Beyond funding, here’s what the social sector needs right now

In recent months several funders have asked me to identify social enterprises that are doing credible work, with the potential to fund and scale their work. Simultaneously, quite a few nonprofit organisations approached me to assist them with feasibility and viability studies to transition to social enterprises, with the view to become more financially sustainable by diversifying their income and identifying new opportunities for income streams.

It became clear to me that what is required now is not only a new breed of organisation, new development and financial models but also a new generation of changemakers – leaders with a long-term vision who are prepared to innovate, take risks and compete with other businesses to raise capital in a highly competitive market.

I also learnt the following:

• Many actors claim to be social entrepreneurs but it’s hard to find credible social entrepreneurship models.
• Many organisations claim to be social enterprises but there is no evidence of credible business models.
• Many state they are hybrid organisations but mostly rely on donor funding instead of generating their own income.
• Raising capital for social enterprises takes time and effort, as many are simply not investment-ready, do not have a track record of delivering at scale and are not ready to guarantee a return on investment.

On the positive side, I found visionary social entrepreneurs who are already scaling their business models to a social franchise level. I’ll share some of these case studies and highlight what the social sector needs to achieve development outcomes that really address South Africa’s social challenges.

Required: Founders with vision

Social entrepreneurs are driven by the vision to create a positive societal impact and believe in the power of communities to create change. They are creative and think outside the boundaries of accepted and standard practice. They collaborate with others to develop unique solutions and use technology to achieve lasting change. Not only do they prioritise the sustainability of their ventures, considering environmental and social implications, but they also set high standards, constantly evaluating their performance. They also view challenges as opportunities to improve their solutions.

• Luvuyo Rani is the brain behind Silulo Ulutho Technologies, an award-winning IT services company. He also founded the Silulo Foundation Business and Career Centre, a one-stop community business and career centre that upskills communities by offering economic opportunities for career seekers and aspirational entrepreneurs as well as education.
• Leana de Beer leads the Feenix group and WaFunda. Feenix is an impactful student funding platform that enables access to higher education. Their income share agreement offers an opportunity for students to borrow money to pay for their studies upfront. The students then commit to paying a percentage of their future income to the agreement.
• Lindiwe Matlali is the founder of Africa Teen Geeks, focused on bringing science into classrooms, especially for underprivileged children and girls in particular. They expose them to computer science and inspire a future generation of technology entrepreneurs and innovators.
• Claire Reid Blanckenberg is the founder and CEO of Reel Gardening and executive director of Reel Life (NPC). Reel Life enables the activation of a larger ecosystem, with a goal of leapfrogging townships and rural towns from the pressure of a declining economy to an era of entrepreneurship and agripreneurship. 

Required: Social enterprises with innovative products and services models

Social enterprises apply commercial strategies to maximise improvements in financial, social and environmental well-being. They are sustainable, do not depend on philanthropy and income from sales is reinvested in their mission.

• Chad Robertson and Nkazimlo Miti are the founders of React (previously Regenize), an accessible and ethical recycling solution. They operate a freemium recycling collection service that incentivises residents with Remali, a virtual currency that can be redeemed for rewards like airtime, data and grocery vouchers.
• Shona McDonald’s Shonaquip Social Enterprise (SSE) is a hybrid social enterprise consisting of Shonaquip (Pty) Ltd, Uhambo Foundation (NPC) and the Champions of Change Trust. They have a joint objective of creating inclusive, barrier-free communities for children with disabilities and their families. As a hybrid social enterprise, SSE’s board ensures that all profits and surplus funds are reinvested into achieving its purpose of social impact.
• Murendeni Mafumo is the founder of Kusini Water, a social enterprise committed to ensuring equitable access to clean drinking water and sanitation for African communities. Kusini Water builds water treatment systems from nanotechnology and macadamia nut shells.
• Johan Olivier and William Bila are the cofounders of Ranyaka Community Transformation, a hybrid nonprofit agency that combines its strengths with SHARE, a for-profit company, to implement a strategy that is place-based, people-centred and citizen-led. Using an integrated development model, Ranyaka activates the inherent strength in towns and townships, guiding communities to self-organise around shared goals.

