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Legal Structure: A Diagnostic Model for Social Entrepreneurs

Legal structure for social entrepreneursAn informative legal panel concluded Day 2 of the San Jose Green Business Academy last week. Professor William Kell of Berkeley’s Boalt Law School provided a helpful approach to social entrepreneurs contemplating their legal structure and business needs.

 

A Business + Law Approach
Professor Kell noted that new entrepreneurs often need more than individual efforts of a lawyer and individual efforts of a financial planner. They often need the combined skills of business and financial acumen along with a good understanding of the law. He outlined an integrated approach for assessing and developing a business-legal strategy for social entrepreneurs.
Professor Kell referred to this approach as a “diagnostic model” with a focus on planning for business success. No matter what stage of building a social enterprise you may be in, this approach can be useful in framing your current and future needs and can help prepare you for meeting with a business attorney.
The approach follows the acronym “BECOME”.
BECOME a social enterprise

Business Planning. Consider concept, customers, capital in developing a business plan.

Entity Formation. Determine the level of liability and protection your venture will need, and work with an attorney to find the optimum legal structure. Avoid forming too soon, as you will have to begin paying state fees for incorporation once you file (even if you don’t actually start doing business or generating income until later)

Capital Relationships. Have a clear understanding of your organization’s debt v. equity equation. The most common pitfall is companies not having enough capital.

Operational Relationships.  Understand players and flow involved in sourcing your products and services, manufacturing, and bringing to market. Do you meet any government requirements for your industry? Do you qualify for any programs (i.e. minority, women small business leaders, etc.)?

Managing Risks. Think of risks such as protecting intellectual property (IP), protecting against tort liability, and considering regulatory liability. An attorney can help identify ways to protect your organization’s assets and protect against liability.

Extra Permits & Licenses.  Depending on the products or services your social venture is contemplating, you will have to look into applicable government licenses and permits. For example, as a non-profit, your organization will have to apply for tax-exempt status. Likewise, to conduct any construction work, procuring a contractor’s license is required.

  • Resource: CalGOLD.ca.gov is a resource Professor Kell mentioned for small businesses in California to find out what kinds of permits and licenses their venture may require.
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5 SF Bay Area Funding Resources for Social Entrepreneurs [Green Business Academy]

Green for All‘s Capital Access Program recently convened a two-day event focused on serving social entrepreneurs. The event, titled the Green Business Academy, was held September 29th-30th 2011, was a no-cost event, and took place at the University of Phoenix campus in San Jose, California—located in the vicinity of two of Silicon Valley’s noted tech & innovation pillars, Cisco and eBay.The Green Business Academy gathered green business leaders, socially responsible (impact) investors, legal experts, and support institutions providing local resources including legal services and mentorship necessary to build a social enterprise.Green Business Academy Day 2: Impact Investor Panel

Green Business Academy impact investors panel

Day 2 of the Green Business Academy in San Jose kicked off with a panel of impact investment firms discussing types of funding resources available to local SF Bay Area social entrepreneurs and how to go about pursuing them.

The panelists included:


5 SF Bay Area Resources for Social Entrepreneurs

The panelists largely spoke about their organization’s focus and resources. Below are key points about each of the 5 local resources introduced.

1. Opportunity Fund (@OpportunityFund) is a non-profit organization that supports local entrepreneurship by providing small business loans to maintain and grow companies. It has lent more than $17M to small businesses throughout California.

Panelist Alex Dang mentioned that Opportunity Funds has primarily served 2 types of green businesses: 1) smaller businesses that have had to go green because of regulatory requirements, and which have in turn formed marketing opportunity with new green business models; and 2) businesses that have chosen to source products sustainability.

You can read about Opportunity Fund success stories from their clients.

2. Hub Ventures (@Hubventures) is a 12-week program providing funding and guidance to Bay area social entrepreneurs, based in Hub SoMa and Hub Berkeley. Participants refine business models and investor pitches and build broader networks through weekly sessions, and compete for $75K in seed funding, as decided by their peers.

Panelist Wes Selke mentioned that Hub Ventures is raising $3M in funding to expand the program.

You can browse through the recent cohort of social entrepreneurs from the last Hub Ventures session.

3. Toniic is an angel investor currently comprised of 30 investors in 5 countries, with 3 global chapters, and is growing. Toniic has placed 18 investments with other $3M over last year.

