The distinct line between small businesses and non-profits has started to blur.
Historically, the two had very different missions: make money or give back. But entrepreneurs today are starting out with a greater sense of social awareness, and savvy non-profits are learning the importance of managing two bottom lines – one that measures their social utility, and another that keeps their finances in check.
This new world presents a paradigm shift, and many of Canada’s more than 150,000 registered non-profits face a steep learning curve. However, they have assistance. Organizations such as Toronto’s Centre for Social Innovation work with non-profits to develop business mindsets that will help them to become more sustainable in the long run.
Structured as a social entrepreneur incubator, CSI houses both for-profits and non-profits under one roof. By working in close proximity, non-profits may discover that growth is a good thing, and small businesses may figure out new ways to stay true to their social missions. Plus, by sharing a work place, they can foster innovation by bouncing ideas off each other.
Although CSI’s tenants must all fulfill some sort of social purpose, the organization emphasizes financial strength and expansion, something non-profits aren’t accustomed to thinking about. CSI has made itself an example. After being founded with just one office space in 2004, it has since open a second, and already has plans to open a third using money raised from a $2-million community bond issue – much like a corporation would reach out to its shareholders to borrow cash.
CSI helps non-profits understand that they shouldn’t feel guilty for making money, says Jessica Hazen, CSI’s director of stakeholder engagement. To foster growth, CSI offers business education through its partner organizations, such as Alterna Savings credit union and ING Direct, which offer workshops to explain concepts like optimal tax structures for non-profits and the right way to go about requesting a business loan.
The hope is that the centre will also promote learning through osmosis. With small businesses and non-profits sharing space, the odds are high that if someone from a non-profit has a question about intellectual property or financial statements, for instance, they can lean over their desk and ask someone who knows. There is also an internal network, or intranet, on which the different organizations ask each other questions or favours. In one of CSI’s offices, six independent lawyers rent desks, and non-profits are always asking them to be notaries or inquiring about legal questions.
The shared workspace has helped people like Jane Zhang, program director at TechSoup Canada, which licenses computer software such as Microsoft Windows to other non-profits for as low as $10 a copy. Ms. Zhang, a former computer programmer, admits that she knew very little about running a business before she got involved with TechSoup, so much so that she didn’t know what breaking even meant, or what cash flow was. She even had to ask somebody what ‘P+L’ stood for.
But she survived, in large part because of the people around her. At CSI, “it’s almost like having hundreds of subject matter experts … outside my door,” she says.
Now her company is thriving. After starting out with a grant, she has hired five more people and distributed more than $68-million worth of software for 27 different companies, including Microsoft and Adobe. The small fees that TechSoup collects from distribution has enabled it to be entirely self-sufficient.
CSI has also helped non-profits that already had a business mindset before joining. Jack Blum is the executive director of Reel Canada, an organization that promotes Canadian films in Canadian high schools, and he worked in the private TV and film industry long before he started working out of CSI.
Yet, despite his experience, Mr. Blum admits that he didn’t look very sophisticated when he started Reel Canada in 2006, working out of his home.
