While the world economy is facing unprecedented challenges, and the unemployment rate in Canada and many other countries is soaring, there are still reasons to be hopeful. In addition to overwhelming devastation, the COVID-19 Pandemic is also leaving opportunity and inspiration in its wake. People and organizations everywhere are innovating and adapting more than ever.
We have seen this shift in the thousands of Canadian small businesses that have transitioned from focusing on their regular products and services to offering products and services in direct response to community need. These businesses have benefitted by responding effectively to demand (allowing them to stay afloat), and they are also creating a positive social impact and public goodwill. We have heard inspiring stories of:
Similarly, the necessity of nonprofit and charitable organizations has never been more apparent. But as the community’s demand for these services grows, the simultaneous reduction in donations and funding cannot be ignored. Imagine Canada estimates the reduction in donations to the charitable sector attributable to the Pandemic could be between $4.2 billion and $6.3 billion. While the negative implications of this will be undeniable, I suggest that this is a time in which nonprofit and charitable organizations can also pivot their operations and explore opportunities to diversify their revenue sources. With various emergency government grants and programs currently available, now may be a good time to consider the possibility of transitioning toward a social enterprise model in order to help sustain your operations.
Social entrepreneurship is the concept of using revenue-generating (business-like) activities to accomplish a social purpose. During these uncertain times, considering whether there are any untapped opportunities to earn income is one of many options your organization may consider as part of the re-assessment and refinement of your strategy.
The decision to integrate a social enterprise into your operations, either as a program or through a subsidiary, should not be made rashly. It requires thoughtful consideration of the various risks involved. If you think a social entrepreneurship approach may make sense for your organization, the various emergency government grants and programs that have recently become available may assist you in exploring this possibility.
The Government of Canada has extended the Canada Summer Jobs 2020 (CSJ) funding to cover up to 100% of provincial or territorial minimum wage to support employment opportunities for youth through the end of February 2021. Have you thought about how you might take advantage of the extended CSJ program to help your organization adapt to new realities? Consider hiring a summer student to assist with research to determine where there are opportunities for your non-profit organization to earn income. A student could help develop a business plan and budget for possible entrepreneurial activities. Please note that the regular application process to CSJ closed in February 2020, however in light of the extensions the government has implemented, applications are still being accepted through Members of Parliament. Check with your local MP to find out if your organization qualifies.
Similarly, think about how your organization might employ the $40,000 Canada Emergency Business Account loan (including up to $10,000 in loan forgiveness) to support operational expenses while you work to make your social enterprise dream a reality.
An important word of caution: due to their tax-exempt status, nonprofit and charitable organizations are legally restricted in many ways from engaging in revenue-generating/ earned income activities. Furthermore, for a charity, any pivot in operations must be aligned with the organization’s charitable purposes. If your organization needs guidance in understanding how you might adopt a social enterprise model, IntegralOrg can help.
IntegralOrg has launched the Social Enterprise Legal Structures Toolkit to guide Alberta organizations and entrepreneurs interested in developing a social enterprise through the decision-making process of selecting a legal structure. Also available is a recording of IntegralOrg’s webinar: Start Your Social Enterprise the Right Way: A Panel Discussion about Social Enterprise and the Legal and Regulatory Environment. Follow us on social media, subscribe to our newsletter, and stay tuned for more information on upcoming social enterprise training and tools.
Kristina Roberts is a practicing lawyer and an active member of the Law Society in Alberta (2019 call). She volunteers as a member of IntegralOrg's Legal Committee. The Legal Committee is comprised of a group of junior lawyers and law students who provide legal research and insight into the various projects and initiatives of IntegralOrg, and gain exposure to the area of nonprofit law under the mentorship of IntegralOrg's Legal Counsel, Yvonne Chenier, QC.