Investors are interested in funding “tranformational enterprises”–that seek to do well by doing good. Toniic funds social ventures across the globe addressing issues such as poverty and climate change.

You can view selected investments by Toniic.

4. Investor’s Circle (@InvestorsCircle) invests in early-stage social start-ups and works to grow its base of “patient capital” investors. Patient capital investors prioritize external rates of return and optimize internal rates of return. Investor’s Circle hosts 2 social venture fairs per year where entrepreneurs and investors meet to discuss potential investment.

You can read about recent presenters at Investor Circle venture fairs.

5. GreenVC (@GreenEconomy) aggregates news and resources on green venture capital, funding, and startups. It is a go-to place to learn about green incubator programs, green funding resources, upcoming events for social entrepreneurs, and registration discounts.

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How Do Federal Agencies Score on Sustainability? Performance.gov has the Results

Performance.gov is a new site managed by the Office of Management and Budget (OMB) that assesses how agencies do according to criteria outlined by Executive Order or as identified by the agencies themselves.

StarTwenty-four agencies are listed in the assessment for sustainability.Social entrepreneurs can use the set-up and content of Performance.gov in devising transparency, accountability, and reporting measures.  You can read more about what performance.gov is and the set-up and choice of criteria for reviewing how “green” federal agencies are in the previous posts in this series on Performance.gov.How Do Federal Agencies Score on Sustainability?

The ratings are relayed with green, yellow, and red dots indicating strong compliance (green), intermediate compliance (yellow), non-compliance (red) with target goals.

So, the million dollar question, how did the agencies score for 2010?

The Winners
The following Federal agencies led the pack, featuring green indicators for all criteria:

Strong Showing 
The following agencies had a strong featuring green indicators for 6 out of 7 criteria.

Bottom of the Class
The following agencies rounded the bottom of the group featuring a majority of non-green indicators (i.e. 4 yellow or red indicators)

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Top 5 Things Social Innovators Learn From Dreamforce 2011

Dreamforce 2011–the conference that brought together upwards of 35,000 developers, professionals, entrepreneurs, non-profit representatives, executives, and industry leaders–enabled each niche to gain something useful from event.

Attending Day 2 of the event with the focus of identifying tools and trends useful to social entrepreneurs and social innovators, a few key themes came to mind.

Listening In to Marc Benioff and Eric Schmidt

Dreamforce 2011 Keynote close up

One of the most compelling sessions of Day 2 was the afternoon keynote session which featured an interview between Salesforce CEO Marc Benioff and Google Chairman and former CEO Eric Schmidt. (see here for the video)

Keynote big pictureSurprisingly, though the conversation was being viewed by a live audience of thousands and was also being broadcast online, it had a kind of personal and intimate feel to it. Like overhearing a conversation between 2 long-time colleagues–who know each other well enough to make a few jokes at the other’s expense, but who also respected the other enough to ask probing questions leading to insightful response.

Schmidt was articulate and honest. Benioff was a generous host and a thoughtful interviewer.

So, what can social innovators learn from Dreamforce, Benioff, and Schmidt?

Top 5 Things Social Innovators Learn From Dreamforce 2011

1. Mobile. Throughout various sessions, there was emphasis on the astounding growth of mobile usage. More people are adopting mobile devices and tablets as main ways they access the internet. Social entrepreneurs looking to build new products, services, and websites would be wise to build their strategy around mobile device usage and content. This includes building apps on multiple platforms and/or making a mobile version of a site.

2. Social. Understanding and using social networks, social platforms, and social media is becoming less optional and more of a necessity in connecting individuals and social investors to causes, and to each other. With a plethora of apps to help engage your audience, it is important for social innovators and social entrepreneurs to consider their goals when it comes to building engagement and wisely use existing social platforms to extend their reach.

3. Local. In the keynote as well as in sessions such as the Google Apps super session, there was an emphasis on the future of local. News, events, deals are most valid to users when they are in the same locale. In building ways for your social venture to effectively connect with your intended audience, consider how to customize the user experience to make it relevant to their location.

4. Real-time. Mobile, social, local formed a buzzword trifecta at Dreamforce. And Marc Benioff was quick to remind the audience of another in his keynote talk with Eric Schmidt. He mentioned that real-time is also an emerging trend in effectively connecting with audiences. Just as information is more relevant when it applies to your location, it is also more relevant when it applies to you, now. As social entrepreneurs consider how to connect their cause with those who can contribute time, resources, social engagement support, it is important to think about how to connect content in real-time.

