Thursday, November 13, 2008

Example of the problem Behind the Gregor Backer$


The following is a great example of why we can’t afford to have Gregor Robertson as Mayor with his mentor , Joel Solomon—the brains behind the Endswell Foundation and a leader in social enterprises that are trying to accelerate the pace of social change.

ONE OF ENDSWELL FOUNDATION’S “VENTURES”

went bankrupt in April ‘07

In the words of IMPACS founding Execeutive Director Shauna Sylvester as written on the blog of the Vancouver Social Enterprise Forum:

“Why would an organization that had an incredible board and staff team, an extensive network of allies and partners, a long-pipeline of potential projects and a ten-year history of working with civil society organizations in Canada and internationally fold? In part, I think it was because IMPACS was an entrepreneurial organization. It operated as a non-profit enterprise in an environment where the supports have not yet been fully developed to support such organizations.”

Translation: People who operate non-profits and try to compete in the business sector as “social enterprises” can’t survive because operating a non-profit is not like running a business. The people who run non-profits usually don’t have business skills and business experience. They measure success differently therefore they can’t be as accountable as business must be to survive.

“In their memo announcing the bankruptcy, the board of IMPACS identified two key issues: the federal government severe cutbacks of non-profit organizations (IMPACS client base) and the lack of core funding. To these two issues I would add:”

Translation: Those of us who can’t admit our own failure can only look to blame someone else. We were a on-profit group that was used to relying on taxpayer handouts controlled by governments. Seeing our demise, when we tried to be something other than a non-profit, we realize our “business model” that was supposedly at the core of our social enterprise venture was flawed because it was not at all about doing business, but it was about relying on handouts from taxpayers—handouts that aren’t available to “businesses”.

· “the increasing transaction costs of dealing with government (which were not compensated)”

Translation: You have to pay for expensive accounting when your “non-profit” managers try to run a business and screw up the books so much they can’t acocunt for the taxpayers’ dollars they were granted by government.

· “the irrational accountability structures that some government departments like CIDA and Industry Canada put in place (that shifted by the hour and were entirely dependent on who was on the other end of the phone),”

Translation: Can you believe it? The government wanted us to account for the taxpayers dollars they gave us? What crap!

· “ the lack of appropriate financial instruments for social enterprise organizations (social enterprises need patient capital),

Translation: no right-minded investor would trust us with his investment dollars knowing that we know nothing about running a business.

· “the lack of consultants with expertise in social enterprise management,”

Translation: people whose experience is limited to the non-profit sector have no skills or knowledge to compete in the business world.

· the lack of a level playing field for NGOs in government procurement (unlike their private sector counterparts, IMPACS could not charge their billable rate for government contracts that they bid on and won - they could only charge the actual cost of salary and benefits),

· the inappropriate regulatory regime for charities (e.g. the restrictions on advocacy and the restrictions on operating a related business),

Translation: the law doesn’t allow you to raise money for charity and use it instead for political action. You also can’t use tax sheltered charitable dollars by laundering them through a business that “masks” as a charity.

· the increasing cost of insurance (and the rise in liability, especially working in conflict zones), and

· the lack of a skilled ‘labour pool’ (there are many people who are skilled in working in non-profit organizations but it is very rare to find people with the values, the entrepreneurial sensibilities, the international outlook and the strategic orientation to work in an organization like IMPACS).

Translation: no need to translate.




5 comments:

Anonymous said...

Mr. Peanut, where are you when we need you?

Anonymous said...

Frances Bula on CBC radio this morning predicts a healthy Vision win. Vancouver must strap itself in for a lot of kumbayas, crystals and these great "social enterprises" for the next 3 years.

Looking back at some 2005 news clippings about Gregor (running as MLA), I found out he is one of the founders of Tides Canada, the organization that accepts US donations in exchange for tax receipts (see http://tidescanada.org/giving/). He campaigned for this so-called "triple bottom line" that he plans to bring to Vancouver City Hall.

Kumbay-effing-ya.

Anonymous said...

You measure of Joel Solomon's success in social investing is completely wrong. Renewal Funds for instance outperformed most other Canadian Venture funds and made returns off such successes as Capers. Their focus on green technology is driven by principle but has put them at the forefront of an incredibly lucrative market. Solomon is very smart and Vancouver is lucky to have him involved in local business and politics.

Little bit more research needed said...

Mr. Berner, you are aware that Peter Ladner was on the board of IMPACS, yes?

http://www.peterladner.ca/experience.php

seems to me to be a pretty good reason why Ladner shouldn't be Mayor.

Gregor "Bozo the Clown" Robberson said...

LOL! Oh, David NOBODY cuts through the social engineering double-speak like you. Have a good vacation. I hope you return with renewed vigour.