Not Business As Usual!

As the chair of the Social Enterprise Alliance, I have the opportunity to address the annual Summit. I had a blast in New Orleans revving up the crowd about this exciting time for the Social Enterprise Alliance and the movement. Here's the text of my speech:

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Social Enterprise: Not Business as Usual!

Jim Fruchterman

Chairman’s Address to the Social Enterprise Alliance 2009 Annual Summit

The world’s a mess. I thought that would be news to you. We’ve got a lot of problems. We have a global economic meltdown. We have instability and violence all over the world. And we have this thing called the global climate crisis. It’s kind of daunting. The challenges of today’s world demand innovation because we can’t afford — business as usual.

I want to talk to you today about this moment in time, this great opportunity for us. We’re joining together to talk about the new face of business. An approach that puts social issues foremost; a strategy that delivers better results for far more people. Social enterprise — not business as usual.

We all know the limitations of the different traditional approaches to solving problems. Charity, business, and government, all accomplish great things but have their limitations. I want to start by exploring those limitations with you today.

First, charity. We know and value the charitable urge. There are so many times when human beings are in need, and they need our charity. When disaster strikes and people need water and shelter, they are not usually in a position to pay for that service. But charity misapplied is corrosive — when charity is more about the giver than the recipient. When charity goes beyond helping someone in need and creates dependency and even creates disincentives to self help — we can’t afford charity like that.

Next, business. I come out of the business sector and I admire what business can do in terms of creating jobs and new technology and new ways for people to communicate. Business is responsible for most of the medical advances we’ve seen in the past decades. There’s so much traditional business can do. But it does have its limitations. The market often fails to deliver what society most needs. Fails for people where the business community decides that the market is too small. Fails when they choose to market a product, but they leave out certain communities because they don’t believe those communities are sufficiently profitable to be worth selling to.

Additionally, and we see this a lot in the fields we work in, the people who most often need a product or service are often those least able to afford it. So we can’t afford traditional business as usual. Over the last decade, I would argue that large segments of the business community have become essentially immoral. These are the people that believe “the business of business is business” — that it’s actually immoral for a business person to consider social considerations in operating his or her business. These are the same people who said that the market would solve all problems and that more deregulation would be better. “Let us alone and we’ll do the right thing.” We’ve clearly seen how that’s worked out. Another example is the people who advocated pay for performance, and then promptly decoupled pay from performance. We most certainly cannot afford their version of business as usual.

And lastly, government. We know that government is rightly tackling many problems for our common good. Issues like education, health, employment, retirement. But innovation is difficult in government because of the constraints that government often operates under. It takes visionary leaders to try to create an environment for cultivating innovation in government. Today’s financial crisis has put government under tremendous financial strain. Right now it seems like we can’t afford government as usual.

As people of good will tackle these challenges of the status quo, we’re gathered here in New Orleans to talk about a new and exciting movement that offers a chance to blend some of the best of those three different sectors and to create innovative solutions to the problems at hand. Social enterprise is definitely not business as usual.

Social enterprises are fundamentally hybrids. We bring the heart of social mission to the market. If changing the world for the better is not your primary goal, then you’re not a social enterpriser. And I think that’s why most of us are here. The relationship that we have with the communities that we serve is fundamentally different than traditional charity. Our clients are customers; they are not the passive recipients of our beneficence or our charity. They are our active partners in changing the world, in changing society. The power relationship between us and our customers is different from that of typical businesses. That, I think, is at the core of all social enterprise. It’s not “we’re up here and you’re down there,” it’s “you’re our partners in making social change.” And so we aim to change the dynamics of business as usual.

Compared to the most extreme examples of abuses of business, social enterprises know better. Social enterprises in the opportunity finance area were not involved with predatory loans when deregulation happened or when regulations ceased being enforced. They knew better. Social enterprises understand that our primary responsibility is to act in the best interests of society. We’re often exploring the new frontiers of the enterprise world, boldly going where no enterprise has gone before. Most definitely not business as usual.

And as for government, we have a new ballgame today. We have political leaders with an active interest in changing the status quo— for finding innovative and scalable solutions to the challenges facing our cities, states, nation and the world. Today we’re not facing government as usual, but we have to be an active partner in making that happen.

As we gather the Social Enterprise Alliance together, we see exciting opportunities to work together to change the country and the world. I’m here because I want to help build that movement. I’m part of the Alliance because I know there are things that my organization alone can’t begin to tackle. But we together as a movement can make a much bigger impact on our society for our joint social mission. We need to work together to make social enterprise a much bigger part of the solution to society’s problems.

And we need your help to make that change. We have a new administration in Washington hungry for ideas that deliver results. We’ll have a new White House Office for Social Innovation that is already hearing from us — and needs to hear from MORE of us. We need you to help get involved in charting that course — as a movement, by getting involved as a member, by joining your local chapter, by starting a local chapter, by talking to your elected representatives, by advocating for the policies and the changes that will provide the capital needed to make the impact the social enterprise movement is capable of on a national level.

We’ll hear exciting ideas here in New Orleans. Great stories from social entrepreneurs about how their unusual business ventures make social change. We’ll hear from our new chapters about how they are assembling like-minded people in their communities to get together and talk about how to make social change.

When I was a business person, the most valued advice I ever got was from my peers. We would talk about the things that my board wouldn’t talk to me about, that I couldn’t talk to my staff about. That’s what chapters and what this annual Summit provide. A chance for peer interaction and advice to help you solve the most challenging problems, because in this room there are several people who have already solved the biggest problem you’re facing right now. Ask them about it. Test it out. We’re going to hear from those people.

We’re going to learn about “how to” and “what to” and “why not” in many different sessions, both in the seminar rooms and in the hallways. And we’ll celebrate the successes of the leaders in our community who are working on creating hybrid forms, actually corporate forms that help meld this hybrid nature of the social enterprise. There are exciting new forms like the L3C or the B Corp that address how to balance social mission with business. And there are people working on more.

We’ll travel outside the United States to explore amazing and inspirational social enterprises not in our country. Having attended the Social Enterprise World Forum in Edinburgh, Scotland last year with Kris, our CEO, it’s clear that the UK is five or ten years ahead of us in social enterprise. We have a lot to learn from other countries in how we can make social enterprise a much bigger part of our movement. In the UK government thinks more and more about turning to social enterprise to deliver social services rather than traditional business or government solutions. We’ll also hear from policy makers and activists working to change laws and unleash capital for social enterprises. The top performing asset class for the last year was social investing in opportunity finance. People who invested in top micro-credit enterprises making low-income housing loans such as Self-Help in North Carolina — good loans, not the predatory ones — realized three or four percent yields, which these days looks pretty good.

There were foundations that were told that it was against their fiduciary duty to make investments in social enterprises. I think the experience of the last year has changed that view. But we have to encourage that forward movement. By tackling all of these issues, we’re going to be encouraging them. We’ll be doing all those things and we’ll be doing more.

So as we mark this 10th summit, let’s join together to fight the forces of business as usual.

Do you believe traditional charity alone will bring the lasting and sustainable change that our communities need? I don’t.

Do you believe that traditional business alone is going to do the right things for society’s disadvantaged — the people who often most need the products and services of business but are least able to afford it? I don’t.

Do you believe that traditional government approaches alone are going to bring the innovation and effectiveness that our global crisis so desperately demands? I don’t.

Traditional charity, business, and government approaches alone are not going to be able to do this.

I know that we all believe that social enterprise is a crucial part of the solution. The solution that charity, business, and government need to get us through this crisis. Together we can build the more sustainable and just world that we all know is possible and forever change — business as usual!