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Staff member Christine Lefloch, left, making red fife sour dough, and showing volunteer Susan, right, how to roll the dough at St. John's Bakery in Toronto on Tuesday, October 19, 2010. (Peter Power/Peter Power/The Globe and Mail)
Staff member Christine Lefloch, left, making red fife sour dough, and showing volunteer Susan, right, how to roll the dough at St. John's Bakery in Toronto on Tuesday, October 19, 2010. (Peter Power/Peter Power/The Globe and Mail)

Corporate social responsibility

Canada playing catch-up in social enterprise Add to ...

Gordon Brown spent 16 years "in and out of reality," addicted to the crack pipe and eventually living on the street. He has remade his life over the last five years as a baker, a popular speaker for the United Way, and as a cooking teacher for children.

In his own words, he is a "broken person made whole again." And that is thanks to the St. John's Bakery, an unincorporated social enterprise run by the St. John the Compassionate Mission in downtown Toronto. Mr. Brown stumbled upon the bakery in his homeless days, became a volunteer and eventually one of 15 full-time employees. Today he is lead baker. "It's almost like they built it knowing I was coming," he says.

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The bakery has been in business for more than 20 years, helping marginalized individuals off welfare and back into the work force. But only in the last few years has the power of social enterprise been discovered by mainstream Canada. MBA schools are minting a new class of graduates who want to use their business acumen to address social issues. A new type of investor is looking for both a return on capital and impact on society's progress. And both large corporations and traditional charities are re-thinking their strategies around the idea.

Social enterprises are broadly defined as organizations that make money and deliver social or environmental benefits. They may be not-for-profits engaging in for-profit activity to supplement the donations they receive, or profit-making companies pursuing not-for-profit community or environmental work.

Canada is playing catch-up to other countries, including the U.S. and Britain, which is considered by many to be a decade ahead. In Canada, about one-third of social enterprises were started in just the last two years, according to Social Innovation Generation (SiG), a national project partnered with the MaRS Discovery District in Toronto. The statistic points to significant growth in new business efforts to address community and environmental issues, according to SiG, which is completing some of the first research to quantify the sector. At the same time, about 20 per cent of social enterprises have been in existence for 20 years or more -- long before supporting networks, or even the term, existed -- illustrating that there are proven, sustainable models already in place.

Allyson Hewitt, who heads the social innovation practice at MaRS, considers it her mission to push both ends of the spectrum of business and charities closer together. At one end are traditional not-for-profits soliciting donations for a cause. At the other are traditional companies, making money for shareholders but not giving much back to their community.

In a speech this month at the Canadian Club of Toronto, Darren Entwistle, president and CEO of Telus Corp., spoke about how the billions of dollars the telecom has invested in broadband technology is not just profiting shareholders, but also addressing some of Canada's biggest social challenges. He spoke of "transforming health care," "revolutionizing work styles" and using a "symbiotic relationship" between the private sectors and communities.

The shift in tone from businesses' long-time vernacular of shareholder value and customer satisfaction was music to Ms. Hewitt's ears. "They realize now that a social mission can have a positive impact on their bottom line," she says.

Not-for-profits are slowly starting to change their language, too, although it remains a challenge to get some of them to think in business terms. Even though making money will never be their cause, revenue-generating projects can help them deliver their cause. St. John's Bakery, for example, has received $350,000 worth of grants from a United Way and government partnership since 2004. During the same time it has increased its annual sales from $81,000 to $740,000 last year. It hopes to be self-sufficient within the next few years.

A-Way Express Courier is one of the oldest social enterprises in the country. It employs about 60 people with a history of mental illness as couriers in the Toronto area, and uses public transit instead of private vehicles. In its last fiscal year, A-Way received $706,000 from the provincial health ministry and generated $189,000 in revenue. This combined amount more than covered expenses.

"Some social enterprises may be able to get by on private money, but when you are serving a very vulnerable population it's much tougher," says executive director Laurie Hall. A-Way could hire faster couriers, but that would not meet its mission. It exists to provide employment to a group that most businesses bypass.

A-Way's relationship with the government is not just financial, she adds. The company presses the government on the importance of employment as part of patients' recovery. "We need to hold it accountable," she says.

The social enterprise sector will require a number of things if it is to continue to expand and succeed in Canada. One of the most critical is a reworking of the legal structure for businesses and charities to allow them to form hybrid enterprises. There is still no legal definition of a social venture or enterprise in Canada, which is a significant impediment to raising capital, Ms. Hewitt says.

Investing in natives

The concept of building businesses to tackle major social issues is gaining support at all levels in Canada. Former prime minister Paul Martin initiated a $50-million fund with his son, David, last year. The focus is to partner with aboriginals to promote aboriginal business, entrepreneurship and prosperity.

CAPE Fund has publicized two investments so far. The first is with One Earth Farms Corp., which teaches sustainable farming practices. The second is with Blue Moose Clothing Co. Ltd., which makes native-designed mukluks, moccasins and fashion accessories.

The 21 investors behind CAPE Fund LP include some of Canada's largest companies as well as the Martin family's Canada Steamship Lines.

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