The approach for this commitment is an innovative and proven model that NESsT designed to supports civil society organizations (CSOs) to develop social enterprises that address the needs of marginalized communities. The approach will combine the model of venture capital with the values of mission-focused nonprofit organizations to invest capital and management support to generate social impact and sustainability. An important part of the commitment's strategy will be to ensure that the power of social enterprise is used to address the needs of particularly marginalized communities to increase their income and (re-)integrate society, specifically artisans, small scale farmers and service providers, and fishing communities.
The model is designed to demonstrate the potential of social enterprises that provide innovative solutions to poverty and marginalization, when such activities are developed and implemented with appropriate levels of technical assistance and financial capital. NESsT will provide such support to social enterprises working with local producers, including those that promote locally-based innovative technologies, so they can assess, plan, launch, and develop their ventures. These strategies are designed to significantly increase the organization's financial sustainability and strengthen its mission impact.
All social enterprises will undergo a rigorous due diligence process based on performance standards created by NESsT. NESsT will provide technical assistance at several levels: in the area of organizational readiness to start up social enterprises; in the early stage of entrepreneurial and technological development to plan social enterprises; and at the incubation and expansion phases to assist with implementation and the reaching of sustainability objectives. NESsT will also provide performance-based financing in the form of grants and soft loans. Throughout the process, NESsT will collaborate with its Business Advisory Network (BAN) composed of professionals from the private sector (including private equity, venture capital, banking, accounting, legal, etc.) who will provide pro-bono support to the portfolio of social enterprises. Social enterprises will be expected to take the initiative to push the process along and to 'learn by doing' to ensure sustainability even after they no longer receive support from NESsT through this commitment.
In Year 1, NESsT will organize a Social Enterprise Competition targeting social enterprises supporting small producers and artisans in Argentina, Brazil, Chile, Ecuador, and Peru. The Competition will provide training and technical assistance to 50 social enterprises to assess business ideas and evaluate their financial and social impact potential. Social enterprises will work with a core group of small producer 'champions' demonstrating the entrepreneurial capacity to assist with the business concept and pilot improved products. Approximately 25 social enterprises will receive financial support to launch or expand their activities and receive continued, long-term support.
In Years 2-3, NESsT will incubate the 25 social enterprises through practical trainings and individualized management support to help overcome the challenges of launching new ventures. Small producer champions will replicate initial successes by acting as role models for other producers to join the social enterprise. Successful models demonstrating the potential for large-scale expansion will be documented and systematized for future replication.
In Years 4-5, NESsT will replicate successful models to new social enterprises to reach a much larger number of producers and increase impact across the region.
NESsT will focus on enterprise planning and development, incubating social enterprises that have demonstrated potential to significantly increase local producers' income. Social enterprises developing innovative models will participate in the systematization and replication of their ventures to reach large-scale impact.
Small producers and artisans from low income communities in Latin America face a series of barriers that prevent them from generating a secure livelihood. They often live in isolated areas, lack access to technology and skills, confront competition or monopolies held by larger producers and encounter discrimination because of their social or economic status. Their low entrepreneurial capacity is compounded by very limited financial options to operate and grow their businesses. The result is that a majority of local producers in Latin America live under the poverty line, unable to generate a sustainable income to improve the quality of life of their families through better access to housing and health and education services. Many civil society organizations (CSOs) support these small producers and artisans and have developed strong knowledge and expertise working in these communities. Yet CSOs have struggled to have significant impact due to limited resources and a lack of long-term sustainability.
A significant opportunity exists to work with CSOs supporting small producers and artisans to develop and expand entrepreneurial, market-based approaches ('social enterprises') to increase producers' income and CSO sustainability. Using a venture philanthropic approach, NESsT will provide management, technology and financial support to CSOs to develop social enterprises that increase market access for artisans and small-scale producers as well as to increase their entrepreneurial capacity. Social enterprises that respond to the needs of these small producers and artisans - by helping them to improve the efficiency and quality of their products, to purchase inputs at lower prices, to increase volumes, to obtain fair prices and to assess viable markets - are indispensable to overcoming these barriers. Although these enterprises face many challenges, they are a very viable alternative for small producers and artisans, and they can eventually be replicated to provide new investment opportunities for socially responsible investors.