On global and local levels, including Detroit, the emergence and rapid growth of social enterprise is changing ways of working by a variety of organizations within “traditional” public, private, and nonprofit sectors and inspiring waves of innovative startups. While it is difficult to pin down an evolving concept utilized across a broad range of contexts, the Social Enterprise Alliance provides a working definition of social enterprises as “organizations that address a basic unmet need or solve a social problem through a market-driven approach.”
Much smaller than New York or Los Angeles, Detroit has held an outsized place in the public imagination for decades, and for many reasons. As the birthplace of the auto industry, Motown Records, and Techno music, the city symbolizes creativity, innovation, resilience, and entrepreneurship; at the same time, it symbolizes the pain of economic decline, racial inequity, and other social challenges.
Detroit’s celebrated “revitalization” in recent years encapsulates both sets of symbols. And while it is right to celebrate the ways that investments, philanthropy, partnerships, and entrepreneurship have benefitted the city and region, it is vital to remember these benefits have not been shared by all.
Through our impact investing practice, the Max M. & Marjorie S. Fisher Foundation has partnered with a small number of Detroit-based small business social enterprises, including Rebel Nell, Recovery Park, and Artesian Farms, and engaged in dialogue with several others. We strongly believe there is ample room for more social enterprises in Detroit, and in the vast potential for such organizations to contribute to Detroit’s economy while making social and/or environmental impacts that benefit the city’s residents and communities—if they are financially stable.
Our experience made us aware – at least anecdotally — of significant challenges faced by Detroit social enterprises when seeking capital. In 2018, the Foundation commissioned a study by our impact investing advisor, Avivar Capital, to help us understand these challenges in the context of the overall ecosystem for social enterprise in Detroit and provide insights into how this ecosystem might be strengthened.
Avivar used an iterative process involving desk research, interviews with key stakeholders, synthesis, and analysis to address three main goals:
- Identifying capital barriers and gaps within Detroit’s social enterprise ecosystem
- Evaluating whether there are existing funds and financing vehicles that provide funding to social enterprises, and
- Determining the best ways of deploying capital to social enterprises, with the goal of maximizing impact.
Avivar’s research led to six key findings. Unsurprisingly, there is a shortage of capital available for small business social enterprises in Detroit. In better news, there is a robust network of local organizations that provide training and other services to support entrepreneurship more broadly that social entrepreneurs can tap into.
We encourage you to review Avivar’s full report, key findings, and recommendations. The Max M. & Marjorie S. Fisher Foundation is eager to hear how you have experienced Detroit’s social enterprise ecosystem, whether you are a business owner, investor, funder, or customer.
About the Author
Jennifer Ludwig is Program Partner managing the Foundation’s Jewish grants portfolio. Jennifer’s background includes program management and fundraising with the International Initiative for Impact Evaluation (3ie) based in Washington DC. Locally she has worked with the Michigan Israel Business Bridge and the American Jewish Committee.