Growth in the social enterprise sector is dramatically outpacing that of the larger B.C. economy, according to a new study released by the Sauder School of Business at the University of British Columbia.
The number of ventures with a social or environmental mission increased by 35 per cent over five years ending in 2015. The sector now earns more than $500 million annually and provides 13,000 paid jobs. In comparison, B.C.’s economy grew by two to three per cent a year in that period.
“The growth is disproportionate to the rest of the economy. It’s well above what we are seeing in other sectors,” said lead author James Tansey. “It also reflects the fact that social enterprise is more common as a business model in B.C. We are clearly different from other provinces.”
B.C. is considered a mecca for mission-based ventures, due in part to the strong financial support the sector receives from financial institutions such as Vancity and Coast Capital Savings Credit Union, said Tansey.
The number of for-profit social ventures — businesses that focus on social or environmental goals — grew by 42 per cent, compared with 33-per-cent growth for the more traditional non-profit model.
The definition of a social enterprise has evolved considerably in recent years, especially on the notion of profit. Socially responsible for-profit businesses are typically excluded, leaving room only for non-profit or low-profit enterprises. Among the non-profit social enterprises, about half are charities and most serve vulnerable populations, according to a report to Philanthropy Canada.
According to the Social Enterprise Council of Canada, social enterprises are community-based businesses that sell goods or services in the marketplace to achieve a social, cultural and/or environmental purpose; they reinvest their profits to maximize their social mission.
“There are those people who say you can’t be a social venture and be for-profit, but we thought that was too narrow,” said Tansey.
Most for-profit respondents to the Sauder survey said that social and environmental good is their primary purpose versus 13 per cent who considered it a positive byproduct of their operations.
The researchers disqualified more than one-third of the 354 respondents, often companies that sold green products but whose social mission was not core to the operation.
“We didn’t get a sense there was anything like greenwashing going on,” said Tansey. “There may be marketing value in being a social enterprise, but it cuts both ways. What you find is that with products that make green claims, consumers assume they don’t perform as well.”
Young people with post-secondary education increasingly view social enterprise as a viable career option and they are looking for more than just a paycheque, Tansey said.
“There are trade-offs you have to make about the compensation you receive, even working in the for-profit space,” he said. “But I’m not sure that if you increased salaries you would have more people coming to social ventures.”
Salaries are generally lower in the social enterprise field, but they are doing work they feel passionate about, he said.
“I’m in a social enterprise because I believe that when there is something broken in the world, you just have to fix it and I feel entirely compelled to do that,” said Sonia Strobel, co-founder of Skipper Otto community supported fishery, a for-profit social enterprise.
Sonia Strobel, co-founder of Skipper Otto, a for-profit social enterprise.
“When we first considered how to structure the business, we considered forming a cooperative because the principles feel logical to us,” she said. “But that legal structure didn’t work for the fishermen who would have been self-employed, meaning they would forfeit benefits such as employment insurance, CPP and workers’ compensation.”
Skipper Otto does not rely on volunteer labour and casual employees make at least $18 an hour.
“I need a living wage and everyone who touches the fish needs a living wage,” said Strobel. “For us, we need to be able to afford to live in the city where we work, have a reasonable standard of living and put our kids in the kinds of activities that other children do. I don’t want them to feel like they are living in poverty.”
Chef Drew Borus was pursuing a career that included stints in some of the city’s best restaurants and hotels, but had an epiphany one day when he was asked to prepare a beef tenderloin — medium rare — for a customer’s dog.
“I had been working for 10 years, finished 6,000 hours of apprenticeship and I was making dinner for a dog,” said Borus, who holds a Red Seal chef certification.
Soon after, Borus made the jump to the social enterprise sector, at first in Seattle and then as director of culinary programs for Potluck Cafe & Catering, a non-profit society that provides jobs to people with barriers to employment.
“If I can help one person spend less time on the street and get into a job that supports them, that makes me happy,” he said. “If you want to drive a Bentley, I wouldn’t recommend the culinary industry in general and it isn’t much different when it’s non-profit.”
The idea that people who work non-profit societies should be satisfied with poor pay and hand-me-down computers is nonsensical.
“We are a business like any business; the mission is different and the stakeholders are the people of the community who get the benefits, but we should be able to have good equipment and fair salaries,” Borus said.
His latest venture is a culinary training program for Downtown Eastside residents that shoulders some of the burden employers faces when hiring inexperienced workers by providing workplace training with kitchen equipment, professional systems and food handling.
“There was a gap between the street and Professional Cook 1 certification; there is nothing that fills that need,” he said. “We can get people ready to do task work like receiving big orders or pitching in on a big chopping job.”
Working in social enterprise need not be akin to a vow of poverty, according to Tansey. What starts life as a modest, but principled, business can become enormously successful.
Max Rivest and Arnaud Petitvallet stumbled on to a business idea while completing their masters degrees and pursued it as a way to bring year-round income to coffee farmers who usually have to make do with only three profitable months a year, while the coffee beans are harvested.
Their business, Wize Monkey, buys coffee bush leaves from coffee growers year-round, creating full-time employment for Nicaraguan workers that otherwise migrate to other agricultural jobs during the off-season.
“While we were doing the product research — that very week — there were riots in Colombia by people demanding that the government subsidize the coffee industry and its workers,” he said. “The industry can’t sustain itself; the business model doesn’t work.”
Rivest and Petitvallet are recent graduates of Sauder’s business accelerator, which mentors young business people with budding social enterprises.
Demand for their product — a fair trade green tea — has skyrocketed and now sells in 30 countries. Orders have grown from a few kilograms into the tonnes.
“They are dealing with a product that people want to buy that meets all kinds of needs,” said Tansey. “They could end up being a very healthy and profitable business.”