5. Work with Good People. When Benioff asked Schmidt about what attracted him to start at Google when it was a young company, Schmidt turned to the audience and said, “life is short and you should spend time working with people you enjoy’. Social business is unique because of its emphasis on building a revenue model as well as serving the community and environment—part of making it work is having an awesome team of bright, committed folks, who like and bring out the best in each other.

To catch up on our tweets from the event, follow @innov8social on Twitter. You can also search #df11 for other tweets related to Dreamforce 2011.

 

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Sustainability on Performance.gov: the Criteria Revealed

As you may have read in a previous post, the Obama Administration recently unveiled its new website that provides a ‘score card’ on how government agency is faring according to criteria for redSustainability on Performance.gov: ucing waste and increasing efficiency.One of the areas of focus is sustainability, i.e. how agencies fare as to environmental factors related to emissions, energy use, oil consumption, and building efficiency. Below is a more-detailed look at the criteria.And stay tuned to find out how the agencies actually scored…
  
The Federal Government’s Sustainability Report Card: The Criteria

President Obama signed Executive Order 13514 in October 2009. It proposed an integrated strategy for sustainability in the Federal Government–which is named the largest consumer of energy in America–including prioritizing reduction of greenhouse gas (GHG) emissions directly and indirectly caused by Federal agencies.  Specifically, it ordered Federal agencies to measure, record, publicly report, and reduce GHG pollution.

Calla lilyPresident Obama followed up with specific GHG reduction goals in 2010. These include reducing direct GHG by 28% by 2020 (Scope 1) and reducing indirect GHG by 13% by 2020 (Scope 2)—which is estimated to yield up to $11 billion in energy cost savings.Performance.gov aims to support these goals by displaying the status of 24 government agencies according to 7 specific criteria which include:

1. Inventory for Scope 1 & 2, greenhouse gas (GHG) Reductions. Scope 1 refers to direct GHG emissions from sources owned/controlled by the Federal agency. Scope 2 refers to direct GHG emissions resulting from generation of electricity, heat, or steam purchased by the Federal agency.

2. Inventory for Scope 3, GHG Reductions. Scope 3 refers to  greenhouse gas emissions from sources not owned or directly controlled by a Federal agency, but that are related to agency activities (i.e. vendor supply chains, delivery services, and employee travel and commuting)

3. Reduction in Energy Intensity. Energy intensity refers to energy consumption per square foot of building space, including industrial or laboratory facilities.

4. Renewable Energy Use. This refers to energy produced by solar, wind, biomass, landfill gas, ocean (including tidal, wave, current, and thermal), geothermal, municipal solid waste, or new hydroelectric generation.

5. Reduction in Potable Water Intensity. This refers to potable  water consumption per square foot of building space.

6. Reduction in Fleet Petroleum. This refers to goals outlined to use low greenhouse gas emitting vehicles (including alternative fuel vehicles) and reduce/optimize the number of vehicles in an agency fleet.

7. Use Sustainable Green Buildings. This refers to goals outlined ensuing that all new construction and major renovation/repair/alteration of Federal buildings complies with published guidelines regarding sustainability.

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What is Performance.gov?

Performance.gov is a new tool for measuring sustainability at the Federal government level. The new site was launched last week by the White House. As explained by Deputy Director for Management and Chief Performance Officer Jeff Zients, Performance.gov provides a report card on Sustainability and 7 other key performance areas of the federal government.Understanding this tool can help social entrepreneurs determine how to assess their own organization’s sustainability and offer an example of transparency and accountability.

Sustainability graphic on Performance.gov
Performance.gov: The Purpose

The site aims to promote alignment with goals of cutting waste, through accountability and transparency. Much of the data is not new, but is consolidated for simplified review. Performance.gov, according to its About section, has the purpose of compiling data in a central location to promote actionable change:

“Performance.gov is a central website that provides a window on the Administration’s efforts to deliver a more effective, smarter, and leaner government. The site gives the public, government agencies, Members of Congress, the media, and others a view of the progress underway in cutting waste, streamlining government, and improving performance.”

Additional Resources
  

Online Tool Grades Feds On Efficiency (InformationWeek)
Performance.gov (finally) launches (OhMyGov)

Stay Tuned
  
This post is the first in a three-part series exploring how performance.gov seeks to assess federal agency sustainability. You can read the second installment that relates to what criteria has been used to make the assessment here.  And you can find the third installment, that looks at how the federal agencies scored here.

