Earlier I had described the benefits of a social enterprise survey (part 1). In part 2 and part 3 I talked about our approach to identify potential respondents and the challenges of collecting a sufficient number of responses. In part 4 I reflected on how to target the right kind of organizations for this survey and on how to improve the response rate. In part 5, I analysed the response rate and pointed to some of the limitations of this survey.
Below I summarize the findings of our social enterprise survey: 1. Who are the entrepreneurs? 2. Values and social impact 3. Innovation and growth 4.Finance and capacity 5. Eco-system.
1. Who are the entrepreneurs?
We analysed responses from green and social entrepreneurs separately expecting to see differences in their strategies and business models. We had defined green entrepreneurs as those entrepreneurs that focusing on environmental impact (‘eco-entrepreneurs’) or as integrating social, environmental and innovative aspects into one single company (‘sustainability entrepreneurs’, Parrish 2008 and see discussion on definitions in part 4 of this blog series). Green entrepreneurs in our sample include businesses in the field of smart agriculture, organic textile, sustainable consumptions or ecological tourism.
Operations of social entrepreneurs in our sample range from crowd funding for social projects and organisations, the creation of income generating opportunities for women and other disadvantaged groups, work with youth and children, volunteering to a time banking system promoting an alternative economy or a women health and sports franchise company run by and for women.
2. Values and social impact
First, we looked for underlying motivations and values that drive respondents’ business models and activities.
- 79% of respondents state that they exist primarily to fulfil a social/environmental purpose. 11% state that they exist primarily to generate financial returns for their stakeholders (29% amongst green enterprises, 5% amongst social enterprises).
- Top causes of respondents are: children and youth (71%); women and environment (both 65%); people with disabilities (58%).
Table 2 provides responses on fundamental issues and key drivers of an organisation’s business strategy. It is interesting to note that 31% rather agree or fully agree with the statement that value driven organisations should not generate revenues nor charge for goods and services, but only 25% support the argument that such organisations should not make a profit even if it was reinvested for social purposes. More than half of respondents (55%) would not consider external finance (debt, equity, venture capital business angels) as a financing option.
Furthermore, most respondents in our sample (95%) see themselves as pioneers and innovators in their respective fields; express optimism about their ability to reach their objectives (87%); claim to integrate environmental sustainability in their processes and objectives (82%); consider collaboration important for their success (94%); state that they manage their organisations based on an social impact oriented business plan (76%).
Table 2: Drivers of business strategy
Secondly, we analysed the role of social impact monitoring and measurement.
- More than half of respondents (52%) do not collect data on social impact performance on a regular basis. Of those who do collect data, a large majority states that they either measure the social value they create (74%) or the outcome (64%) rather than outputs (34%). 42% stated that they published reports on social or environmental impact.
- However, we found some discrepancies between these statements, the results from our one-by-one interviews and the impact reports we reviewed.
- Few organisations make their reports publicly available: out of twenty two organizations of those who state that they publish reports, only five had put them up on their websites.
- Only three of provide their financial accounts. Only one provides a quantitative research on the impact of the organisations work on its target group, others report on outputs, i.e. the number of people reached.
- We found some correlation between impact monitoring activties and the organisations approach to revenue generation: the more organisations rely on grants and donations rather than revenues from products and services, the more organisations monitor their performance (donor requirement?).
3. Innovation and growth
We aimed at understanding what challenges organisations faced during different phases of the innovation lifecycle, what growth strategies they apply, which growth constraints they face, as well as the way they diffuse innovation.
- Stages in innovation cycle: 11% find themselves in phase 1 (concept phase); 29% in phase 2 (prototype/ran a pilot project/started an organisation); 32% in phase 3 (market introduction); 29% in phase 4 (scaling up and diffusion of products and services phase).
- Innovation constraints: Access to finance as well as cash flow constraints constitute organisations major constraint during both concept & piloting phase (53% and 55% respectively) and – even slightly less so – the market introduction & scaling phase (44% and 37% respectively).
- Growth strategy: Increasing the number of people reached is the growth strategy most organisations have applied in the past twelve months (88%) and will pursue in the next twelve months (70%). In the future around half of the respondents also expect to add new sources of financing (52%) and add indirect impact activities such as lobbying or consulting to their existing activities (50%).
