This holiday season individuals will be typically generous and give their money and time to various charities. However, at the end of the year this largesse will account for only less than 2% of the gross domestic product in the United States (according to Giving USA 2012) and less than 1% in Canada (according to Imagine Canada).
When you compare this to how much both countries will spend this holiday season ($854 for average Americans according to the American Research Group Inc.), it is no surprise that nonprofits and for-profits are starting to strategize on how to capture more of this market.
This trend holds for Children, Inc., the largest nonprofit provider of high-quality childcare in Kentucky. This organization started using music in their classrooms because research suggested it was one of the best ways to bridge key findings from child development research into practice. Building on the resulting interest, they formed their social enterprise, Growing Sound. Growing Sound now offers music CDs and other supportive materials to both the education and general consumer market available to consumers this holiday season.
In addition, in early 2014, they will release a new multimedia positive social skills program titled BEFORE THE BULLYING which will include 6 music videos among other components. Their ‘Everyone Is Someone’ music video is already getting rave reviews.
There is wide research on consumers’ increased preference for cause marketing – when consumers purchase products with a tie to a charity. When Cone Communications first began measuring this trend, only 20% of Americans said they had purchased a product in the past year because of its association with a social cause. More recent studies show this number has doubled to 41% of consumers.
The question is, what do we know about consumer interest in charities who produce their own products through social enterprises?
Looking for answers, Flywheel: Social Enterprise Hub, located in Cincinnati, conducted a survey of 122 consumers who were subscribers of a local newspaper. Interestingly, 78% of Cincinnatians related that they had purchased from a social enterprise in the past and 59% were likely to purchase from a social enterprise in the future.
These are promising results for the sector, but we still have some work to do. We need to:
• RAISE AWARENESS
For example, only 21% of Cincinnatians understood what a social enterprise is, while 46% had some idea about the concept. The remaining 31% knew nothing about social enterprise. Once social enterprise was illustrated with examples, such as thrift shops, many more understood – and then expressed interest in purchasing from them. Flywheel is, therefore, working hard – alongside national groups such as the Social Enterprise Alliance – to build local awareness through media and events in Cincinnati.
• FOCUS ON QUALITY + MISSION
While many social enterprises lead with their mission as selling points for their product, consumers still ranked “getting a quality product or service” and “getting a good price” as more important than “supporting the mission.” Furthermore, many consumers commented that, while connection to a charity was important, they were more concerned as to whether that charity connected with their own interests. To this end, it is important that social enterprises ensure that they focus equally on mission, quality and price as drivers of their business model – as appropriate – and not overly rely on their mission to drive business.
• BUILD MARKET
When consumers were asked where they go to find information about social enterprises, the answers were (not surprisingly) mixed – with news media being the most prominent source, followed closely by direct mail. Right now, consumers in most communities do not have a central location to find information about existing social enterprises. Two online solutions have been developed – Buy with Heart in Rhode Island and Social Impact App. Both are excellent resources, but still need market penetration and publicity to become more well-known among consumers.
Social enterprise is indeed becoming more popular among nonprofits and for-profits who are pursuing the socially conscious consumer. However, we must always factor in consumer needs as we design products, achieve publicity and reach new platforms. At the end of the day, we all want to promote social enterprise as a way to give back throughout the year.
Suzanne Smith, MBA (Dallas, Texas) is a serial social entrepreneur and bridges many disciplines, including serving on the National Board of the Social Enterprise Alliance, coaching nonprofits as Managing Director of Social Impact Architects, and Co-Founder of Flywheel: Social Enterprise Hub, and educating future leaders as Adjunct Professor at the University of North Texas. She holds an MBA from Duke University, where she was a CASE (Center for the Advancement of Social Entrepreneurship) Scholar and continues to serve as a Research Fellow.