The question of how to achieve financial sustainability as a social enterprise does not have a universal answer. Despite this, Zbig Skiba uncovered a few possible solutions from a conversation with Irish Impacter Brady Gott, a Notre Dame Executive MBA student and the Managing Director at Cleanslate. Cleanslate provides paid transitional jobs in neighborhood beautification projects intended to invigorate communities and to help individuals build the skills to secure lasting careers. His organization’s ability to reach financial sustainability through changes to its business model, employee selection and training, affiliations, and leadership may serve as a model for similar social enterprises to finally break even.
Originally published on Skiba’s blog, “Profit through Impact”.
If you are a self-described “social enterprise” but have no compelling interest in becoming financially self-sufficient, then you can stop reading now.
Surprisingly, many self-described social enterprises do not strive for break even or profitability. Instead, they operate a model that is closer to a traditional non-profit than a social enterprise. They rely on foundation, sponsors, or other contributors to sustain them. (Read Towards a Better Understanding of Social Entrepreneurship by Jerr Boschee and Jim McClurg to better understand the distinction between a non-profit and a social enterprise.)
Cleanslate Chicago is an example of a true social enterprise, taking financial self-sufficiency seriously. Cleanslate is a neighborhood beautification business created by The Cara Program. Cleanslate prides itself on delivering best-in-class services to business districts while providing over 200 transitional jobs and diverting over half million pounds of debris from landfills annually.
The Managing Director, Brady Gott, has a mix of non-profit (Director at Morningstar Mission) and for-profit (Franchisee of East of Chicago Pizza Company) experience. Brady achieved profitability at Cleanslate for the first time in its seven year history while maintaining or expanding the organization’s social impact. So how did he do it?
- Business Model: Cleanslate modified its business model in order to compete with regular for-profit businesses in a low-margin industry.
- Changed benefits and hours to be in line with competitors,
- Renegotiated its contribution for back office and leadership support from Cara,
- Developed greater autonomy from the parent organization, thereby freeing up time for core activities at Cleanslate.
- Employee selection and training:
- For permanent employees, focused on a stronger balance between mission employees (hiring permanent employees from the trainee pool) vs. outside hires with stronger hard skills.
- Worked more intentionally to make employee training more efficient, by simplifying course offerings to provide focus and best prepare candidates for the rigors of the job.
- Negotiated more flexibility in employee scheduling and demands on employee time from the parent non-profit organization.
- Affiliations: Focus on working with communities that understand and support Cleanslate’s mission, where the sales process is much simpler.
- Cleanslate and The Cara Program established a mandate for Cleanslate to break-even or better. All business opportunities are now assessed on whether they are financially viable, and then whether they expand the accomplishment of Cleanslate’s mission. In the past, Cleanslate was TOO mission-oriented and finances under-appreciated.
- In Brady Gott, Cleanslate has a leader with the right mix of for-profit and non-profit experience
to lead an organization with a social mission that strives for financial self-sufficiency.
Running a social enterprise is more complex than running either a pure for-profit enterprise or a pure non-profit. There is a continuous tug-of-war between expanding the social mission and paying for it. Cleanslate is an example that it can be done, even under challenging circumstances.