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Progress in BC’s Social Enterprise EcoSystem

Progress in BC’s Social Enterprise EcoSystem

The Social Enterprise Day of Learning, held on April 16, 2014 in Vancouver, opened with a panel discussing the social enterprise environment in the Province of British Columbia. The full day’s program, along with the evening event, was hosted by Enterprising Non-Profits BC (“ENP”), and was sponsored by JDQ Systems, Junxion Strategy, KPMG and TELUS.

The panel consisted of representatives from government, law and business, and explored the ecosystem for social enterprise through the lens of these three sectors.

BC Government Lends Support to Sector

Representing the government was Rachel Holmes, Executive Director of Innovative Partnerships at the BC Ministry of Social Development and Social Innovation. Holmes gave an update on the BC Social Innovation Council’s Action Plan Recommendations to Maximize Social Innovation in British Columbia, released in 2012, as the first four recommendations are focused on “increasing the visibility and viability” of the social enterprise sector.

One clear sign of increased visibility, noted Holmes, is the Province’s official designation (see above) of April 2014 as Social Enterprise Month, an expansion of the Social Enterprise Day proclaimed in previous years. The Province is also planning an official Aboriginal Social Enterprise Day.

Another sign of the increased awareness of social enterprise at the provincial level is that it’s showing up in other ministries. Holmes mentioned the the BC Small Business Accord, released in March 2013, whose purpose is to create long-term growth opportunities for small business through government procurement. The Accord has a direct impact on social enterprises in BC, the overwhelming majority of which are small and medium sized enterprises.

Holmes highlighted two of the direct benefits to the social enterprise sector growing out of the Accord: the Province’s commitment to increase its purchasing from small businesses by 20%, and the development of a two-page Request for Proposal for contracts under $250,000. She also discussed the Doing Business with Government project, completed in March 2014, which highlights the BC Government’s desire to increase its social and environmental impact through purchasing, another boon for social enterprise.

Working in partnership with Employment and Social Development Canada, the BC Ministry of Social Development and Social Innovation is creating a robust inventory of the services available to small businesses in BC. As they go through the process of validating this list over the next few months, Holmes and her team will be making sure that these services are accessible to social enterprises, identifying gaps and encouraging more services for social enterprises.

Finally, Holmes spoke about Hubcap, an online social innovation community website in development slated to be launched later this year (a teaser site is available here). The site will contain a community-driven knowledge library and visual map that will connect people, communities and organizations around BC. Holmes is confident that “social enterprise will continue to be a pillar for social innovation over the next number of years.”

Legal Environment Still Playing Catch Up

The next panelist was Michael Blatchford, an Associate with the Vancouver law firm Bull Housser. Blatchford, who specializes in Charities and Tax Exempt Organizations, observed that social enterprise has lately been one of the hottest community-driven topics in his practice. He admitted, though, that the legal environment is still catching up to the business realities of social enterprise; to date, there is not a single statute that uses the term “social enterprise”. While there is a strong sense of community, Blatchford says, without a legal definition, “there is no one structure, no one way to ‘do’ social enterprise.”

Blatchford walked through the five structures that are currently available through which to run purpose-driven businesses:

  • Registered charities
  • Non-profit organizations
  • For-profit corporations
  • Community Contribution Companies (also known as “CCC”s or “C3”s)
  • Cooperative associations

Each structure has its own benefits and drawbacks. Ultimately, said Blatchford, deciding on a legal structure for one’s social enterprise depends on how the business is going to be run. “The structure shouldn’t drive what you do,” Blatchford noted. “Start with your business plan, the service or product you’re offering, and how you’re going to be funded. Then find the legal structure that best suits that business.”

Adaptability is Key

Heather O’Hara, Executive Director of Potluck Café and Catering, was the final panelist. O’Hara spoke from her experience leading a non-profit that has recently changed its legal structure to adapt to the changing environment of Canada Revenue Agency’s regulations around social enterprise. Evolution has been critical to their ongoing success, said O’Hara.

The Potluck Café Society was formed in 2001as a registered charity, “but always thought of itself as a business with a mission,” said O’Hara, who has been with the organization for the past eight years. The community café and catering business originally operated as a single entity, but over time, changing CRA regulations and shifting community perceptions called for a new strategy.

In 2008, Potluck’s board proactively began to consider separating the catering business from the non-profit, and by 2010 had decided to move forward with a formal restructure, which took effect in April 2013. The non-profit now owns the business as a wholly owned subsidiary. From an administrative standpoint, says O’Hara, there’s a lot more paperwork (two sets of books, two boards, two bank accounts, etc.), but the restructuring has created greater transparency for all stakeholders. The move “has clearly separated ‘church and state’,” joked O’Hara.

O’Hara’s advice to new social entrepreneurs is to consider their structure carefully from the start. She added, though, that the most important thing is to “just get on with it,” not to become mired by structural questions: “You don’t have to have all of the answers at once.”

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