he recession has spurred skepticism about the singular pursuit of the bottom line as a viable business model. Social enterprises offer a potential solution to the failing economy, by achieving social goals and still making a profit.

It often starts with a moment of frustration

After working in the banking industry for eight years, Mark Kuznicki felt like something was missing in his career. Sure it was a stable job that paid well, but on 9/11, it finally hit him: "I just looked around and said I'm working here in this office tower and for this large institution who's serving other large institutions and I feel so disconnected with what's going on in the world,” he said. said

Kuznicki left his job in search for answers. What he found was another question—one that he is passionate about, and that he continues to ask today: how can we build resilient communities in response to accelerating global change?

This question led him to start Remarkk Consulting, the event creation and collaboration platform he uses to bring people together to find creative solutions to social issues.

Kuznicki uses online social networking tools and organizes face-to-face events like: TransitCamp in 2007—a community brainstorming session on improving Toronto's transit experience; and ChangeCamp early this year—an event for re-thinking government and citizenship in the age of participation. He recently worked with TVO on AgendaCamp, which took The Agenda with Steve Paikin on the road to five cities in Ontario in order to engage people in discussions about Ontario's changing regional economies.

Today, Kuznicki’s decision to leap into something new is paying off immensely.

His consulting work is growing, and in a changing economy, his innovative service is more valuable than ever. The recession, in fact, "created more work," he said.

Kuznicki is one of the 150 tenants that work out of the Centre for Social Innovation (CSI), a workspace hub in Toronto for both not-for-profit and for-profit social mission organizations. Working in a diverse community has proven beneficial for Kuznicki's work, since he can tap into resources like web designers and group facilitators when he is formulating projects.

“When you have a diverse ecosystem that you can draw on, you become a more resilient entity," said Tonya Surman, executive director of CSI. "Everybody tells us in the evaluations we've done, they came for the space and stayed for the community," she said.

CSI's business is also improving during the recession. Since their model is designed for small organizations and community-building, more people have been approaching them.

Kuznicki and Surman both work in the business of innovation, where a stale economy is an opportunity for change.

"We created a system that was so complex that we couldn't manage it anymore, and it ran away on us,” Kuznicki said. “This reconfiguration that’s happening needs to find a sustainable cycle that’s not going to depend on some genius in a corner office somewhere coming up with a formula to create value,” he said.

Building financial trust

As trust in the financial system fades, social capitalism is gaining momentum. Wired Magazine recently argued that “the financial world doesn't need new regulations. It needs radical transparency.”

The social lending model does exactly that. It allows people to borrow and invest directly from each other—sort of like the E-bay of loans. Borrowers request a loan of amount x, which multiple lenders can then bid on.  Once enough lenders cover the amount, the social lending company does the mediating work.

Each social lending company works a bit differently, depending on its home country and their financial rules.

The credit crunch has provided a great deal of new business for many social lending companies. Zopa, the first social lending company in the world, lent record amounts recently. It's monthly lending rose the equivalent of $4.5 million to $4.76 million (Canadian) from February to March alone.

Now Michael Garrity is working to bring social lending to Canada. He started building the blocks for CommunityLend in Toronto four years ago, after being inspired by companies in Europe and the U.S. “It would totally work in Canada, where you've got essentially five financial institutions that control 95 per cent of consumer credit activity," he said.

The new financial landscape makes his business venture even more viable than he first anticipated. CommunityLend plans to go live this summer, once completing registration with securities regulators.

Who’s serving social needs?

Dominic Campbell became frustrated after working for the British government for five years. It wasn't enough that he gained experience working for local and central government projects and agencies; he still couldn't advance in the system.

Frustration led to innovation: Campbell decided to start FutureGov—a consultancy that helps governments improve business processes and citizen engagement. Though a young 18-month-old company, the recession hasn’t stunted its growth.

“At the moment we're kind of protected by the fact that the work that we do is always going to be important,” Campbell said. “Unfortunately there's more social need as the recession progresses,” he added.

He also launched FutureGov Networks, a series of events that connect social entrepreneurs with government workers.

Campbell runs two social enterprises outside of FutureGov. He co-founded Enabled by Design a year ago, after his friend Denise Stephens thought there must be a way to create medical equipment for her multiple sclerosis that didn't make her house look like a hospital. Campbell is currently working on AccessCity, a forum to collect transportationissues so that transit authorities can prioritize their improvements.

In the true social enterprise spirit, the business side of Campbell's work is secondary to his social mission. Observing a social need comes first, and creating a social enterprise is the solution. Campbell's mentality made it natural to connect his businesses with government work. “They're basically around social need, as is in theory the work that government does,” he said.

“I’ve always been really passionate about the people who work in the public sector. And they piss me off certainly, right, but at the same time they are amazing, talented, clever, passionate people in their hearts, and they’ve just forgotten what it’s like,” he said.” (Listen to the full statement)

Resilience

The recession isn't serving all social entrepreneurs well.

Laurent Ho's electronic waste recycling company was seriously impacted by a drop in commodity prices. He started iRecycle after witnessing how much old electronic equipment goes to waste. When he began three years ago, he could recycle e-waste and sell the refined output for a good rate. At the end of 2008, those rates dropped by 65 per cent. He had to adapt in order to survive.

“Before we could do some pickups for free. But now, there's no way. And what's very unfortunate, is that a lot of companies that we have seen doing similar things, is that they've gone under,” Ho said.

iRecycle had to switch gears and collect more old computer materials in order to meet his financial bottom line. “What I had to do was use the bin, the collection bin, as a really primary way of revenue, of collection. We sell the bin, we sell the service, and then the material, we collect it too. That is a huge shift for iRecycle,” he said.

But even in tough times, Ho's social mission reminds him why he is running his business.

"There's times where it's like what am I doing? Then I sat back and you know what, this is all for my company. This is like my baby. I'm trying to do some real good here. That stuff doesn't matter," Ho said.

---

What do you think? Discuss, contribute ideas and learn more HERE.

Back to the RESILIENCE page.

This is a modified version of a photo taken at the Centre for Social Innovation. Click to see original.

What is a social enterprise?

Social enterprises are businesses with a social mission—such as reducing waste or providing employment for an at-risk population. Unlike not-for-profit organizations, social enterprises make a profit. They also differ from regular for-profit businesses because their goal is not to maximize shareholder value.

Learn more and discuss the business models here.

"The interesting thing about social enterprise is that it's structurally designed to keep greed at bay, if you know what I mean, and yet still create value in the marketplace and employment in the world. So, you know, might social enterprise be an opportunity to be part of a market transformation? Might we look at social enterprise as a strategy to transition manufacturer workers into new industries? Yeah. I think there's some really interesting potential for that."

-Tonya Surman, executive director, Centre for Social Innovation.

What do you think?

Peer-to-peer lending is spreading internationally, according to P2P-Banking.com. Click to see a list of growing monthly lending rates.

E-WASTE FAST FACTS

Two per cent of over 160,000 tonnes of electronic waste is recycled in Ontario. The rest is sent to landfills.

Exposure to high levels of lead, cadmium and mercury in the environment has been linked to adverse effects on human health and wildlife. This includes subtle neurobehavioural effects for lead, chronic kidney damage for cadmium, and sensory or neurological impairments for mercury.

An estimated 4,750 tonnes of lead is contained in personal computers and televisions disposed each year in Canada.

Sources: iRecycle Computers, Environment Canada