- Growth constraint: 83% of respondents see lack of financial resources as the major constraint for growth followed by internal constraints (50%), such as limited capacity and know-how (27%), lack of skills (19%) and resistance within their organisation (4%). 15% stated that they lacked a suitable partner.
- Diffusion and adaptation strategy: 70% of respondents state that they actively want to encourage imitation and adaptation to as many partners as possible to increase social impact. Out of the remaining 30% who want to be solely in charge or at least continue to be in control of the original idea almost half are concerned about their capacity to manage the imitation and adaptation process, and around a quarter of respondents are concerned about increased competition (%25). A few noted that a wrong implementation of their idea will damage the original idea and their organization.
- Role of technology: 31% of respondents see technology at the core of the goods or services they offer, while 75% of the participants stated that technology is an enabling aspect to bring goods or services to their clients/beneficiaries more efficiently and effectively.
4. Finance and capacity
We wanted to find out what respondents’ financial situation was, whether they had specific financing needs, if so which type of financing they would be looking for and what constraints they were facing in accessing finance. We also sought to identify their non-financial needs and capacity constraints.
- Sources of income: On average, 43% of income of organizations in our sample is generated through goods sold and services provided, 18% from grants, 18% from donations, another 7% from membership fees and 14% from other sources.
- Income levels: A majority of respondents (65%) earn less than 500,000TL in annual revenues, but their projections indicate slight optimism about growing revenues in the future.
- Profits: Some made a profit in the last financial year (34%) but more than 40% of respondents (14% for green enterprises and 48% for social enterprises) never expect to break even. 30% consider themselves as non-profit with 100% external funding and no own income, 38% see themselves as hybrid organisations and 23% are for profit ventures.
- Interest in ‘repayable finance’: 34% of respondents actively seek repayable finance while only 7% have succesfully secured repayable finance. 39% would like to know more about the subject. Almost half of those interested in external finance would be interested in long term loans (44%), followed by venture capital and private equity (41% each). However, a majority would still apply to government agencies (58%) or international organizations or NGO (53%) if they needed external finance.
- Loan or investment size: A majority of respondents would seek to obtain a relatively small amount: 27% between 10,000TL and 50,000TL and 52% between 50,000TL – 500,000TL.
- Purpose: Many would seek external finance to cover operating expenses (59%), whereas 63% look for finance for investment in core activities. Access to debt or equity finance is constrained by both internal capacity constraints and lack of suitable supply of debt or equity finance.
- Capacity constraints: Respondents identify communication and social media, strategy, financial management, and human resources as the main areas in which additional support would be required.
We wanted to find out to how social enterprises connected with other actors, which support structures they benefit from and what they expected from government.
- Interaction: We looked at the frequency of interaction between respondents and service providers, government agencies and social entrepreneurship intermediaries (SIM, Hub etc) during the past 12 months. Many respondents stated that during that time period they never interacted with SE intermediaries (61%), regional development agencies (41%), banks (38%) or other financial institutions (56%). In contrast, 43% interacted more than 3 times with industry associations, their lawyers and accountants (44% and 42%), other government departments (38%) and universities and research centres (38%).
- Support programmes: 67% of respondents had benefited from a fellowship or another form of support programme. Eleven of our respondents (20%) are Ashoka fellows, 12% benefited from support by Endevour. 12% were acknowledged in competitions run by Bilgi or Koc University.
- Social media: 68% of respondents use Facebook and Twitter, 54% use LinkedIn. On average, social enterprises have 4283 twitter followers, 3348 ‘likes’ on their Facebook page, and 178 links in LinkedIn. However, there are significant variations between organisations (e.g. one organization with 145,000 Twitter followers, another with 34,000 Facebook ‘likes’).
- Government policies: A majority of respondents (54%) believes that the Government should promote social entrepreneurship by developing a specific legal structure for social enterprises. Many also believe that the Government should allow for tax exemptions for social enterprises (41%), tax incentives for donations (35%) or subsidies to social enterprises (44%). A further 30% believes that lending and investing in social enterprises should be incentivised and the same amount of respondents (30%) suggests that government should provide funding for social enterprises at growth stage (20% for start-up phase).
Download survey findings as ppt presentation here!