ENTERPRISING CHANGE REPORT OF THE 2015 SOCIAL ENTERPRISE SURVEY FOR ONTARIO The Canadian Community Economy Development Network MaRS Centre for Impact Investing Simon Fraser University Mount Royal University ACKNOWLEDGEMENTS 1 P R E PA R E D BY: Paul Chamberlain, The Canadian CED Network Kelly Gillis, The Canadian CED Network Taralyn Prindiville, The Canadian CED Network Olivia Bechard, The Canadian CED Network Muska Ulhaq, MaRS Centre for Impact Investing Peter R Elson, Mount Royal University Peter V Hall, Simon Fraser University AC K N O W L E D G E M E N T S This report was made possible with the financial support of the Government of Ontario the Ontario Trillium Foundation and the Government of Canada’s Employment and Social Development Canada and with contributions from Mount Royal University and Simon Fraser University as well as the Centre for Learning, Social Economy & Work (CLSEW) at Ontario Institute for Studies in Education / University of Toronto (OISE/UT)

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ENTERPRISING CHANGE REPORT OF THE 2015 SOCIAL ENTERPRISE SURVEY FOR ONTARIO The Canadian Community Economy Development Network MaRS Centre for Impact Investing Simon Fraser University Mount Royal University ACKNOWLEDGEMENTS 1 P R E PA R E D BY: Paul Chamberlain, The Canadian CED Network Kelly Gillis, The Canadian CED Network Taralyn Prindiville, The Canadian CED Network Olivia Bechard, The Canadian CED Network Muska Ulhaq, MaRS Centre for Impact Investing Peter R Elson, Mount Royal University Peter V Hall, Simon Fraser University AC K N O W L E D G E M E N T S This report was made possible with the financial support of the Government of Ontario the Ontario Trillium Foundation and the Government of Canada’s Employment and Social Development Canada and with contributions from Mount Royal University and Simon Fraser University as well as the Centre for Learning, Social Economy & Work (CLSEW) at Ontario Institute for Studies in Education / University of Toronto (OISE/UT). First and foremost, we would like to express our gratitude to the social enterprises that took time to complete the survey. Without their contribution, this survey would not have been possible. We would also like to thank the many people who helped us identify and contact these enterprises, especially Ushnish Sengupta of the CLSEW at OISE/UofT and Jennifer Raftis, Dominika Zapolnik-Farrelly, and Suzannne Addison-Toor of the Community Education Partnership Centre (CEPC) at Georgian College. A special thank you to Muska Ulhaq of the MaRS Centre for Impact Investing (CII) for her outreach and research to include for-profit social enterprises for the first time in the Ontario survey. Finally we would like to thank Skye Zhang for her creativity and patience in transforming complex data into clear and lovely visuals. Copyright © 2015, Paul Chamberlain, Kelly Gillis, Taralyn Prindiville, Olivia Bechard, Muska Ulhaq, Peter R Elson, Peter V Hall * T he views expressed in this publication are the views of the authors and do not necessarily reflect those of the Province, the Government of Canada or the Ontario Trillium Foundation. ENTERPRISING CHANGE: SOCIAL ENTERPRISE IN ONTARIO 2 Table of Contents ACKNO WL E D GE ME NT S 1 I NT RO D UCT I O N 4 KE Y FI ND I NGS 6 1. 0 GRO UND I NG S O CI A L E NT E R P R I S E 10 1 . 1 What is Social Enterprise? 11 1 . 2 Momentum, Uncertainty & Opportunity 12 1 . 3 Ontario’s Social Enterprise Climate 14 2 . 0 D E FI NI T I O N O F S O CI A L E NT E R P R I S E 18 3 . 0 S UR V E Y ME T HO D & L I MI TAT I O NS 20 3 . 1 Purpose 20 3 . 2 Method 21 4 . 0 S UR V E Y FI ND I NGS 26 4 . 1 Purpose 27 4 . 2 G eographic Focus 40 (REGIONAL & RURAL-URBAN COMPARISONS & SCALE OF OPERATIONS) 4 . 3 E conomic Impact 63 (EMPLOYEES, VOLUNTEERS AND FINANCIALS) 4 . 4 C hallenges & Opportunities 69 (CHALLENGES & EDUCATIONAL RESOURCE HIGHLIGHTS) 4 . 5 Trends: 2012 and 2015 compared 78 5 . 0 FR A NCO P HO NE FO CUS 80 6 . 0 P OV E RT Y FO CUS 87 7 . 0 D I S A B I L I T Y FO CUS 92 8 . 0 FO R -P RO FI T S O CI A L E NT E R P R I S E 101 9 . 0 NO NP RO FI T CHI L D CA R E S P OT L I GHT 113 C O NCL US I O NS & R E CO MME NDAT I O NS 116 TABLE OF CONTENTS 3 AP P END IC ES Appendix A: 2015 Social Enterprise Survey for Ontario (Nonprofit Questionnaire) Appendix B: Cross Comparative Data on Social Enterprise in Ontario, 2012 & 2015 Appendix C: Detailed Survey Methods Appendix D: Average Revenues & Expenses by Subsector Appendix E: Detailed Employment & Financial Averages by Age of Social Enterprise Appendix F: Detailed Employment & Financials for Nonprofit, For-profit and Child Care Appendix G: Detailed Challenges & Helpful Resources Charts Appendix H: Additional Purpose & Structure Information Appendix I: Additional Geographic Information Appendix J: Breakdown of Regions by Counties Appendix K: Detailed Financial Comparison for Rural-Urban Social Enterprises Appendix L: Cross-Comparative Data on Social Enterprise by Province Appendix M: Social Enterprise Ressources & Publications NOT ES BI BLIOGRAPHY ENTERPRISING CHANGE: SOCIAL ENTERPRISE IN ONTARIO 4 Introduction There has been a lot of talk about social