Governance

Social enterprises are innovative not only in the type of services and goods they produce, but also in the structures and processes by which they pursue their social and economic goals. Consequently, issues of governance—understood as both the legal and regulatory environment in which social enterprises operate as well as their internal policies, strategies and management—require careful consideration. Among the most important aspects of governance relevant to your organizations’ capacity to launch and sustain a successful social enterprise include clarifying your community and organizational goals and mission, creating a structure and strategic plan that allows you to effectively pursue your goals, and developing guidelines and procedures for managing human resources fairly, promoting effective, inclusive, and accountable decision making, and measuring outcomes to maximize social impact.

This section offers a wide variety of information, links, and resources designed to help get you started in thinking about governance and how it relates to developing a sustainable social enterprise. Boards and Decision Making Bodies offers information on the formation of a board of directors and the legal responsibilities and functions they entail, including information on developing participatory governance. Mission and By-Laws provides information about developing a mission statement and examples and guidelines on the creation of by-laws. Code of Ethics provides examples and guidelines to creating a code of ethics for the organization to follow. Business Plans and Strategies for Development provides resources and information on what should be included in the non-profit’s business plan and guidelines and strategies to continue to develop and successfully implement that plan. Human Resources and Employment Issues offers information on managing personnel and financial information for employment practices, including the benefits of cultivating a diverse workforce. Measuring and Accounting for Success provides examples and suggestions for evaluating results, with a specific emphasis on measuring social value to ensure success.

Designing Good Governance Systems

Designing good governance systems is an important part of developing a successful social enterprise. The Toronto Enterprise Fund (http://www.torontoenterprisefund.ca/ ) seeks to help social enterprises develop successfully in order to improve community involvement and the quality of life of socially marginalized people. The website offers an important resource called “Doing Well While Doing Good” that shares insights on why some social enterprises are more successful than other in terms of developing strong leadership and organization. Please click on the PDF below to access this resource that provides real life examples and extensive advice on how to develop a successful social enterprise:
Doing Well While Doing Good

Another helpful resource is found in the “Introduction to Social Enterprise Resource Package” put out by the Canadian Centre for Community Renewal’s Centre for Community Enterprise.

See the following PDF for specific steps in social enterprise development as well as a checklist assessing your readiness and getting started in planning your social enterprise development work:
Steps in SE Development

Boards and Decision Making Bodies

The key governing body of social enterprises is usually the board of directors, which has the responsibility for making key decisions that allow the organization to fulfill its mission.  Among social enterprises incorporated as nonprofit organizations, a board of directors is required to receive tax-exempt status from the federal government, to carry out the legal and fiduciary responsibilities, and publicly assure legal operations.

The Lodestar Center at ASU provides more information about board development, specifically as related to the following questions:

·         How often should boards meet?
·         What are the responsibilities of board membership?
·         What is the best size for a board?
·         Should the board have committees?

For answers to these questions and more information regarding board development go to Lodestar’s FAQ at: http://lodestar.asu.edu/organizational_assistance/ask-the-nonprofit-specialists/frequently-asked-questions/governance-and-boardsmanship/

In addition, North American Students of Cooperation (NASCO) also has important information regarding board functions and legal responsibilities that can be found in these documents:

NASCO’s Guide on Board Functions

NASCO’s Guide on Legal Responsibilities of the Board

For more information on NASCO please visit http://www.nasco.coop/ 

The Ontario Cooperative Association has also produced several useful documents regarding electing board members and running effective director and membership meetings.

 Guidelines for Running_a_Good_AGM

Hold_Effective_Board_of_Directors_Meetings

Running_Elections_for_Directors

Developing a Participatory Framework

Inclusive, participatory governance is a key feature of the social economy.  Below you will find a few key pieces that help to illuminate its importance along with specific resources to help you to foster participatory democracy in your organization.

The Design of Governance Systems. Janet Saglio and Richard Hackman (Harvard Business School) have developed a model for ensuring that individual rights of members are protected and exercised.  Though designed for workers cooperatives, this paper is relevant for a wider variety of social economy organizations.  This paper is available for $5.00 through the International Cooperative Alliance at the following website: http://www.icahdq.org/divisions/

The following document, “Stepping Stones to a Solidarity Economy” is available on the U.S. Solidarity Economy Network’s website (http://www.ussen.org) as an exercise designed to give people exposure to a wide range of solidarity economy initiatives. It also provides an opportunity to discuss, critique, and elaborate on the wide array of solidarity economy initiatives.

