FIELD Projects: Direction 7

Making progress toward growth and sustainability will require greater efforts to both increase self-sufficiency and secure more stable sources of support. To gain and sustain funder interest, microenterprise development programs need more detailed and rigorous information on the outcomes their clients experience, and on other benefits their programs contribute to local economic development. Increasing self-sufficiency also will demand that programs generate more ways to recover their costs – by finding and implementing strategies to increase efficiency, by increasing interest and fee income, and by creating other revenue generating strategies. For some, this will include managing a social enterprise with double bottom line results, benefiting clients as well as the program itself.

The following resources offer guidance and examples on documenting client outcomes and other program benefits, on increasing the cost recovery potential of current program operations for both credit-led and training-led organizations, and on starting and sustaining a social enterprise.

Overview of Sustainability

Pursuing Sustainability in the Microenterprise Field: Findings from a Literature Review by FIELD. Certainly one of the most critical issues confronting the microenterprise field today is sustainability. Recognizing that, FIELD compiled a literature review exploring current research and writing on the topic. The review covers a set of financial factors facing microenterprise programs on the path to sustainability: increasing earned income, achieving efficiency, building an appropriate capital structure and effectively fund-raising. Also included is a section on what's known about managing leadership transitions, which is considered an important organizational factor affecting sustainability. The review attempts to organize and capture sustainability lessons in hopes that practitioners and funders will use the information to improve their strategies to achieve a sustainable microenterprise industry. (March 2007, 27 pages, authored by Elaine L. Edgcomb, Joyce A. Klein and Tamra Thetford, The Aspen Institute/FIELD.)

Demonstrating Outcomes

Processes for Demonstrating Outcomes

Performance Management for Microenterprise Programs. This brief, 5-page summary provides an overview of key data collection and MIS issues involved in the performance management process, and specifies how performance management can benefit microenterprise organizations seeking to improve the quality of their program. (September 2005, 5 pages, The Aspen Institute/FIELD.)
Social Return on Investment for Microenterprise Development. Presented at the Association for Enterprise Opportunity annual conference, the key elements of a Social Return on Investment (SROI) are examined in this PowerPoint presentation. SROI models estimate and project the personal and public benefits – the social return – a microenterprise program creates for every dollar invested in it. This presentation begins by explaining a SROI, explores the challenges and issues in developing a SROI, and concludes with an examination of a current MicroTest SROI model. Additional resources are included at the end of the PowerPoint. (May 2005, 33 pages, authored by Elaine Edgcomb, The Aspen Institute/FIELD and Julie Abrams, Women’s Initiative for Self Employment.)

Data on Microenteprise Program Outcomes

Monitoring Client Outcomes: A Report from MicroTest’s 2004 Data Collection. This 15-page report presents findings from client outcomes data collected by 17 MicroTest members on clients served in Fiscal Year 2002, and interviewed about the outcomes they experienced during 2003. Key findings include:

Programs are reaching traditionally disadvantaged populations.
Clients are opening and sustaining businesses.
Business owners are receiving a financial return from their investment.
Many businesses grow, creating positive economic benefits for owners and others.
The benefits of microenterprise were not evenly distributed.

The Ms Foundation for Women’s third round of the Collaborative Fund for Women's Economic Development supported nine microenterprise programs and nine social-purpose business programs across the country that help low-income women to start and expand microenterprise, community-based, and cooperative businesses. As part of the Collaborative Fund’s work, FIELD worked with the grantees to collect data on the outcomes experienced by their clients. The interim report, Enhancing Economic Opportunity through Entrepreneurship, presents key findings from Fiscal Year 2002 program performance data and 2002 client outcomes data. (August 2004, 13 pages, authored by Jeremy Black, The Aspen Institute/FIELD.) The final report, Enhancing Opportunities for Entrepreneurship, presents 2003 findings for the microenterprise grantees. Observations on the outcomes data include strong business survival rates and job creation, a drop in poverty rates and healthy savings rates. Challenges focused on issues surrounding access to health insurance, and sales levels in specific sectors. (2004, 6 pages, FIELD). Both reports include information on the data collection and survey methodology used.
Opening Opportunities, Building Ownership: Fulfilling the Promise of Microenterprise in the United States. The fourth chapter of this report by FIELD assessing the microenterprise industry summarizes research findings from the leading efforts to identify outcomes experienced by low-income entrepreneurs. At 22 pages, it examines some of the economic and noneconomic effects a microenterprise can have on entrepreneurs. The chapter, entitled: "The Value of Microenterprise to Low-Income Americans: What Do We Know about the Experiences of Microentrepreneurs," begins on page 55. (February 2005, 22 pages, authored by Elaine L. Edgcomb and Joyce A. Klein,
Women’s Initiative Measures Up: A Report on the Post-Training Outcomes for Microenterprise Training Participants from 1999-2002. Reporting on the client outcomes experienced by clients during the 18 months after enrollment in a core training class, this report also explores a Social Return on Investment model developed by Women’s Initiative for Self Employment. The Women’s Initiative SROI model also is compared to other SROI models in circulation to yield a return of $3.68 to $21 for every $1 invested in the services received by clients during 1999-2002. In-depth sections of the report detail the client outcomes survey methodology and SROI model used. (April 2004, 20 pages, authored by Marian Doub, Women’s Initiative for Self Employment.)