Required: Social entrepreneurs with a long-term vision and social enterprises that can evolve to create deeper impact through evidence-based approaches

A social enterprise approach is only a means to an end ─ the profitmaking strategies are an essential component to bring about meaningful and long-term social or environmental change.

• Mitch Besser, Gene Falk and Robin Allinson Smalley are the cofounders of mothers2mothers (m2m), which consists of three affiliated nonprofit organisations. mothers2mothers employs women living with HIV as community health workers called mentor mothers who work at health facilities as well as door-to-door to improve community health across ten African nations.
• Alef Meulengerg’s Rhiza Ventures empowers startup growth and scales ventures through strategic financial backing and expert guidance. Their focus areas are:

o   Linking their own Rhiza Farms with their social enterprise Munching Mongoose, selling locally sourced products to suburban households.

o   They offer IT learnerships and link graduates to IT-based business process outsourcing opportunities.

o   Their enterprise and supplier development programme includes business hub management, incubation and acceleration programmes.

o   They provide early childhood development centres with loans. The interest is repayable to the ECDs based on various developmental improvements.

o   Their nursepreneur network model gives nurses the opportunity to own their own private health clinic as part of a loan repayable through revenue. 

Required: Serial social enterprises that can innovate continuously

With goals to achieve both social impact and financial sustainability, social enterprises look to a unique set of business models to achieve their goals. Some of the frameworks are:

o   One group of customers pays for a service and profits subsidise the service for an underserved group.

o   Beneficiaries pay directly for goods or services.

o   Employment and skills training, aiming to provide living wages, skills and job training.

o   The social enterprise acts as a distributor to an expanded market.

o   The social enterprise facilitates trade relationships between beneficiaries and new markets.

o   The social enterprise delivers a product or service to a market that is separate from the beneficiary and social impact generated.

o   A for-profit or nonprofit cooperative owned by members who also use its services.

• Rene and Marlon Parker cofounded RLabs, a nonprofit that creates environments and systems where people are empowered through innovation, technology, training and economic opportunities. They equip people with educational resources and skills training, build new ideas and technologies and scale solutions to drive sustained impact.
• Tracey Chambers and Tracey Gilmore are the co-founders of the nonprofit social enterprises Taking Care of Business (TCB) and Grow ECD. TCB empowers unemployed South Africans to escape the cycle of poverty through small business opportunities, mostly in the circular economy. Its flagship programmes ensure that unwanted fashion and other products are responsibly eliminated from the main market and distributed to secondary ones.
• Rejoice Shumba-Mtisi’s Siyakholwa Foundation is dedicated to establishing sustainable enterprises and projects. Its Qobo Qobo Essential Oils Incubator creates an enabling environment for farming communities to enter the lucrative essential oils agriculture and production markets.

Required: Social franchises with scalable business models

Social enterprises and franchises prove that solving South Africa’s most pressing challenges is not only possible but scalable.

• Imperial Holdings and Lynda Toussaint lead Unjani Clinic and aim to bring quality affordable healthcare services to communities across South Africa. By building a network of clinics owned and run by professional nurses, Unjani Clinic empowers black women, improves healthcare quality and access and creates employment.
• DG Murray Trust, ELMA Foundation, Yellowwoods and Hollard Trust are the founding members of SmartStart, a social franchise designed to address the implementation gap in early learning and promote employment opportunities for a women-led care economy. Through its network, SmartStart recruits and trains early-learning practitioners to run their own programmes.

Towards hope, inclusivity and sustainability

Social entrepreneurs, enterprises and franchises symbolise hope and resilience. By aligning purpose with profit, these models are rewriting the story of South Africa, one community at a time. The time to support social entrepreneurs, enterprises and franchises is now. Together we can transform challenges into opportunities and drive an inclusive, sustainable future.

• Reana Rossouw leads Next Generation Consultants, a management consultancy that works in the social investment and development sector. Their services include research and development, strategic development as well as impact management and measurement.