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Corporate America, Meet Social Enterprise.

June 10, 2011

Read the article from the Stanford Social Innovation Review

As I described yesterday, much attention is now focused on using social enterprise as a development tool in emerging economies. Yet entrepreneurial solutions to social problems shouldn’t be overlooked at home. The United States may be further along the development curve, but social enterprise models can be equally effective at driving progress here in the US.

For example, Investing In Communities (IIC) aligns the interests of nonprofits, realtors, and real estate clients to create a philanthropic resource and an effective business development tool.  Creating shared value (social and financial return) is what we do. Now, large corporations are dipping their toes in the water and exploring ways to unite corporate citizenship with bottom-line goals. So naturally, we’re interested.

Recently, Panera Bread has distinguished itself from its peers by going a step further and using its brand, supply chain, and expertise to launch a line of philanthropic cafés. The effort  could practically be described as a social enterprise franchise within Panera.

Known as Panera Cares Cafés, these locations are largely indistinguishable from standard Panera Bread cafés, except for one detail – in place of cash registers, patrons at a Panera Care’s Café will find a donation box. Customers pay on an honor system. Those who can afford to pay the full price or a little extra do, those who are strapped give what they can, and those who have nothing to give are, “free to enjoy their meal with dignity” says Panera co-founder Ron Schaich.

With 60% paying fair value, 20% paying more, and the rest paying less the cafés pull in about 85% of suggested retail – more than sufficient to cover operating costs. Any profits generated by cafés will be plowed into job training programs for disadvantaged youth – increasing the social impact of the model.

While Panera has donated food and resources to charity for years, this approach is significant for several reasons:

  1. The model is self-sustaining. The café sites are selected carefully, to capture an economic cross-section of society. This not only removes the stigma of poverty that surrounds a soup kitchen, it also ensures that “well-heeled professionals” may be dining next to homeless families – and offsetting the cost of individuals who can’t pay full price.
  2. Panera is using its core strengths and its established retail and production infrastructure. The company has taken a successful business model and tweaked it in order to generate social value in lieu of profits. Because this revised model is self-supporting, it does not consume additional resources or represent an expansion of Panera’s charitable expenditures.
  3. The cafés exist under the brand of Panera. Although they are operated under the Panera Foundation, the Panera Cares Cafés still represent the Panera Brand. The menu, layout, and pricing system remain the same. Thus, Panera has effectively integrated a social enterprise franchise directly into its public brand.

Panera’s innovation may be the most direct application of social enterprise to corporate citizenship goals that I’ve seen yet. Panera demonstrates that CSR no longer equates to simply writing a check. Truly progressive companies are integrating CSR initiatives  into standard operations or an existing business model, making them a part of “business as usual.”

Investing In Communities integrates philanthropy directly into profitable commerce by changing it from an afterthought into a business development tool. Philanthropy drives business within a network of IIC stakeholders, and in turn profitable business drives philanthropy. As a result, all participants – corporate clients, realtors, and nonprofits –  integrate a social enterprise model into their operations.

So how does this work? IIC Real Estate Members replace an existing business development cost – lead generation and referral services – with philanthropy. Members donate at least 10% of IIC –related commission to the nonprofit their client selects. And since buyers/tenants don’t pay realtors’ commissions, clients are able to support their favorite causes at no personal cost! Nonprofits receive free money, and Real Estate Members attract increased business from socially responsible clients – the individual and corporate supporters of nonprofits.

IIC provides companies with an easy, no-cost way to make business as usual socially responsible. Imagine if each new Panera Bread café opened through an IIC transaction! The company would generate and direct significant philanthropy without touching its bottom line. Better yet, IIC Corporate Friends are recognized for their philanthropy by IIC and recipient nonprofits – and what’s better than taking credit for a gift you didn’t pay for?

Our next goal? Growing money on trees…We’ll keep you posted.

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