Data on Social-Purpose Business Outcomes

The Ms Foundation for Women’s third round of the Collaborative Fund for Women's Economic Development supported nine social-purpose business programs that created employment opportunities for low-income women. With assistance from FIELD, the Ms. Foundation grantees created data on their performance and client outcomes. The interim report, Enhancing Employment for Low-Income Women, draws on program performance data for Fiscal Year 2002 and includes 2002 client outcomes data. (August 2004, 13 pages, authored by Jeremy Black, The Aspen Institute/FIELD.) Enhancing Employment Opportunities for Women, the final summary report, presents the client outcomes findings that social-purpose businesses provided solid employment, income to poor families, and stable and improving job quality measures. (2004, 6 pages, The Aspen Institute/FIELD.)
REDF, formerly known as the Roberts Enterprise Development Fund, “provides guidance, leadership and investment to a portfolio of nonprofit social enterprises.” The Fund is committed to measuring the impact of its work and continuing to create and refine tools to collect and report on social outcomes data for social enterprises. A summary of the Fund’s measurement methodology as well as reports and presentations on its social outcomes data can be found on its Web site at http://www.redf.org/results-intro.htm.

Cost Recovery

Webinar explores creating capital structures that support greater sustainability. This Webinar features the efforts of Justine Petersen to generate more flexible capital and deliver microloans with a pricing strategy that more appropriately matches its costs. ACCION New York staff commented on the loan pricing strategy and staff from ACCION New Mexico provided feedback on the fundraising/development and board development strategy.
The Question of Sustainability for Microfinance Institutions. This article in the Journal of Small Business Management provides an excellent examination of the role of pricing in the levels of self-sufficiency and sustainability of microfinance organizations in the U.S. The authors developed a model for determining the breakeven prices of microcredit products, and then compare this with actual prices charged by existing microlenders. They find that most microlenders are charging prices that are well below breakeven, and that this has important implications for their long-term sustainability. (2007, 19 pages, authored by J. Jordan Pollinger, John Outhwaite and Hector Cordero-Guzman.)
How to Develop an Effective and Appropriate Fee Structure for your Organization. This PowerPoint addresses the key issues covered in a training session offered at the 2005 Association for Enterprise Opportunity’s annual conference in Portland, Ore. The presentation, which focuses on fee structures for microenterprise training and technical assistance services, touches on both the benefits and challenges of implementing a fee program. (May 2005, 16 pages, authored by Jason Friedman, Association for Enterprise Opportunity.)
Models for Advanced Technical Assistance, Client Retention and Business Growth. This PowerPoint presentation, also from a training at the 2005 Association for Enterprise Opportunity’s annual conference, focuses primarily on models for advanced technical assistance services. However, the program examples discussed in the presentation do address the fee structures for these services. (May 2005, 55 pages, authored by Jason Friedman, Association for Enterprise Opportunity.)
Generating and Sustaining Nonprofit Earned Income: A Guide to Successful Enterprise Strategies. Chapter five of this book (which is described in its entirety below), entitled “Pricing Goods and Services,” deals specifically with the issue of pricing for nonprofits. While many microenterprise organizations will be familiar with the basic pricing issues it raises, the chapter provides interesting insights into the particular pricing issues faced by nonprofit organizations. (April 2004, produced through the Yale School of Management-The Goldman Sachs Foundation Partnership on Nonprofit Ventures.)
The Art and Science of Pricing Financial Services. This Briefing Note (#49) from MicroSave outlines the critical issues that microfinance organizations should consider in setting prices for their financial services. Although developed based on the experiences of international microfinance institutions, many of the issues raised – including costs, competition and transparency – apply to U.S. microlenders as well. (2006, 2 pages, authored by David Cracknell and Hermann Messan.)
Costing and Pricing of Financial Services: A Toolkit. This publication from MicroSave’s Toolkit series is an advanced tool that will be of most benefit to larger-scale microlenders and those engaged in lending within the context of a CDFI that offers multiple products. Developed for microfinance organizations that offer lending and savings products, the toolkit addresses two models for determining costs: an allocation model that helps the organization identify and disaggregate its costs across multiple financial products, and a marginal cost model. The toolkit then addresses the question of how to price products, based on varying objectives and strategies such as competitive pricing and penetration pricing. (March 2004, 71 pages, authored by David Cracknell, Henry Sempangi and Graham A. N. Wright.)

