Social enterprise reinvented for 21st century

  • June 21, 2007

{mosimage} When Fr. Eugene Funken was faced with 10 orphans whose homes had burned down in St. Agatha, Ont., in 1858, he started a charity.

When Sonya Pouyat took over leadership of Funken’s charity in the midst of “slash and burn” Ontario government policies in the 1990s, she started a business.

Pouyat is a social entrepreneur who has transformed the old Notre Dame of St. Agatha orphanage and home for troubled children into kidsLink NDSA, which earns more than $1.5 million a year on consulting and training services – money which it turns back into the care of some of the most disadvantaged children in Ontario.

Social enterprise is a hot topic in the not-for-profit sector – among co-operatives, social agencies and charities. Even among those who claim to be social enterprises, however, there's no agreement on a definition.

Some claim to have a double bottom line, and others a triple bottom line. The double bottom line camp defines success in terms of both financial performance and social goals. The triple bottom line camp breaks it down further into people, profit and planet – corporate annual reports that account for environmental sustainability, financial soundness and social purpose.

Pouyat tries to keep it simple.

"It's an organization that adopts an earned income strategy as a way of achieving its mission," she said.

In the case of kidsLink, they did it because they had to, said Pouyat.

"It was the slash and burn era," said Pouyat. "Everybody was shrinking. kidsLink did not shrink. kidsLink grew."

Building on more than 100 years of expertise in dealing with at-risk children, and the wisdom of a century of School Sisters of Notre Dame caring for and educating children in need, kidsLink became a consulting firm helping other agencies with organization issues and providing them with assessment tools that help them understand the needs of particular children. The result was a dramatic turnaround.

In 12 years, kidsLink's budget has grown from $2.5 million to $6.4 million.

"It was risky," said Pouyat. "We had to invest money we didn't have in order to move it. It wasn't popular."

Not all social enterprises have seized such opportunities of their own free will. Home care provider St. Elizabeth Health Care was in the same boat as everyone else when the province introduced the whole home care sector to managed competition. Now every home care provider is competing for the business in a largely deregulated environment.

But the government push didn't necessarily mean that St. Elizabeth's, which will be 100 years old in 2008, would go into the consulting business in Trinidad, or that it would begin selling its expertise in information technology. But those are now significant sources of income for what was once a strictly government- and charity-funded organization.

St. Elizabeth president and CEO Shirlee Sharkey says what makes her operation different from Bay Street businesses is not the competitiveness or the innovation or the hard-nosed decision making, it's the dedication to a social mission.

"We have to look now in the 21st century and examine mechanisms that frankly keep our eyes focussed on the prize," Sharkey said.

The ultimate bottom line is better health care. More revenue only makes sense if it can be invested back into patient outcomes, she said.

Where corporate profits are disbursed in dividends or directed to takeovers, St. Elizabeth's surpluses go largely into training for staff and education for patients and their families.

"You're driven by mission first. If you're not anchored in mission there's no point in being a social enterprise," said Pouyat. "I really don't think it's just a business model for the fun of it."

Tompkins Institute director Fr. Greg MacLeod said it would be a mistake to think of social enterprise primarily in terms of social agencies trying to turn a buck in the marketplace because charity and government can't or won't provide the funding. For MacLeod, a philosophy professor at the University College of Cape Breton, a social enterprise doesn't have to be involved in social service. He points to the Spanish transportation and manufacturing giant Mondragon Co-operative Corporation, the world's largest worker-owned co-operative, as the model of a social enterprise which represents a whole different way of organizing the economy.

Now that communism has collapsed worldwide, and globalized capitalism has proven itself less than capable of creating wealth for communities rather than for individuals, there has to be an alternative, said MacLeod.

"Outside of capitalism, the only theoretical approach or philosophical approach to guide people in an economy that is humanistic – for human purposes – is what the Catholic Church offers," said MacLeod. "I don't know of any other system of thought that's coherent that can serve as a guide for doing business in the world today, that is based on personal values and community values."

MacLeod inherits his mantle from Fr. Moses Coady who in the 1930s applied the social teaching of Pope Leo XIII's 1891 encyclical Rerum Novarum and an economic theory called distributism and came up with the co-operative movement as an answer to widespread unemployment and apparent failure of capitalism. In the 1950s and 1960s the movement became the community economic development movement. Today it's called social enterprise.

"It's the philosophy of the co-operative wearing new clothes and using modern technology," said MacLeod.

MacLeod wishes the Canadian church were more engaged in the questions of how to shape the economy to serve people, rather than just delivering charitable services.

"Thirty years ago the Catholic hierarchy in Canada was much more interested in Catholic social action – interested in the economy and in new forms of business based on Christian principles," he said. "But in the last 20 years there has not been a great deal of interest expressed."

Nor is turning all the charities into businesses some sort of panacea, said Pouyat.

"Churches should be very, very careful before they go down this bandwagon," she said.

"It's much easier to raise $50,000 in fund-raising than it is to turn a $50,000 enterprise into something viable."

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