enterprise (SE) over the last few years, with many ideas about what it is and what it means for the future of our communities. While there is no one definition of social enterprise, most agree it involves the combination of businesssavvy market activity with the mission-focused purpose of the nonprofit/voluntary sector to bring about positive impact. From research and experience, we know that Ontarians have sought to achieve both economic and societal goals for community benefit. The concept of doing good while earning a profit may not be new, but recent interest from politicians, academics, and community organizations has pushed social enterprise into the limelight. With the increasing number of socially-minded start-ups and the creation of the Office for Social Enterprise by the Government of Ontario, it is vital to have accurate and updated information about the social enterprise sector in this province. An enhanced understanding will enable policymakers, intermediaries and community stakeholders to better support the development of a social economy that provides opportunities for employment and training as well as offer environmental, cultural and social benefits. This is the purpose of the 2015 Social Enterprise Survey for Ontario: To provide a snapshot-in-time profile of this province’s social enterprise sector, in order to increase awareness and inform actions to support its development. This report builds on previous research that the Canadian CED Network (CCEDNet) conducted in 2012, titled ‘Inspiring Innovation: the Size, Scope and Socioeconomic Impact of Nonprofit Social Enterprise in Ontario’. It also contributes to the national profile being created through similar surveys which have been conducted across the country- so far British Columbia and Alberta have been surveyed three times; Manitoba, Nova Scotia and New Brunswick twice, and Prince Edward Island, Newfoundland/Labrador, Yukon, Nunavut and the Northwest Territories once. A survey is currently under development in Saskatchewan. All of these reports contribute to a better understanding of a national entrepreneurial movement within the nonprofit sector. INTRODUCTION 5 RESPONDING SOCIAL ENTERPRISES (N= 597) 33 FOR-PROFITS (unknown / not confirmed) 75 FOR-PROFITS (known) 40 NONPROFIT CHILD CARE 449 NONPROFITS The findings from this survey are based on the participation of 597 social enterprise respondents (nonprofit and for-profit combined). Some respondents are parent organizations managing multiple sites/businesses; when considering all sites separately the total count represents 1,271 entities. This 2015 Ontario survey is unique in that it is the first in Canada to include for-profit social enterprises, as well as nonprofit child care and housing providers. This is an important step in recognizing the broad continuum of enterprises that contribute to Ontario’s social economy. The report begins with a background of Ontario’s social economic climate and the momentum of social enterprise in particular. It presents an operational definition of social enterprise as used in this survey and discusses the method and limitations of the research. Findings for nonprofit respondents are then presented in four overarching themes: Purpose & Structure, Economic Impact, Geographic Analysis and Challenges & Opportunities. Spotlights are presented for francophone, poverty and disability focused nonprofits, and this is followed by an examination of for-profit social enterprises. Finally, nonprofit child care providers are presented separately due to concerns about the comparability of data. The report concludes with a summary of key findings and recommendations for sector-building opportunities among policy makers and community stakeholders. ENTERPRISING CHANGE: SOCIAL ENTERPRISE IN ONTARIO 6 Key Findings Note: Key Finding highlights do not differentiate specific respondent categories and therefore should not be cited in isolation. For a more detailed explanation of respondents represented in these highlights, refer to the specific sections listed in brackets. Unless otherwise noted, nonprofit social enterprise results do not include nonprofit child care respondents. ONTARIO’S SOCIAL ENTERPRISES: Address Employment Barriers Operate Across A Range Of Industries Almost half of nonprofit respondents focus on assisting low income populations and one-fifth of them specifically train, employ or provide services to people living with physical, psychiatric or intellectual disabilities. Four-fifths of SEs with a poverty focus and over half of those with a disability focus include employment development in their mission. (See Poverty Focus and Disability Focus) Ontario’s responding SEs are active in diverse sectors ranging from health and social services to trade and finance and food and tourism. Over half of for-profit respondents identify as multisector, with a greater focus on professional services (49%) and health and social services (45%) while nonprofit respondents centre more on trade and finance (36%), accommodation, food and tourism (34%), and real estate (33%). (See Purpose & Structure and For-profit Social Enterprise Sector) Juggle Multiple