Benevolence and bottom lines: Social enterprise in metro Detroit

The term social enterprise has become common parlance in southeast Michigan in recent years, thanks to a growing number of local ventures that identify themselves with the term.

But while there may be some general awareness of the phrase, its exact meaning remains elusive for a lot of folks.

To gain a better understanding, Metromode reached out to Jaymes Vettraino, director of Rochester College’s Center for Social Entrepreneurship and an assistant professor of business at the school. Students in the program receive education on the history, theory and practice of social enterprises (as well as business basics). That education is bolstered with visits to local social enterprise organizations.

Vettraino defines a social enterprise as an organization that combines sustainable and ethical revenue-generating methods with a social mission dedicated to making a community better. He says social enterprises “blur the lines” between nonprofits and for-profits in a way that allows for practical business techniques to be put into the service of humanitarian and ecologically-friendly goals.

It’s a fairly open framework that has room enough for do-good businesses, nonprofits, co-ops and even governmental entities.

“People are really looking for companies to purchase products and services from in a way that is consistent with their opinion of how the earth and people should be treated,” he says.

At the same time, nonprofits are feeling the pull to establish business operations that foster long-term economic, social and environmental health; Vettraino sees philanthropic organizations and other funders “becoming much more demanding of nonprofits,” often expecting them “to think up ways to make sure what they’re doing is sustainable.”

Vettraino directed Metromode to several local organizations, each with their own unique place on the spectrum between nonprofit and for-profit enterprise. We got in touch with three of them to see how they were applying social entrepreneurial ideas in the real world.

A nonprofit model: Habitat for Humanity’s ReStores

Habitat for Humanity of Oakland County’s ReStores offers a great example of how entrepreneurial methods can be used to further nonprofit goals.

Essentially a discount home goods store with a social mission, there are more than 900 ReStores in North America. Oakland County’s are located in Farmington and Pontiac. The outlets collect used and donated home goods like furniture, paint, appliances, cabinets and lights and sell them to help fund Habitat for Humanity’s work building homes for people in need.

Donated ReStore items cost about 50 percent less on average than what you might find at regular retail outlets, and donors get a tax receipt for bringing in used goods.

“We are saving landfills by people donating items they can’t use but others can use,” says Rose-Ann Nathan. “One person’s trash is another person’s treasure!”

Products are often dropped off at the ReStores, but the organization also picks up donations with a service truck. In addition to individuals, items are also donated by retailers like Lowe’s and Home Hardware.

The Pontiac and Farmington stores are a new venture for Habitat of Oakland County, which took over running the shops and pick-up operations from Detroit’s Habitat branch this past April. With the recent change in management, the nonprofit is eager to educate the public about what products they take and to recruit folks to help with intake, sorting, stocking, customer service and other tasks.

“We are just starting up in Oakland and many ReStores support 50 percent of their respective Habitat organization’s top line revenue,” says Nathan. “The more volunteers we have, the more we can support the mission through revenue supporting the home program.”

From nonprofit to for-profit: Hopeful Harvest

The food hub Hopeful Harvest is a social enterprise spinoff of Forgotten Harvest, a nonprofit that feeds people by collecting donated surplus food. Established in 2014, Hopeful Harvest directs its efforts to helping fledgling food entrepreneurs get off the ground. It does this by providing aspiring ventures with a state-of-the-art commercial kitchen space; prep rooms; dry, refrigerated and frozen storage space; and professional development support. The food preparation facilities are housed at the organization’s Oak Park headquarters.

“We recognized there was a shortage of facilities and support for the burgeoning small food entrepreneurial market,” says President Chris Nemeth. “We offer complete co-packing services, a la carte support services and kitchen rental space for each manufacturer to utilize to make their own products. “

Hopeful Harvest now has a staff of nine, who work with a variety of organizations, educational institutions and businesses. The enterprise has been pretty successful at its work, too; twenty-three people now take advantage of its food prep facilities, it’s outgrown its initial business plan three times and is looking into getting a new facility.

Even though Forgotten Harvest and Hopeful Harvest physically share the same Oak Park facility, legally-speaking, they’re separate entities. However, while the food hub operates as a stand-alone for-profit S Corp, 100 percent of its shares are owned by Forgotten Harvest and all profits are donated to the nonprofit.

“It is rewarding, exciting and energizing,” says Nemeth of Hopeful Harvest’s work. “Social enterprises are catalysts for the continued growth and revitalization of metro Detroit and beyond.”

Marketing Social Value: Daniel Brand Advertising

Daniel Brian Advertising (DBA) comes to social entrepreneurship from a somewhat different angle.  Based in Rochester, the marketing agency has dedicated itself to the idea of “better brands for a better human condition.”

“What that means is that we will look at the things that matter to our consumers and we look towards creating more value in their lives through our brands,” explains founder and CEO Daniel Cobb. “When you find a way to bring more value in various ways, you bring more results to your clients. “

Founded in 1992, DBA focused its early efforts in the healthcare field, where they found it made more sense to craft campaigns geared towards helping patients than ones pitting different hospitals against another. Now, more than two decades later, DBA has a staff of about 50 people and caters to retail brands like Hungry Howie’s Pizza and Sony.

But, while the company has shifted focus, it’s still retained the idea of helping people through its marketing.

Take, for example, the pink pizza boxes that Hungry Howie’s uses to promote Breast Cancer Awareness Month each October. The DBA-created campaign, which donates a portion of pizza sales to the National Breast Cancer Foundation, has raised more than $1.5 million since 2008. Another of their socially-oriented projects has involved creating daddy-daughter date nights at Chick-fil-A restaurant franchises to encourage family bonding.

The firm is also in the process of establishing an orphanage in India. The DBA Dream House will eventually house 12 children. It will also feature three computers with Microsoft and Adobe software packages that will allow the youth to learn the essentials of the advertising trade.

Asked about the benefits of incorporating good deeds into a business model, Cobb says he believes consumers respond to firms they feel are helping make the world a better place.

“When people feel they’re getting value, they tend to want to give that value back in some sense,” he says, “so when you’re a giver, you generally get a result of a return investment.”