SEN’s Stepping Stones to Creating a Solidarity Economy

Authors Mike Menser and Juscha Robinson expand upon the participatory democracy concept by talking about popular participatory budgeting movement. Participatory budgeting started in Brazil in the 1980’s and consists of a process of democratic deliberation and decision-making in which ordinary city residents decide how to allocate part of a public budget through a series of local assemblies and meetings. This process seeks to go beyond just the political realm of participatory democracy, and empower civilians to take part in the social and economic areas. This movement has spread throughout the world with implications of it starting in the US. For more detailed information about this phenomenon, please view this Word document : Menser and Robinson’s Participatory Budgeting

Co-op Governance Panel: Quintin Fox highlights Quintin Fox’s address to the Co-op Governance Panel. Mr. Fox discusses an overview on co-op governance and why governance is important. He covers board and director development, what sort of competencies might be involved in finding a director and creating a board, what is governance, and why is it important.

 

Mission and By-Laws

Mission

An organizations’ mission statement communicates its core values, guiding philosophies and key social as well as organizational priorities. Below are a variety of resources which demonstrate how and why mission statements are important and why they are critical for communicating to external audiences, but perhaps more importantly, establishing the foundation of the organizational culture on which your social enterprise will be built.

The Association of Specialized and Cooperative Library Agencies (ASCLA) has two guides relating to the development of the mission statement as well as the values and philosophy a social enterprise abides by. The core underlying purpose of the organization is laid out in the mission statement and is the first major step in the strategic planning process. It must be understood and agreed upon by all of the social enterprise’s stakeholders, the Board, the staff and members.  Another important step in the planning process is the organization’s ability to articulate the essential foundations of its organizational culture through its values and philosophy. Unlike the mission statement, these might evolve overtime as a wide range of cultural values expand over the changing organizational environment.

For more information on the ASCLA’s guides on Mission Statements and Values and Philosophy please see the references and links below:

Strategic Planning for Library Multi-type Cooperatives: Samples and Examples by ASCLA. Edited by Stephen A. Baughman and Elizabeth A. Curry. Chapter 3: Values and Philosophy (1997) :
ASCLA’s Values and Philosophy

Strategic Planning for Library Multi-type Cooperatives: Samples and Examples by ASCLA. Edited by Stephen A. Baughman and Elizabeth A. Curry. Chapter 5: Missions (1997) : ASCLA’s Mission

 

By-Laws

One of the most fundamental tasks for social enterprises to accomplish is to develop by-laws.  These by-laws establish the purpose and mission of the company along with the guidelines and principles it will uphold. Not only do these by-laws dictate how the company is run, but it also provides established rules for the board and committee’s including voting and decision-making.

For more information on what non-profit by-laws are and guidelines on how to develop them please visit http://www.grantspace.org/Tools/Knowledge-Base/Nonprofit-Management/Establishment/Nonprofit-bylaws

For an example of non-profit by-laws, please view the following example provided from NASCO:
NASCO’s Example of Non-Profit Bylaws

For an example of cooperative by-laws, please view the following examples provided from The USDA’s Rural Business-Cooperative Service (1999) and the California Cooperative Legal Sourcebook (2004):

Sample Legal Documents by Cooperatives by Donald A. Frederick from the USDA’s Rural Business-Cooperative Service (1999): USDA Sample Bylaws for Coops

Legal Sourcebook for California Cooperatives: Start-up and Administration by Van P. Baldwin. Chapter 5: Bylaws (2004) : California Coop Legal Sourcebook Bylaws

Code of Ethics

Another important step in the development of social enterprises is the formulation of a code of ethics to guide decision-making and responsibility. The code of ethics should reflect the organizations key values, as well as the by-laws.  It helps to uphold a system of accountability for the organizations leaders, managers, and employees and helps communicate the core identity of the organization to external constituencies.