Social Enterprise

FIELD forum Issue 19: Blazing a Trail to Sustainability through Social Enterprise: A Case Example. This edition takes an in-depth look at how one program - Mountain BizWorks in North Carolina - created a retail store as a way to market clients' artistic products, while also generating revenue for BizWorks. The publication details how and why this social enterprise was launched, identifies some of the challenges encountered, and explains some of the critical lessons learned through the experience.
The Institute for Social Entrepreneurs' Evolution of the social enterprise industry: A chronology of key events is a "living document" updated annually that compiles the historical antecedents to the social enterprise industry and provides a detailed chronology from 1980 to the present. It includes key articles, organizations, trainings and conferences, and other events that shaped the current social enterprise industry. The 85-page guide provides a surprisingly quick way to understand how the industry developed and the leaders who shaped its path. (Revised August 1, 2008 by the Institute for Social Entrepreneurs)
Spotlight on Sustainability: A Conversation about Social Enterprise. This free FIELD Webinar explores how three microenterprise programs created social enterprises as vehicles for developing financially sustainable services. Featured are: Mountain BizWorks in western North Carolina; WREN (Women's Rural Entrepreneurial Network) in New Hampshire; and Wisconsin Women's Business Initiative Corporation. Included is discussion of the "double bottom line" aspects of the businesses, such as: blending social mission and financial goals; expected returns; positioning of the venture in the marketplace and connecting the social enterprise to the larger nonprofit.
Generating and Sustaining Nonprofit Earned Income: A Guide to Successful Enterprise Strategies. This volume was developed in collaboration with the Yale School of Management-Goldman Sachs Foundation Partnership on Nonprofit Ventures and is designed to comprehensively present best practices for generating a reliable income stream that doesn’t depend on traditional sources of funding. It includes contributions from some of the leaders of the social enterprise movement and covers such key issues as business planning for nonprofit enterprises, finding and attracting capital for the enterprise, implementation challenges, and performance measurement. The book presents a fair and reasoned exploration of the important challenges that must be met by a social enterprise and emphasizes that the creation of social value (and achievement of an organization’s social mission) should be the key reason for embarking on this type of initiative. The book can be ordered through Amazon.com. (April 2004, 352 pages, edited by Sharon M. Oster, Cynthia W. Massarsky and Samantha L. Beinhacker.)
The Social Enterprise Alliance is a membership organization for practitioners and funders engaged in the social enterprise movement that provides training and resources for nonprofits interested in pursuing earned-income businesses or strategies to generate revenue in support of their charitable mission. The Alliance conducts an annual conference and other training events, and offers members opportunities to market their enterprise, access technical assistance, and purchase publications at discounted rates. Its Web site offers a resource section that includes links to organizations, consultants, funders, publications and software useful to nonprofits. One especially valuable link for an MDO planning a social business is to Business Plan-Pro, a “wizard-driven” software that helps an organization produce a social enterprise plan including market analysis, strategy and implementation description, Social Return on Investment, sales forecast, personnel plan, and financial statements.
The Social Enterprise Reporter is an on-line business newsletter, published 10 times per year (Jan.-June, Aug.-Nov.) in PDF and HTML formats that offers readers “practical news and information, business tools, and inspiration that will improve the profitability and social impact of their social purpose ventures, without sacrificing their tax-exempt missions. SER serves ventures including those pursuing earned-income strategies for new or existing programs, profit-making enterprises, and those developing partnerships with for-profit businesses.” The newsletter has regular columns on marketing, profiles of member organizations, publication reviews and news of upcoming events. The first issue, available free on-line, contains an article on Wisconsin Women’s Business Initiative Corporation, a microenterprise program that operates “Coffee with a Conscience,” which sells Fair Trade coffee, the food products of local businesses, and offers experiential training for the organization’s business clients.
New Social Entrepreneurs: The Success, Challenges and Lessons of Non-profit Enterprise Creation and Social Purpose Enterprises and Venture Philanthropy in the New Millennium (REDF Box Set) are publications from REDF (formerly the Roberts Enterprise Development Fund), that describe the intermediary’s efforts in supporting a set of social purpose businesses in San Francisco, and summarize their findings. The Executive Summary of the first publication summarizes a set of lessons for managers considering launching a social enterprise. REDF Box Set 1 – Practitioner Perspectives, which is the first part of the boxed set described above, includes a series of papers by the program managers who implemented REDF-assisted social purpose businesses. Individual papers, which can be downloaded, discuss such themes as organizational mission and culture, management issues, the challenges of staffing and leading a social business, and managing key external relations.

