Social Entrepreneurship Prof. Clara Navarro Colomer Group C

Alessandro Corio – Charles Van Haverbeke – Julian Muller Schwefe – Miti Sheth

Contents1. Introduction

1. Task Description2. General Overview

2. Analysis3. Problem Solving4. Supporting pointers5. Implications6. Alternatives7. Sum Up

Introduction

Task Description

Assumptions

€ 350,000

1. The sum will be used for paying-off the refurbishment costs

2. The € 350,000 can be ˝collected˝ either through fundraising or through cost savings

3. The main costs for the refurbishment come from materials and labor

General Overview

Meet Capital Needs

Fundraising Cost Savings

Involve Tenants

Corp. Partn.

Reduce Labor Costs

Gov’t Support

NGO Support

Classic Loan

General Overview

Meet Capital Needs

Fundraising Cost Savings

Classic Loan

Challenge:Financial structure might become too risky (90% bank

loan) and repayment too

expensive

General OverviewMeet Capital

Needs

Fundraising Cost Savings

Involve Tenants

Corp. Partn.

Reduce Labor Costs

Gov’t Support

NGO Support

Classic Loan

General OverviewMeet Capital

Needs

Cost Savings

Corp. Partn.

Challenge:Very hard to implement as

many companies have few useful left-overs at the end of the year

General Overview

Meet Capital Needs

Fundraising Cost Savings

Involve Tenants

Corp. Partn.

Reduce Labor Costs

Gov’t Support

NGO Support

Classic Loan

General Overview

Meet Capital Needs

Fundraising Cost Savings

Reduce Labor Costs

Gov’t Support

Advantages:1. Amount of finance

needed is reduced2. Government can

provide finance promptly

3. Incentives for government:cost reduction and creation of additional social value

Analysis

Analysis

Sostre Civic

creates social

value by:

Providing affordable housing to people in need

Bringing together people with

different backgrounds

Core Competencies

BeneficiariesUsers

People that used not to be able to afford a

house, now they can. Also, some people, who were able to

afford a house with

big sacrifices, can now save more money

and increase their life-standards

Property

Owners:

House owners without the necessary financial

resources to refurbish their property, can now have a renewed

house which they can use or sell in the

market in about 25

years

Govern’t:

Government benefits from an average €17,500

saving per unit. Also,

the government would foster

greater societal cohesion

(one of governments’

goals) through its support to

Sostre Civic

Analysis

GovernmentEven though there are other players that can benefit from Sostre Civic‘s project (such as construction companies, firms, etc.), the

government is the institutions that receives the most direct advantages. Also, the

relatively low heterogeneity of such institution makes it more easier for Sostre

Civic to involve it in the project.

Analysis

Problem Solving

Problem SolvingIntegrated Approach

Mehgenerationen-Haus Concept

Using unexploited resources

Unexploited WORKFORCE resources

Problem Solving

Mehgenerationen-Haus (Multi-generation housing) is a concept that has been developed by the German Government.

People with different age, income, race, job, etc. live in the same dwelling.30% of the tenants are low-income people that went for public housing

solutions.This way of pooling capabilities is extremely efficient for all tenants, as

everybody can benefit of the qualities of other tenants and feels a sense of belonging to a community as his skills/capabilities are needed. Often in these

dwellings, many services (for example bricolage, watching children, ride to doctors) are handled internally.

Mehgenerationen-Haus

Problem Solving

Given that labor is going to be one of the major expenditures, we need to find a way to reduce this cost

Use of under-exploited resources which are going to shrink labor costs close to zero use of inmates as work force. The workforce will be made of those

prisoners that are involved in projects that help in re-entering the job market through work outside the

fence programs.The government, then, will mainly help through the

provision of cheap workforce.

Using unexploited workforce resources

Supporting Data

Supporting DataTotal Direct Costs: € 686,230

Material Costs: € 480,361

Labor Costs: € 205,869

Qualified Workforce: € 21,215.2

Blue Collars:€ 184,653.8

Supporting Data

Using prisoners as workforce is going to provide us with a cost saving of

€ 185,000. This means that the money that will have to be phisically

raised are: € 165,000.

This amount of money can be provided by the local government (in this case the government of Catalunya). The cost savings that Sostre Civic is going to provide by the government with these projects are in fact higher than the sum that the government will have to provide: € 210,000 > € 165,000.Also, the government will have additional benefits, as mentioned above, through the promotion of better social integration.

Residual Amount

Implications

Implications

Sostre Civic Government Tenants

Money of government starts implementation phase

Integrated Approach complements and slightly modify Sostre Civic‘s model

Cost Savings after initial investment

Attacks 2 social issues of government at the same time (housing,re-integration)

Cheap housing

Enjoy benefits of a Mehrgenerationen-Haus communityExperience social inclusion

Alternatives

Social Venture CapitalismAn alternative to raise the remaining €

165,000 would be to find social investors willing to invest in Sostre Civic.

We actually tried to activate a new network of potential social investors for Sostre Civic,

but we are still waiting for an answer.

Corporate PartnershipAnother alternative would be to further reduce the

expenses for Sostre Civic, through reducing the costs for the materials

This could be done buying leftovers from other construction companies. These companies would be

willing to sell this material at prices lower than market average. Also, this would be particularly true if they sell

this material for social enterprises as Sostre Civic in exchange of recognition for their socially valuable

action. This would prove to be beneficial for Sostre Civic in

terms of cost reduction and it would also be align to its environmentally friendly approach to refurbishing.

Corporate Partnership IIIn case Sostre Civic is interested also in offering

furnished appartments, partnership agreements can be signed also with other companies/social

enterprises that can offer products at lower costs.

Examples can be for-profit companies such as IKEA, or social enterprises, such as RESEAT, that offer good

quality products, made using environmentally friendly, processes at low costs

Summary

ConclusionsOur solution is a hybrid between cost-savings

and fundraisingIn our first option, the government will play a

pivotal role as it will provide us with workforce and finance

The introduction of the ‘multi-generation housing’ concept will slightly change Sostre Civic’s business model but will help in getting the government involved

The solution we propose can be used together with other tools such as partnerships with other NGOs or with other for profit enterprises.

General Recommendations1. Reduce the initial amount required to

its clients (€ 3,000)? Even though this functions as a long-term commitment, this kind of incentive can also be created through direct involvement of the tenants, peers or shared/partly ownership in the projects or similar approaches

2. Revise the rent term? Is the feasibility checked of this term? Do house owners want to ‘rent’ their property for 25 years = big opportunity cost