Purposes The majority of responding SEs (85%) identify with a social purpose. Nonprofit respondents tend to identify with a variety of purposes: over a third identify with having a cultural or environmental purpose. Almost half of for-profit respondents report having an environmental mission. (See Purpose & Structure and For-profit Social Enterprise Sector) Work With Diverse Communities Nearly half of nonprofit and one-quarter of for-profit responding SEs work with people with low incomes and most subsectors reported working with four or more distinct groups. About two-fifths of nonprofit respondents work with youth, women and families while almost half of for-profit respondents work with women. (See Groups Served, Employed or Trained by Social Enterprises , Average Number of Targeted Groups by Subsector, and For-profit Social Enterprise Sector) KEY FINDINGS Operate Under A Range Of Legal Structures Among nonprofit respondents, 42% identify as co-operatives; and just under half identify as registered charities. About one fifth of for-profit respondents identify with another legal structure such as B Corporation, original IP and limited liability partnership. (See Purpose & Structure and For-profit Social Enterprise Sector) Create Jobs In 2014, Ontario’s responding SEs employed a total of at least 14,000 people, including at least 7,500 full-time equivalent (FTE) employees, and paid out a total of at least $252 million in wages and salaries. Responding SEs hired an average of 38 staff (18.5 FTE). Respondents aged 40 years and older hired more employees compared to younger enterprises. (See Economic Impact) Are Well-Established And Increasing Almost three-quarters of responding social enterprise are 10 years or older, with over half operating for more than 20 years. Many new enterprises are also being developed. The majority of for-profit respondents are relatively new companies, with 57% operating less than three years. Sixty-six percent (66%) of nonprofit SEs with a poverty focus have been operating for three years or less. (See Purpose & Structure, Poverty Focus and For-profit Social Enterprise Sector) 7 Fight Poverty Nearly half (45%) of nonprofit SEs surveyed have a poverty focus. This is more common among younger social enterprises. Povertyfocused respondents are found to be less likely than other SEs to receive grants from all three levels of Canadian government. (See Poverty Focus) Work Locally The majority of Ontario’s responding SEs operate at the local/neighbourhood, city/town and regional levels. For-profit respondents are much more likely to work at larger scales, such as provincial, national and international levels. (See Geographic Scale and For-profit Social Enterprise Sector) Contribute To Ontario’s Economy In 2014, Ontario’s responding SEs earned at least $489 million in total revenues. About 78% of this came from the sale of goods and services. (See Economic Impact) Are Distinctive In Francophone Communities In general, francophone and anglophone social enterprises are similar. However, there are a higher percentage of francophone respondents in rural communities and they are more likely to identify with a cultural purpose. They are also over five times as likely to consider repayable equity as a strategy for revenue growth (compared to anglophone enterprises). (See Francophone Focus) ENTERPRISING CHANGE: SOCIAL ENTERPRISE IN ONTARIO 8 Engage Volunteers In total, Ontario’s responding SEs engage at least 25,000 volunteers; this includes at least 10,200 full-time volunteers. Nonprofit respondents have an average of almost four times as many total volunteers as for-profit respondents, with the older social enterprises (40+ years) engaging more than twice the number of volunteers on average (99) compared to the average for all of the nonprofits. (See Economic Impact) Are Building Financial Sustainabiltiy Over three-quarters of nonprofit respondents reported breaking even in 2014, but only a little over half broke even without grants. On the other hand, just over half of for-profit respondents broke even in 2014, dropping to just above two fifths (42%) when grants are not counted. (See Economic Impact) Have Human And Financial Resource Challenges Forty-two percent (42%) of responding nonprofits identify human resources as a moderate or significant challenge. Access to external capital is a major challenge as well, with 53% of nonprofit respondents and 81% of for-profit respondents citing access to grant capital as a moderate or significant barrier to their development. (See Challenges Highlights and For-profit Social Enterprise Sector) Differ In Rural And Urban Contexts Rural respondents are more likely to operate as farmers’ markets and arts and culture organizations; 73% of farmers’ market respondents are in rural communities. Urban respondents are more likely to focus on employment development and housing. When considering top challenges, only urban respondents list legal and regulatory considerations as a significant to moderate challenge, while only rural respondents mention access to grant capital. (See Rural-Urban Comparison) Are Hesitant To Use Loans To Grow Over