Improving Efficiency

Maximizing Efficiency: The Path to Enhanced Outreach and Sustainability is written for managers of microfinance organizations who want to increase their efficiency in order to reduce expenditures and, thereby, extend the use of scarce subsidies and revenues generated from program operations. Written with a global perspective, the publication largely draws on international examples, but also includes reference to the experience of ACCION in the United States, and features a review of ACCION New York’s reengineering effort that led to substantially increasing the organization’s lending capacity and operational self-sufficiency. The publication provides an overview of approaches to efficiency management, a review of key analytical tools for measuring and understanding efficiency, a detailed discussion of alignment theory (which helps an organization identify specific sources of inefficiency), case examples of three successful reengineering projects, and concludes with a set of key ideas for organizations interested in enhancing their efficiency. While the work is largely designed for microfinance organizations, training-led programs can also find much of value in the overall concepts presented and recommendations for how to undertake organizational change with a view to dramatically improving efficiency. (September 2000, 249 pages, authored by Monica Brand, ACCION International, and Julie Gerschick, Strategic Solutions, ACCION Monograph Series No. 12.)
The Microbanking Bulletin: Focus on Efficiency. This article is included in Issue 4 of the Microbanking Bulletin, which was entirely devoted to the subject of efficiency in microfinance organizations. Here, author Todd Farrington lays out measures for assessing the efficiency of microfinance organizations, and the key factors that influence efficiency. (2000, 6 pages, Todd Farrington.)

Effective Fundraising

FIELD forum Issue 20: Capital Structure - Getting It Right to Increase Sustainability. This edition explores how Justine Petersen, a program in St. Louis, Mo., is pursuing equity capital as part of a scale-up and sustainability strategy. The publication describes Justine Petersen's need both to supplement its earned income and performance-based grants with "smarter subsidy" in the form of less restrictive capital, and to capitalize on such assets as its building, efficiency and proven asset-building strategies, in order to grow and attract new supporters. Justine Petersen's multipronged approach to pursuing those goals - and the lessons being learned along the way - are the focus of this publication.
Stanford Social Innovation Review. "In Perla Ni's Stanford Social Innovation Review blog post, "Marketing to Donors," three marketing tips are explored from the perspective of nonprofit fund-raising. Extensive reader comments offer ideas, resources and first-hand experiences on integrating a marketing focus in nonprofit fund-raising.
Grassroots Institute for Fundraising Training (GIFT). Individual contributions are the largest and fastest growing segment of philanthropic giving. The Grassroots Institute is a resource for progressive organizations that are seeking to raise money, as well as to increase the number of people of color working in fund-raising. GIFT offers a range of training options, including in-person trainings, Webinars, videos, and a companion journal, the Grassroots Fundraising Journal.

Have additional resources to suggest? Email us at fieldus@aspeninstitute.org.