ASU’s Lodestar Center offers guidelines on writing a code of ethics and standards for non-profit organizations: http://lodestar.asu.edu/organizational_assistance/ask-the-nonprofit-specialists/frequently-asked-questions/legal-and-ethical-issues/

Independent Sector, a website suggested by ASU’s Lodestar Center, is a good resource for an overview of statement of values and code of ethics for chartable and philanthropic organizations in both state and national areas. http://www.independentsector.org/compendium_of_standards

The following website provides specific guidelines and samples for writing a code of ethics,
http://www.ethicsweb.ca/codes/

The Association of Fundraising Professionals (AFP) has been the standard bearer for this critical part of nonprofits for over 40 years. Its Web site (http://www.afpnet.org/) has a major section devoted to ethics and standards.

For more information on Ethics, conflicts of interest, and accountability go to The National Council of Non-Profits links below:
http://www.councilofnonprofits.org/resources/resources-topic/ethics-accountability

http://www.councilofnonprofits.org/resources/resources-topic/boards-governance/conflict-interest

Business Plans and Strategies for Development

While establishing the fundamental laws and codes that the social enterprise will adhere to is important, developing a plan and strategy to carry out its mission and goals is essential to sustaining the business. The following sections will examine the concept of a business plan and tips on how to develop one based on the social enterprise’s purpose. Once the business plan is created, developing a strategy to carry out this plan is also important to adhere to its original purpose. Another section dealing specifically with strategy will offer resources and guidelines to developing a strategy to go along with the business plan.

Developing a Business Plan

A business plan is used to map out the critical issues in growing and starting a social enterprise. These issues include the organizational focus and strategy, methods of measuring impact, guidelines for making decisions and improvements, and establish means of obtaining financial resources. An important aspect of this is that the business plan is a living document that continues to evolve as a framework of the social enterprise to maintain sustainability and adapt to overall changes. The following resources from Rootcause, Enterprising Non-Profits, and the California Center for Cooperative Development each offer important guidelines and examples for developing and maintaining business plans for social enterprises:

The California Center for Cooperative Development (http://www.cccd.coop/ ) offers a brief but thorough outline of the essential business planning elements needed to make a complete planning document for use by investors and management. Please click on the following link for more detail.  CCCD’s Essential Business Planning Elements

Rootcause (http://www.rootcause.org/) has an extensive guide on developing a business plan for enduring social impact. This document includes sections on the pre-planning process, business analysis, creating the plan, implementing strategy, changing organizational capacity to use the strategy, and finalizing the plan for action.  Please click on the following link for more elaborate detail and examples for these sections: RootCause’s Business Planning for Enduring Social Impact

Enterprising Non-Profits (http://www.enterprisingnonprofits.ca/) has an extensive chapter from their expansive Canadian Social Enterprise Guide titled Planning for Your Social Enterprise. This document examines several features of the business plan including detailed explanation of what should be in each section of the business plan and tips and guidelines on how to develop it. Please click on the following link for the entire chapter on social enterprise business plans:
Social Enterprise Guide – Planning for your Social Enterprise

The U.S. Small Business Administration (http://www.sba.gov/) offers advice on how to write a business plan as a small enterprise, how to make it stand out in the market, and examples tailored specifically toward small business. Please visit the following link for more information:
http://www.sba.gov/category/navigation-structure/starting-managing-business/starting-business/writing-business-plan

The Ultimate Guide to Social Entrepreneur Business Plan Competitions provides a list of competitions around the nations.  Most importantly, the article explains why participating in a business plan competition is important – not only can your enterprise benefit from the limelight and publicity, but competing can force your organization to think through the finer details which may not have come to light previously.  To read the full article, follow the link: http://www.greenmarketing.tv/2010/11/03/guide-social-entrepreneur-business-plan-competitions/

Developing a Strategic Plan

A social enterprise can become more effective with clearly articulated goals, objectives, and strategies. The Association of Specialized and Cooperative Library Agencies (ASCLA) has a guide for developing a strategic plan including examples of goals and objectives as well as the benefits of having such a plan. These benefits include:

  • · A clear sense of direction for the organization and active stakeholders
  • · Documented and agreed upon destination(s) or anticipated accomplishments
  • · Clearly defined roles and responsibilities
  • · A guide for accountability with activity levels tied to allocation of resources

For more information on the ASCLA’s guide on Goals, Objectives, and Strategies please see the reference and link below:

Strategic Planning for Library Multi-type Cooperatives: Samples and Examples by ASCLA. Edited by Stephen A. Baughman and Elizabeth A. Curry. Chapter 7: Goals, Objectives and Strategies (1997): ASCLA’s Goals, objectives, and strategies

