society – former gang members, people with criminal records or addictions, drifters and wanderers.

Mr. Pollock, 55, has now clocked his ninth year with the company. He won the province’s apprentice of the year award in 2008 and has worked his way up from labourer to certified carpenter to project manager and estimator. It’s the longest he's ever been with one employer.

“There’s not as much stress with worrying about where [the]next place to live is,” he says. “There’s stability, where I can have a home base.”

This new breed of business uses market-based models to tackle society's most pressing needs. The enterprises span the country, and likewise the economy, from Potluck's catering and restaurant in Vancouver's Downtown Eastside to Blue Sky DJ Service in Toronto and Just Us fair-trade coffee in Nova Scotia.

Some of the businesses are innovative startups run by savvy former business executives; others are little shops begun by a charity to generate income. And they're the sort of endeavour that is central to a new plan announced by federal Human Resources Minister Diane Finley to make it easier for Canada's charity and non-profit sector to create its own revenues.

More than 1,000 social enterprises have sprung up in Canada. Some, like Goodwill Industries, have been around for decades, but much of the growth has occurred in the past five years. Toronto alone has at least 150 social ventures, while British Columbia is home to more than 230.

It’s little wonder. Demand at many social services remains at recessionary levels, just as donations ebb and governments trim budgets. All these factors compel charities to search for a sustainable source of funding.

Indeed, a “huge shift” is occurring away from traditional philanthropy to creating viable businesses that address society's problems, says Mark Kramer, senior fellow at Harvard's Kennedy School of Government, who co-wrote a paper on the topic earlier this year – and since has travelled the world to speak on it. Businesses have the advantages of being nimble, responsive and scalable; and economic hardship has only increased the drive for entrepreneurship, he says. He calls social enterprise “a higher form of capitalism” and says it appeals to people of all political stripes.

Winnipeg’s Inner City Renovation is the brainchild of Marty Donkervoort, whose background blends Bay Street and Main Street. The MBA grad worked his way up to manager of corporate planning for Noranda Inc. But by the mid-1980s, the job entailed closing plants. One closing in New Brunswick resulted in 100 layoffs.

“That precipitated thinking differently about business, and what I wanted to do with my life,” Mr. Donkervoort says. “I thought, there's got to be a better way of dealing with peoples' lives and work.”

He proceeded to develop a business plan for A-Way Express Courier, a now-thriving Toronto service staffed by ex-psychiatric patients — people who had previously been considered unemployable.

Mr. Donkervoort then moved to Winnipeg and started Inner City, which he ran from 2002 to 2010. He is now writing a book about the experience.

His odyssey hasn't been without serious challenges. Turnover was higher than average. So was burnout. One spinoff company he started, in janitorial services, seemed a good idea because the work didn't require much training. But the wages the enterprise could pay were pitiful, and sometimes his staff didn't show up for shifts.

“A number of times, I'd be out there at midnight cleaning a school or a bank myself,” he says, before showing up to run the construction business the next day.

The janitorial services sideline was wound down after a few years. But Inner City Renovation has completed 325 projects and employed 150 people, many of them referred to the company by social service agencies. It began to turn a profit in 2009. The funding it gets from agencies like the United Way and various foundations has shrunk to 3 per cent of gross revenue.

But balancing competing aims of profit and social purpose is fraught. “If you can’t be financially sustainable, your social mission doesn’t mean anything,” says Mr. Donkervoort. “But at the same time, you can lose sight of the social mission by concentrating too much on the finances.” There's a temptation to take the easy way out, to say, “If we just cut this social program, or hire people who are slightly more skilled or better trained, we can improve our productivity and make life easier for everybody. It’s a constant daily struggle.”

But Mr. Donkervoort has seen first-hand how providing meaningful work gives workers pride, independence and stability. “Regardless of ideology, creating a more equal society makes it a more safe society for everyone, including the wealthy,” he says.

A fellow traveller of Mr. Donkervoort's is Angela Draskovic, who spent 16 years climbing the ranks in the telecom world, eventually becoming a vice-president of sales at Lucent Technologies. She too, was tasked with laying people off.

“Quarterly earnings calls were driving too many of our decisions and I just thought, ‘I’m not having fun any more,’ “ she says.

She quit, and spent six years as a fundraiser for the non-profit sector. But it wasn't exactly the right fit.

Instead, Ms. Draskovic wanted to bring a market-driven, sustainable approach to international development, reaching the poorest of the poor. Three years ago, she started Zoë Alliance, which aims to take a slice of the $40-billion North American market in corporate gifts. She works with partners in villages in Haiti, India and Guatemala to supply popular hand-crafted gift items like wooden chess sets and leather luggage tags.

The idea is catching on. Among others, Toronto-Dominion Bank, Nokia and Royal LePage are already clients. “This is real and it’s going to grow,” says Ms. Draskovic, who expects revenue will quadruple this year from last year. “Clients are becoming instant advocates for the idea, because it’s fun and rewarding for the people involved.”

The social-enterprise concept is also spreading in academic circles. Simon Fraser University in British Columbia and Acadia University in Nova Scotia have started courses in social enterprise. Newfoundland’s Memorial University, along with George Brown College and the Rotman School of Management in Toronto, now offer free consulting services to social enterprises.

Meanwhile Net Impact, a global student and professional organization aimed at using business skills to “tackle the world’s toughest problems,” says membership has more than doubled since 2006, to more than 20,000 members and nearly 300 chapters, including 16 in Canada.

“What we’re seeing, not just in Canada and the U.S., but globally, are some of the best and brightest young people turning their attention to this — harnessing the power of a market-based model to address social issues that were historically either not addressed or addressed only partly by government and non-profits,” says Andy Horsnell, manager at Acadia University’s centre for social and business entrepreneurship.

He cites Craig and Marc Kielburger's Me to We enterprise as an example. It sells socially and environmentally friendly clothes, books and music and plows half of its profits into the brothers’ Free the Children charity.

At least one financial institution now wants to tie its brand to social businesses. Capital One recently donated $200,000 to fund youth-led social enterprises, its biggest donation this year. “We would like to brand our company as the company in the banking sector that supports social enterprise,” says president Rob Livingston. The draw for his employees, he says, is that the effort blends innovation and entrepreneurship with local social change.

Other global businesses are jumping on board too. “We see social enterprise as a major way forward for the country at the moment,” London-based director Ian Oakley Smith at PricewaterhouseCoopers said last month.

Still, several factors are thwarting the sector's progress. Charity workers that want to start a business arm don’t have enough access to training, some say.

And unlike other countries such as the U.K., in Canada there still isn’t a legal structure for businesses and charities to let them to form hybrid enterprises. Many such enterprises have a higher cost of doing business (for example, they may need more time to train people and have higher turnover), which makes posting a profit tougher than for other businesses. Mr. Donkervoort says a tax break would ease that pressure. Ms. Finley, the human resources minister, is considering relevant changes in the tax regime.

Longer term, as the lines between business and charity blur, some hope that the whole “social enterprise” name will disappear entirely. “I’m hoping that in my lifetime, business will just be business and a social mission will just be the way you do business, and not an afterthought of philanthropy,” says Mr. Donkervoort.

When Mr. Pollock looks around Winnipeg now, he sees scores of physical markers of his company's impact on the city. “There is a memory of things we’ve done together that have bound us together,” he says.

“It’s a good model for the rest of Canada — the inclusiveness, the tolerance and the patience.”

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