We’re all familiar with for-profit businesses, focused on the sales of a product or service, and motivated by value creation and financial return. We also know nonprofit organizations, focused on public needs, a social mission, and global impact, and supported by charitable dollars. But there’s an emerging middle ground: social enterprise. A for-profit/nonprofit hybrid, social enterprises use market-based practices and the discipline of business to support efforts that benefit people and the planet.
“There is a space in society for a social safety net,” says Drew Tulchin, founder of Social Enterprise Associates, a management consulting firm that helps organizations raise the capital they need to achieve their social and environmental goals. Traditionally, this space has been the domain of the nonprofit sector, but as need continues to increase, there is not enough philanthropic money to support the growing nonprofit marketplace. Social enterprises avoid this problem by forgoing a donation-only model in favor of market-based efforts to sell products and services that earn income. “It’s a pretty basic economic proposition,” explains Tulchin. “Where can a mission driven entity find more money to do the things it needs to do if donations aren’t enough? The answer is in risk capital.”
Social Enterprise Associates helps entrepreneurs of for-profits and nonprofit entities become game ready to attract investment. Tulchin says that while social impact is attractive to many investors, mission-based organizations may be far more accustomed to appealing for donations and lack the business skills needed to secure capital. “It’s very important for organizations that are trying to ‘do well by doing good’ to actually do well,” he explains. “Take the discipline of business, of a well-run organization, and do that first. Once those elements are in place, investors are more likely to see a social enterprise as investment-worthy.”
When Tulchin entered the MBA Program at the UW Business School in 1998, he’d never heard the term “social enterprise.” All he knew was that he had a goal—to make the nonprofit model work better—and he believed in using the power of business to achieve it. “I came in trying to solve this puzzle,” he says, “and the University of Washington was a fantastic place to do it.” Tulchin learned from accomplished leaders in Seattle’s growing social entrepreneurship community (including Paul Shoemaker of Social Venture Partners and Gary Mulhair of Pioneer Human Services) that there was opportunity at the intersection of nonprofits and for-profits for mission driven businesses.
After business school and a brief stint with a Bluetooth start-up company, Tulchin focused his career on social enterprise. He joined Prisma Microfinance, where he co-wrote a Global Social Venture Competition award-winning business plan and raised $1.2 million in private equity to launch subsidiaries in Nicaragua and Honduras. He went on to work as a program officer and founder of the Capital Markets Group at the Grameen Foundation, and directed a U.S. microfinance organization in Washington DC before starting his own firm in the early 2000s. Social Enterprise Associates was incorporated in 2007.
Six years later, the company is a leader in social enterprise consulting, working with nonprofits, for-profits, foundations, and government entities throughout the U.S. and around the world. The firm’s recent consulting projects have including working with banks in Afghanistan, providing strategic planning for Native American housing organizations in New Mexico, and helping a mobile grocer bring healthy food to rural communities. Social Enterprise Associates was named a 2011 “Best For the World” Small Business by B Lab, which certifies businesses as “B Corporations” that meet standards of social and environmental performance, accountability, and transparency.
Tulchin is perhaps most proud of having advised numerous social enterprises on raising the money needed to accomplish their missions. Most recently, the firm helped close $250,000 in debt for Sea2Table, a family-owned sustainably-caught fish distributor, and is securing $1 million for Florida-based Solar and Energy Loan Fund, supporting efficient home improvements. “Raising money for social entrepreneurs is fantastic,” says Tulchin. “It’s something I’m fortunate enough to wake up and do every day.”