As social entrepreneurs view the landscape of potential funding available to them they inevitably begin to assess their options and opportunities for both non-profit and for profit by eDeals" in_hover="" in_hdr="" style="outline: 0px; color: rgb(128, 23, 26); cursor: pointer; border-style: none !important; display: inline-block !important; float: none !important; font-weight: bold !important; height: auto !important; min-height: 0px !important; min-width: 0px !important; text-transform: uppercase !important; width: auto !important; background: transparent !important;">INVESTMENT. Both models have advantages and disadvantages and both can have a critical impact on how an enterprise is viewed in the marketplace.
The final decision for many social entrepreneurs is complicated by the fact that there is no clear answer; on the one hand a part of their activities often sit squarely in the public domain, while on the other, their commercial activities (by definition) would best be served by a more commercial format.
This is tricky territory for many social entrepreneurs and one we have faced both with clients in our consulting practice at Origo but one we also face ourselves in our work as a think tank that engages in research and development of social enterprise best practices.
One answer that we, and many of the people that we worked with, have arrived at is to structure as a hybrid social enterprise so that you can be both.
A number of social entrepreneurs have successfully built ‘hybrid’ organizational structures using a number of innovative approaches to tap into the strengths of both; non profits with wholly by eDeals" style="outline: 0px; color: rgb(128, 23, 26); cursor: pointer; border-style: none !important; display: inline-block !important; float: none !important; font-weight: bold !important; height: auto !important; min-height: 0px !important; min-width: 0px !important; text-transform: uppercase !important; width: auto !important; background: transparent !important;">OWNED BUSINESS subsidiaries, donated equity models and emerging for benefit business structures are all good examples of this type of thinking. Others have developed hybridized investment structures that achieve similar goals from the investor side like Calvert Foundation’s GiftShare program. In addition, there has also been research done by groups like the Aspen Institute into the frameworks that surround these structures and how to begin moving public policy to embrace the for benefit business structure initially pioneered in the UK.
Despite these examples, the decision to go ‘hybrid’ is still largely undocumented and feels difficult. We have invited some thought leaders in the area to comment on the subject and in addition we’d like to open out the discussion to others who have tried, failed or succeeded in building hybrid social enterprises. Particularly, we would be interested to hear people’s thoughts and experiences on:
- The advantages of a hybrid structure; what kind of opportunities were opened to your organization by going down this route?
- The risks; it seems like many people are put off hybrid structures by legal fears and complexities around governance, IP and conflicts of interest between one entity and the other. How have these risks been navigated and in your experience how real are they?
- The costs; how easy was it to set up the hybrid structure? What kind of ongoing management (bureaucracy) and accounting costs are associated with it?
- Any unexpected consequences or opportunities?
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