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The Social Enterprise VolunTourism Model

Although the term “social enterprise” can be applied to for-profit corporations, this article will concentrate on the application of social enterprise practices as they pertain to non-profit organizations.

Let’s start with a definition and additional clarification from the Social Enterprise Action website:

What is Social Enterprise?

'A Social Enterprise is a business with primarily social objectives whose surplus is principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners.'
(Social Enterprise - A Strategy for Success, DTI, 2002)

Social Enterprises can be seen as a key part of the effort to eradicate social exclusion, as they are enterprises with ethical and social objectives, which involve the local community in promoting the creation of wealth.

Common Characteristics
Social Enterprises have three common characteristics, they are enterprise orientated, they have social aims and have social ownership!

Enterprise orientated:
They are directly involved in the production of goods and the provision of services to the market. They seek to be viable trading concerns, making a surplus from trading.

Social aims:
They have explicit social aims such as job creation, training and provision of local services. They have ethical values including a commitment to local capacity building. They are accountable to their members and the wider community for their social, environmental and economic impact.

Social ownership:
They are autonomous organisations with a governance and ownership structure based on participation by stakeholder groups (users or clients, local community groups, etc.) or by trustees. Profits are distributed as profit sharing to stakeholders or used for the benefit of the community.

Here is a second definition from the Social Enterprise Alliance website:

so·cial en·ter·prise (n.)

Any earned-income business or strategy undertaken by a nonprofit to generate revenue in support of its charitable mission.  "Earned income" consists of payments received in direct exchange for a product, service or privilege.

When considering social enterprise for non-profit organizations (NPOs) and, for the international community, non-governmental organizations (NGOs), there are basically two options:

• Those social enterprises that directly, or indirectly, relate to the mission, goals, and/or objectives of an NPO/NGO, or
• Those social enterprises that do not have any relationship to the mission, goals, and/or objectives of an NPO/NGO.

An example of a direct/indirect social enterprise would be a food bank producing canvas bags and selling them to their clients for collecting their monthly food packages. An example of a non-related social enterprise would be an NPO/NGO purchasing a building and leasing office space to tenants.

Because of the nature of VolunTourism, at least from the perspective of the voluntary service element, we will assume that the majority of NPOs/NGOs will develop a social enterprise strategy in direct/indirect alignment with its current mission, goals, and objectives. Therefore, we will not address the option of creating VolunTourism products and services as a non-related social enterprise.

What is the product/service that NPOs/NGOs will sell?

Option 1: The VolunTourism Vendor

NPOs/NGOs may elect to support either a business or leisure tourism operator, supplier, or destination representative. To avoid such issues as unrelated business income tax (UBIT), or higher initial capital investment, or due to other reasons determined internally (staff/board), operating as a VolunTourism Vendor will sufficiently serve the organization. Under the terms of this option, an NGO/NPO will create a rate schedule for various types of services that it will provide to a business/leisure tourism operator, supplier, or destination.

An NGO/NPO will set prices for such services as identifying five different voluntary service options for a “client.” Other fees may include:

• Logistics
• Materials
• Insurance
• Administrative Fees
• Coordination & Implementation

Benefits vs. Drawbacks

It is very unlikely that an NPO/NGO will experience any downside to this strategy. The biggest challenge will be working with Business Tourism Operators (BTOs). Entities such as destination management companies (DMCs) and incentive travel planners will ask for proposals from an NPO/NGO that may or may not ultimately be selected by their respective clients. This is, however, no different than the experience that NPOs/NGOs have in dealing with submitting grant proposals. Many of these proposals are not funded, but the effort is made to secure the funds nonetheless.

The benefits are primarily related to minimal capital outlay. Marketing & publicity are minimal as most relationships with BTOs are face-to-face generated. Internal capacity development is also minimized because most BTOs will be able to provide necessary staff to assist in project implementation. (Usually some basic orientation is all that is required.) In addition, the NPO/NGO will have little difficulty in proving the value of this type of social enterprise to its board, staff, and constituents.

Option 2: The VolunTourism Operator

If an NPO/NGO was to accept greater initial risk (obviously with the promise of greater return), then developing its operations to assume the role of both delivering voluntary service options and establishing unique tourism experiences is the appropriate step. Yes, the capital outlay to support promotional activities & sales, staff training & development, increased liability, and other expenditures, will be higher than the option of being a VolunTourism Vendor. However, you may be able to address some of these challenges by hiring local residents or constituents – a strategy particularly appealing to international NPOs/NGOs. Such practices may enable you to access seed grants and funding from sources that were not previously available to you.

One of the primary challenges of this option revolves around competition. You will be competing directly with other NPOs/NGOs, but, more important for you, is that you will be facing the stiff competition of for-profit operations. You have an asset-base of relationships from which to draw that many for-profit companies do not have at the local level. This will give you an advantage. Tour operators will immediately be able to connect with charitable entities – orphanages, health clinics, and other similar operations. But if you are an NPO/NGO with a focus on community development, your list of opportunities will certainly offer degrees of intensity and variety that will satisfy the adventurous VolunTourist.

Conclusion

The social enterprise model encourages NPOs/NGOs to develop profit-making ventures to support their operations. VolunTourism is a distinct product/service that can easily connect with their mission and programming parameters. The challenges and risks, as we have said previously, will always exist. The opportunity is more than enticing, however, for those NPOs/NGOs looking to diversify their revenue models.

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