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Newbie’s Guide to the Stanford Social Innovation Review (SSIR) Website: 6 Things to Try

The Stanford Social Innovation Review (SSIR) is the premier publication for the study of social innovation. And that’s key to know if you are exploring the field as a career or social innovation hobbyist.SSIR magazine covers

SSIR is Breadth and Depth

SSIR features stories on a broad range of issues ranging from education, socially responsible investment, social entrepreneurship, social media movements, foundation perspectives, non-profit management, to global issues such as poverty, education, and human rights. And it delves into issues—through various media platforms, interviews with thought leaders, and community engagement.If you are a social innovation newbie, you may want to take a tour of what’s available before you commit to becoming an SSIR member receiving glossy quarterly magazines and premium access to SSIR’s robust website.

Below are a few suggestions on how to traverse your way through the online treasure trove that is the SSIR website. According to SSIR, only 20% of the website is accessible to non-subscribers. So this is an effort to ensure that you know what is available to the public and where to find it.

6 Things A Non-Subscriber Can Do on SSIReview.org

1. Tune in to Podcasts

Select the Podcasts tab and you will be taken to the index page listing podcasts available for listening. The podcasts are ordered by date and indicate cost in brackets. Notably, the vast majority of the podcasts listed are free to the public for viewing.
Here are a few podcast titles of interest:

2. Read Book Reviews

Whether you bookworm the old-fashioned way—with pages—or have adopted a tablet for reading, SSIR book reviews may provide inspiration for your next book club pick. The listings include links to buy the book and the reviews are available for public perusal.
Here are a few interesting reads and excerpts of the SSIR reviews:

(review by Chip Pitts): “Its main contribution may be that it highlights the vital need for greater and more ethical generosity—and for continuous improvement of the effectiveness of the “new philanthropy.

(review by Joel Fleishman): “The short of it is, I plan to make this book required reading for students in my 2009 spring term course on philanthropy, voluntarism, and nonprofit law and management at Duke University.

(review by Diana Wells): “His book is well written, accessible to nonacademic readers, and datarich— Light balances substantial literature review (500 studies) with the presentation and analysis of his own multiple research endeavors.”

3. Engage in the Community

Just like Prince promises you don’t have to be rich to be his girl, SSIR assures that you don’t need to be a subscriber to start engaging in its robust community. For articles accessible to the general public, you can comment and discuss using the comment boxes. If you are new to the field and trying to build understanding and awareness, these comment fields can very useful in connecting and engaging.

4. Sign Up for the Free Weekly eNewsletter

Go to the SSIR homepage and in the right navigation bar you will see your a space to easily and painlessly sign up for the weekly Stanford Social Innovation Review enewsletter. It’s a quick add and can plug you into SSIR’s upcoming events and publications.

5. Peruse Accessible Articles

If you find yourself to be more of kinesthetic learner, you may be eager to get out to live events and engage with a community by shaking hands, exchanging business cards, and asking questions using your vocal chords rather than your keyboard. The SSIR Events page lists upcoming happenings with links to registration or more information.
Here is a snapshot of events listed for the coming months:

(Sept 6-9, San Francisco)

(Oct 27-30)

(Oct 28-29, Portland)

(Oct 31-Nov 2, Chicago)

6. Follow SSIR

And one of the easiest ways to connect with SSIR website content is simply to follow SSIR on Facebook, on Twitter, or via LinkedIn. It’s a way to let the content come to meet you.

And if you like what you see as a new user, you can always consider ‘investing’ in change by signing up to be an SSIR member and gaining access to much more of the site including digital archives of past magazine issues, webinars, and other podcasts and content.

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The Hub: A Collaborative Workspace for Social Entrepreneurs [Video 360]

Cruise to the San Francisco Chronicle building in SF and you may discover something unexpected on the first floor. A Hub. Or, The Hub (SoMa) to be more specific.In exploring social innovation, a former colleague who is now deeply engaged in the field suggested checking out Hub SoMA. And no sooner did we sign in and enter the lobby–featuring trendy seating and a number of individuals hard at work on a late Thursday afternoon– did I begin to realize that this is no ordinary co-working space.

Take a look at the quick video showing a 360 degree view of the Hub SoMA to get the look & feel…and then read on to find out a few features that make the Hub unique and how it could be a useful tool for any entrepreneur exploring the social innovation space.