two-thirds of nonprofit respondents report receiving grants, while only one-quarter report receiving loans; this highlights a low uptake of loans among nonprofit social enterprises. For-profit respondents are more likely to take this type of risk, with 68% of them securing loans in 2014. Just under half of organizations in operation for 40 years or more had loans in 2014, making them the most likely to finance activities through credit. (See Economic Impact) KEY FINDINGS 9 Want Practical Support Plan To Grow For-profit responding SEs are much more likely to have an interest in resources relating to capital and social purpose investment opportunities. Both for-profit and nonprofit respondents identify educational resources and specific training as very helpful. However, nonprofits are more likely to prefer having this information available online, either as a manual or webinar, or in-person through workshops , while for-profits prefer to have this support inperson through coaching. (See Educational Resources Highlights and For-profit Social Enterprise Sector) Fifty-six percent of all responding social enterprises consider business revenue growth as a very important part of their strategic plans over the next two years. The most common sources of potential revenue growth identified as very likely by all responding social enterprises are profits/surplus and fundraising, followed by government and non-government grants. For-profit responding SEs are actually 10% more likely than nonprofits to identify government grant revenue as very likely. However, for-profits are also much more likely than nonprofit SEs to consider repayable equity (59% vs 17%) and loans/mortgages (56% vs 19%) as potential revenue sources. (See For-profit Social Enterprise Sector and Helpful Resources & Opportunities Highlights) ENTERPRISING CHANGE: SOCIAL ENTERPRISE IN ONTARIO 10 SECTION 1 Grounding of Social Enterprise PUBLIC SECTOR PRIVATE SECTOR COMMUNITY ECONOMIC DEVELOPMENT PUBLIC SECTOR NON-PROFIT SOCIAL ECONOMY BUSINESSES CIVIL SOCIETY ORGANIZATIONS SOCIAL ECONOMY Understanding the Social Economy Diagram, Adapted from “An Interactive View of the Social Economy”, by Jack Quarter and Laurie Mook, 2010, ANSERJ Canadian Journal of Nonprofit ans Social Economy research, vol 1 GROUNDING SOCIAL ENTERPRISE 11 BUSINESS MODEL CONTINUUM Not-for-Profit Ownership For Profit / Private Ownership (including NFP Cooperatives) (including FP Cooperatives) Donations Fee for Service Social Enterprise Socially responsible business Corporate social responsibility Strictly Seeks Profit Blended Return On Investment 1.1 What is Social Enterprise? Definitions of social enterprise continue to be debated. Perspectives can diverge across provinces, countries and sectors, as well as motivations and ideological divides. To add to this complexity, social enterprises tend to defy neat classification, with fluid boundaries and wide variations in form, structure and context. Debates over specific meanings and classifications reflect the diversity of stakeholders in the sector and the fact that this field is still emerging. However, from a ‘big picture’ lens, there is broad agreement that social enterprise involves the engagement of an organization in market activities that produce revenue as well as clear social, environmental and/or cultural benefits. The Government of Ontario states simply that “a social enterprise is an organization that uses business strategies to maximize its social or environmental impact” (Government of Ontario, 2013). The blending of business revenue generation with the drive to generate measureable, positive impacts in society is sometimes referred to as a ‘double bottom line’ or a ‘blended return on investment’. Business Model Continuum, Adapted from “Introduction to Social Enterprise’ workshops by Enterprising Nonprofits (enp), David Lepage, 2011 Canada’s social economy is replete with enterprises that blur the lines between public, for-profit and nonprofit sectors. They comprise a spectrum of legal and operational structures, ranging from for-profit corporations with additional objectives (i.e. social purpose businesses) to nonprofit charitable organizations that manage or own an operation in the market, investing earned revenue back into their programs. They also differ in respect to strategies for generating revenue which can be achieved through the sale of goods and services or fee-for-service program development. A separate hybrid incorporation structure that is neither for-profit nor nonprofit is a third option in some other countries and now in BC. The province is discussing with community stakeholders the possibility of such a hybrid model for Ontario. Co-operatives are one existing structure that crosses the for-profit/nonprofit boundary and have a history of significant contribution to the social economy. ENTERPRISING CHANGE: SOCIAL ENTERPRISE IN ONTARIO 12 1.2 Momentum, Uncertainty & Opportunity Many well-established organizations have been practicing ‘social enterprise’ long before the term was coined, generating revenue through sales of goods and services, fees for service, and service contracts. However, it i...