A social enterprise’s transformation from a non-profit enterprise cannot be “old wine in a new bottle”: are its role, environment, strategy and thinking changed too?

The past 20 years has been a period of rapid growth for Taiwan’s non-profit organisation sector. This “third force” outside of government and corporations had already grown by 2013 to include more than 40,000 organisations serving the general public in all corners of Taiwan.

However, in the past five to ten years, social enterprises have also emerged. This new idea of “using commercial power to solve social problems” has not only struck the fancy of up-and-coming entrepreneurs, but also deeply affected existing non-profit organisations. Many have begun to think about a path of transformation, hoping to reduce dependence on donations, given the reality that there are not enough resources to go around, and use a more sustainable way to serve vulnerable groups.

However, this so-called transformation is not only limited to organisational changes and not just to selling a commodity or service. Instead, there exist the four models mentioned below, which include changes in role, environment, strategy and thinking.

1. From resource users to “value creators”

The first change is related to “role”. In the past, non-profit organisations were mainly dependent on donations, and most of the serviced groups played the role of “recipients”. However, more and more organisations are beginning to try to become “value creators”, using customised vocational training to transition people who were originally recipients into becoming producers or service providers. Among these, the Children Are Us Foundation and the Victory Potential Development Centre for the Disabled are successful examples of organisations adopting this kind of model.

In addition to teaching intellectually-challenged children how to make pastries, the Children Are Us Foundation has also opened a restaurant. Having designed customised assistive devices, kitchen equipment and service processes, the Foundation allows intellectually-challenged children to become waiters and chefs, serving delicious meals to customers.

The Victory Potential Development Centre for the Disabled has also opened up a world of employment for people who are disabled.

From its typing and data archiving business of 20 years ago to today’s petrol station, hand-made desserts, visual design, and even its handmade glass art business, Victory Potential is breaking the invisible ceilings encountered by people who are disabled bit by bit, guiding them to tap into incredible business potential.

2. From disadvantage to advantage

The transformation in “role” described above sometimes needs to be boosted by “environment”. The term “disadvantaged group” tends to be a label created in a society centred on healthy people. However, through the transformation of the environment, original weaknesses may become advantages and a valuable resource for non-profit organisations.

The Chairman of the Board of Taiwan’s Dialogue in the Dark (DiD) Pang-chun Hsieh said, “Darkness is no stranger to most people, but we never think about how to use it.” DiD creates a unique environment, turning darkness into a kind of experience and learning opportunity, so that members of the general public become “subjects being served”, while visually impaired people who act as “guides” in the dark bring core value to the experience.

The above-mentioned Victory Potential Development Centre for the Disabled is also a leader in changing “environment” for the better. Victory Potential creates a suitable work environment and trains different skills based on the various characteristics of all kinds of physical and mental disabilities, so that people with disabilities work together in a team giving full play to their strengths. For example, in Victory’s handmade glass team, there are employees with mental, physical and intellectual disabilities. They are not labelled as any one group, but carefully utilise the different strengths that people with different disabilities have, so that everyone can do what they are good at in the environment that most suits them, turning disadvantage into advantage.

3. From sheltered workshops to excellent brands

Just like other businesses, a non-profit organisation also needs “strategy” change in the process of transformation. It must consider its own value orientation rather than swarming to do things that “other people can do”, leaving it unable to develop brand differences.

Victory Potential, the disabled service group operating typing and data archiving services, is a good example of the importance of strategy. Victory Potential demands of itself that it produce work that is top-industry level, positioning itself as a “safe, accurate and efficient” service provider, and not only becoming Taiwan’s first BS7799 certified information data entry centre, but also reaching a high accuracy rate of 99.9997% for CTBC Bank’s credit card information input. Victory Potential does not just do what everyone else does, but has also developed high value-added visual design and a handmade glass business to help establish a high threshold that is difficult to imitate.

The development of goods and services is only the first step in transformation. Follow-ups like market testing, brand management, and the improvement of goods and services are keys to sustained business growth, as well as the reason why the Victory Potential Development Centre for the Disabled has been able to succeed.

4. From a single organisation to multiple ways of dividing tasks between organisations

Finally, we return to the transformation of “organisation type”. Both non-profits and social enterprises have their own regulatory restrictions, such as non-profit organisations often needing to be more limited in their business practices, and private companies not being able to accept public donations. Therefore, we can consider a model in which tasks are divided between social enterprises and non-profit foundations, allowing each one to have its own duties and help each other.

There are a variety of ways in which this kind of mixed mode collaboration can be arranged. The first is non-profit organisations concentrating on providing social services, and the other is for social enterprises to fundraise. The Geng Xin Lian Yuan Foundation and Love Family One Social Enterprise are examples of these models. The former focuses on community education, so that poor students can also receive good after-school coaching. The latter sells handmade desserts for charity, and puts the revenue back into community education.

The second way that collaboration can take place is in the exact opposite form. Social infleunce can be created by social enterprises who set up a partner association that accepts external donations, which are then used to bring together more resources. For example, ELIV International operates under a social enterprise model but has also established an association that does earmarked fundraising so that more resources can be dedicated to social services.

In addition, there is also a model under which both a non-profit organisation and a social enterprise provide social services, but adopt the practice of professional division of labour, such as in the case of Manna Organic Culture and Living Association and Aurora Social Enterprise. The former assists Aboriginal people to establish sound agricultural production mechanisms, and provides training in farming skills and knowledge. The latter distributes organic vegetables produced by indigenous people so that they can grow food safe in the knowledge that Aurora will take responsibility for selling it on.

For a non-profit organisation to transform into a social enterprise, it needs to simultaneously make changes to “role”, “environment”, “strategy” and “organisation type” in order to avoid being “old wine in a new bottle”. But it is worth noting that not all non-profit organisations are suited to being transformed into social enterprises. It is important to first analyse their financial structure, the source and flow of their resources and the core values of the organisation before choosing the most appropriate development model. We are looking forward to Taiwan’s non-profit organisations not only blossoming all over the place, but also shining brightly!