Funk and Soul


Alissa Walker wrote a great post on the Hub for Fast Company (“The Hub Bay Area: Where Change Agents Share Space and Ideas”) in which she overviews the Hub, its offerings, and sheds a little light on its history and design—including that it was designed with advice from the well-known design firm IDEO and under the direction of a local lead architect.

Visiting the Hub SoMA, I definitely picked up on vibes of funk and soul. Work tables on wheels, unique conference spaces, privacy booths for telephone calls (or very small meetings) and conference rooms complete with writable glass walls are all features that give it a funky, groovy feel. And the soul is the sheer diversity of individuals, organizations, causes, and ideas that flow through the airy space in any given moment.


Movement


Sans cubicles there is a lot of movement at the Hub. Literally. Walk around and you will see a CEO of one organization walking over to chat with a founder of a budding social venture. Or you may spot an blogger taking a break for tea and chatting with a developer stirring a latte. Wait until evening and you may see all of the desks and chairs shifted over to host a Hub workshop or networking event.  There is movement at the Hub—and that can be a welcome counterbalance to inertia that organizations and individuals may face when trying to think through a big idea.


en-Listing


Membership at the Hub requires committing to a monthly fee that enables you to use the space for a specific allotment of hours per month. The lowest increment is five hours per month for $25. Is it really worth it? One of the big adds in being a Hub member is being a member of the mailing list—and that may itself make the monthly fee worthwhile. Through the internal listserv you can post about your organization and receive updates on employment opportunities, upcoming events, volunteer activities, and social/health happenings.

Being a Hub member at SOMA also gives you access to Berkeley’s Hub (and vice versa).


Sexy Salad Wednesdays


A peek at Hub SoMA’s calendar  reveals a number of events—intended to inform, introduce, and entertain. Perhaps one of the most memorable events our host (and tour guide) for the afternoon mentioned was Sexy Salad Wednesdays. A time to bring the ingredients you have and share with others to create some healthy, delicious, and downright tempting fruit and veggie re-mixes.

The emphasis on social activity is a key feature of Hub membership. Just like communities aren’t based soley on work, the Hub organizers realize that social change is effectively fostered when it’s, well, social.

From a newly-minted Hub SOMA member, you are invited to take a tour, a peek, and perhaps partake in a sexy salad and consider joining a community of social innovators.


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3 Ways Social Entrepreneurs Can Connect with SCORE

There is an inherent dance in social innovation—balancing social & environmental sensibilities while harnessing entrepreneurial drive. Coming up on the side of small business is a compelling organization that was created for the sole purpose of helping small businesses launch and thrive.

SCORE logo signThink SCORE.
If you have are negotiating success in entrepreneurship, the Service Corps Of Retired Executives (SCORE) may be able to help.  It is a 501(c)3 non-profit, is run by retired/semi-retired volunteers who have either owned & operated a small business or who held a senior position at a corporate level, and are passionate about making business ideas blossom.
After attending a workshop at the SCORE Silicon Valley office, I sat down with Membership Chair, Lido Scardigli to learn about the organization and how it can help budding social entrepreneurs.
Here are 3 ways social entrepreneurs can connect with SCORE:
1. Enlist a Mentor. With over 13,000 mentors in their database, there is likely one that is a good fit for you, your idea, and your company’s evolution. Lido mentioned that an idea is often enough to get the ball rolling with a mentor. And that all too often small businesses wait until they are in a tight spot to seek out help.  Most remarkable? The mentorship services are free! Imagine having an experienced mentor to guide you through the initial stages of building your big idea. The right help at the right time, is priceless.
2. Attend a Workshop. “Legal Issues for Startups“, “Simple Steps Startup Basics”, “Marketing on the Internet“, “The Business Plan” are a few of the types of workshops offered regularly by the office in Silicon Valley. And with over 360 SCORE chapters nationwide, you may find these and more offerings nearby.  The workshops usually call for a fee and can be useful, especially for first-time entrepreneurs trying to conceptualize the multitude of moving parts.
3. Use the Business Library. Whether you want to research which form of business you should  incorporate as, find templates for common business forms, or seek written inspiration from entrepreneurs who have succeeded—you can probably find a book or two of interest at a SCORE office. And the advantage of reading the books at SCORE is that you can talk to an experienced volunteer if you have any questions.
You can also peruse the SCORE website for webinars, free templates, how to register for an email mentor, upcoming events, and catching up on the latest headlines.
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