The Spirit of Enterprise Center (http://wpcarey.asu.edu/spirit) at Arizona State University’s WP Carey School of Business offers assistance to students who strive to become community entrepreneurs and develop business plans through their Student Teams for Entrepreneurial Projects (STEP) program. This program allows future entrepreneurs to work with experts who assist in writing a business plan, a component of a business plan, or assessing the need for a potential product or service for their proposed venture. For more information regarding this program please visit the following link: http://wpcarey.asu.edu/Spirit/STEP.cfm

 

Human Resources and Employment Issues

Human Resources and employment issues are core components of developing a social enterprise. Aside from the formal aspects of developing employment and personnel policies and protocols, human resources involves recruiting participants—both volunteers and employees—and helping individuals and teams work fairly and effectively to accomplish common goals.

For more information on Human Resource and Personnel Practices (i.e. payroll and benefit issues, performance evaluations, and other relevant elements see the following sites:

The ASU Lodestar Center’s FAQ on Human Resource Issues explains the importance of the Human Resource Department and personnel policies for social enterprises, how to determine compensation and benefits for employees, as well several differences between paid and non-paid staff:
http://lodestar.asu.edu/organizational_assistance/ask-the-nonprofit-specialists/frequently-asked-questions/human-resource-issues

National Council of Non-Profit’s Topics on Personnel Practices discusses the importance of an employee manual, offers resources on employment law, and guidance on volunteer worker management:
http://www.councilofnonprofits.org/resources/resources-topic/administration-and-management/managing-employees

Arizona Department of Economic Security provides several resources in the area of employment including employee training, tax assistance, and recruitment. The website also offers resources to those who are currently unemployed including those on disability or veterans, and provides assistance with job searching, preparation, and placement: https://www.azdes.gov/main.aspx?id=3331

Diversity Plans

Solidarity amidst diversity is an important element of the social economy.  The economic and cultural benefits of cultivating a diverse workforce are well established. In addition to fostering diversity through promotion and recruitment of employees, it is important to cultivate diversity within leadership and decision-making making bodies, such as the board of directors and key management positions in order to incorporate a wider range of experiences and ideas. This not only helps to foster innovation, but promotes greater creativity, productivity and social inclusion, thus strengthening communities more broadly.

For more information on the benefits and importance of creating diversity among non-profit organizations please check out these extensive resources provided by Lodestar:
Lodestar’s Workplace Diversity
Lodestar’s Board of Directors Diversity

 

Measuring and Accounting for Success

Over the course of the last decade, considerable emphasis has been placed on evaluating and measuring outcomes to demonstrate success. There are a variety of ways to define, let alone measure success.  Typically measures have focused on economic productivity and organizational output, but today one of the key challenges facing social enterprises is how to evaluate and communicate social value.

Geoff Mulgan provides an excellent article on the difficulty of measuring social value due to different definitions of what social value is and how it should be evaluated. He seeks to define social value as subjective and malleable as it may change across time, people, places, and situations. Creating a framework based on upon existing social value metrics and building upon this framework as the social enterprise continues to evolve, is an effective way to establish social value as an important measurement and assessment tool. For access to the full article, please click on the following PDF link:
Mulgan-Measuring Social Value

The National Council of Nonprofits has a section dedicated to the reasoning behind and importance of measuring outcomes for social enterprises as well as offering resources and guides for Self-Assessment, Effective Program Evaluation, and Outcome Measurement and Analysis.
http://www.councilofnonprofits.org/knowledge-center/resources-topic/administration-and-management/self-assessment

For additional ways to measure outcomes of success more specifically different ways a non-profit organization can evaluate itself through areas such as Ethics, Organizational Culture, Financial and Organizational Planning, Volunteerism, Marketing, Community Involvement and more, view the “Principles of Effectiveness worksheet” provided by ASU’s Lodestar Center.
Lodestar’s Principles of Effectiveness Worksheet

In 2010, the Obama Administration released a document examining standardized performance metrics for national service programs. It has several performance measure criteria, definitions and calculation methods that social enterprises can use to effectively evaluate their business with the goal of enhancing accountability and ultimately provide successful outcomes. The full document can be accessed from the following PDF: Standardized Performance Metrics for National Service Programs

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