Social Enterprises Might Actually Work

On July 2000, Mexico became a democratic country. New transparent and strong institutions and participative citizens put a stop to more than 7 decades of authoritarian governments. Soon, Mexicans got to know freedom of expression and freedom of association for the first time. However, most of us didn’t know what to do with it. Even when the “black list” of books you couldn’t buy nor read was dismissed and even when journalists were able for the first time to criticize the President freely and without fear, citizens weren’t actually exercising their liberties. They didn’t know how to do it.

Eventually, generalized apathy became so annoying that a group of friends and I decided to take advantage of this window of opportunity.

On April 2008, we launched a non-profit organization with the mission of providing political education to the Mexican youth. On January 2009 we published the first issue of an online magazine in which we encouraged students to write freely about political issues. Soon, we got writers from many universities in the country and even from other Latin American countries, as well.

To present each issue we organized forums, conferences, film weeks, photographic exhibitions and many other events to complement the contents published in each issue. These events were so successful that we received funding from three Mexican universities and from several private sponsors. At the end of each issue we donated our profits to non-profit causes related to the topic we chose for each issue[1].

However, on January 2011, most of the original team of Interdependencia had graduated from college and the universities who sponsored our work decided to stop doing so.

Recruiting younger students helped us to attract support from new universities. One of them actually decided to adopt Interdependencia’s contents to do a print magazine. Nevertheless, our income was not enough for sustaining our activities and still donating our profits.

We participated in several start-up competitions, but we only won special mentions “for being the best fully running initiative in the contest”. Then, we tried to apply for government grants, but they told us that our non-profit organization was not old enough, so we could just apply for getting training support. After this experience, we didn’t even try to apply for foundation grants.

In order to contain the crisis, I deconstructed Interdependencia’s business model so as to turn it into a social enterprise.

First, I added two other branches to the organization. I realized that if we were going to implement important changes any way, it would be a good time for doing extreme changes. Since many of us debated constantly about the pros and cons of being an opinion magazine rather than an academic magazine, I developed the business model for a digital-interactive think tank that would do research and organize online lectures.[2] Also, I integrated a consulting branch that would let us sell our skills, get experience, do networking and finance the magazine and the think tank.

Then, I changed the whole organizational structure and added legal, accounting and organizational teams that could deal with a rather complicated flow of information and resources between the non-profit association and the for-profit enterprise. I have to say that Business Process Modeling has been a nightmare since then.

On January 2012, the team accomplished our goal and Interdependencia formally (and legally) transformed into Grupo Interdependencia. We celebrated by changing our image and our website.[3]

On May 2012, we sold our first project to a local government. Unfortunately we couldn’t develop it because the municipality did not comply with the terms stated in our proposal. However, we proved ourselves that this is the way to go. Currently, we are developing more services and I strongly believe that soon we will be able to overcome our funding gap. 

In the end, I learned a lot from this experience of success. However, after living throughout the whole process of transforming a nonprofit into a social enterprise, I wouldn’t advise any organization to walk my steps.

Firstly, legal and organizational mayor transformations are extremely costly. On the one hand, we lost some members of the original team who didn’t want to earn a profit, so we had to recruit and train new members. On the other hand, I believe that if Interdependencia’s members were not voluntary workers it would have been very expensive to exert accounting and legal changes.

Secondly, I learned that it’s extremely important to preserve your mission both in the non-profit and in the for-profit sides of the equation. Every time we had concerns or doubts about what we should do in any of our branches, by recalling our mission we were able to get the correct answer.

So, even if social enterprises might actually work in some cases, it is very important for organizations to understand that it is a costly and complicated process that won’t actually work in any context. You have to be prepared and give a serious thought to strategy issues. 

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[1] For example, we helped a community of women to build a small shelter for immigrants where the women could feed the immigrants and provide basic medical assistance. The women from La Patrona, a town located in Veracruz, Mexico, felt compelled to help immigrants because their sons have had to migrate too.

[2] This branch of the organization found its own social entrepreneur who is leading this initiative. They started working immediately after the team was informed about the changes in Interdependencia. They are now conducting a couple of research projects. One of them is monitoring legislators’ expenses. 

[3] If you are interested, I invite you to check our new and still in progress website at www.interdependencia.org.mx