Since its founding by the Presbyterian Church in 1912 as an immigrant settlement house, St. Christopher House (SCH), has offered vital services to less-advantaged people of all ages and ethnocultural backgrounds in downtown Toronto, Ontario. Successive waves of immigrants from around the world have made Toronto their first stop in Canada, and SCH works in partnership with the community to facilitate their integration into Canadian society and to promote personal and broader social change.

At the end of 2003, SCH faced a funding climate characterized by 'flatlined' (frozen at pre-millennium levels) government budgets and shifting funder priorities. In order to pursue its mission and cover its operational costs, SCH needed access to additional and more reliable revenue streams. Initially the agency implemented a combination of cost-cutting measures, fee-for-service programs, and aggressive fundraising--but these strategies only took them so far.

At the same time, ten years of intensive residential development had led to dramatic changes in SCH's traditionally working-class catchment area. New condominiums and industrial buildings redesigned as trendy lofts brought with them a dramatic demographic shift. The community is now a mix of modern condominium high-rises, townhouses, and older Victorian homes, which attract more affluent young professionals and empty nesters, as well as the lower income group that previously were the dominant population.

Birth of a Social Enterprise

In keeping with its strong history of community mobilization and identifying innovative solutions to pressing social problems, SCH's management and Board of Directors began exploring the idea of a revenue-generating enterprise that would support the organization�s charitable work. The agency worked with a team of MBA and MIR students from the Rotman School of Management of the University of Toronto to define a suitable business opportunity.

Ultimately, the team elected to launch All Through the House (ATTH), a high-quality, reliable, cleaning service for condominium and loft residents in downtown Toronto. They began with a cleaning service and plan to expand into complementary services, such as plant watering, delivery receipts, and dog walking. ATTH enables SCH to link with its affluent new neighbors and further build its community.

By serving the condominium and loft market, SCH has developed an enduring competitive advantage: A lower cost structure achieved through minimal downtime and travel costs, rapid turnaround, and the provision of multiple services at a single location. This is especially important because SCH pays ATTH staff at the same rates as its unionized home support staff.

Financing the Enterprise

SCH's Board approved a pilot phase, with the condition that the agency secure independent funding of no less than $50,000. Social Capital Partners (SCP), an organization that specializes in funding new and growing social enterprise ventures, contributed $50,000 in seed funding, along with professional advice through participation in ATTH's advisory board. SCP specified that SCH invest $10,000 in cash and $10,000 in products and services in the new business.

Media coverage around the launch of ATTH, combined with a widespread direct mail campaign, attracted sufficient customer enquiries to enable the pilot to exceed revenue targets by more than 10%. At the pilot�s completion, ATTH had 28 regular customers, three part-time in-house workers and monthly revenues of approximately $2,800. Based on these successes, SCH engaged in a full-scale launch in January 2005.

ATTH aimed at acquiring eight new customers per month, based on the average client usage profile, and projected break even in December 2006, two years after its launch. As of mid-June 2005, ATTH is on track to achieve profitability and begin contributing to SCH's operating costs by April 2007 with steady monthly revenue in excess of $5,000.

Managing Perception and Reputation

From the time it began to explore the concept of social enterprise, SCH recognized that ATTH could introduce serious risks to its parent organization's reputation. SCH is situated in a part of Toronto that many in-home cleaners call home. Most of Toronto's in-home cleaners work in the underground economy that represents an estimated 75% of Canada's household services industry. They are independent, paid in cash and unlikely to pay taxes.

By competing directly with this segment of the community, SCH risked being perceived as operating counter to its mission of "enabling less-advantaged individuals, families and groups in the community to gain greater control over their lives", effectively driving a wedge between the parent organization and the community. To manage this risk, ATTH identified a different client base from that served directly by local cleaners. SCH also made it known that ATTH was looking for new employees who might be attracted by the prospect of stability, benefits, and the protection of a union.

SCH also sought to identify a new client base that would not be eligible for the organization�s Home Support Services, in order to ensure that the agency was not seen to be providing a 'two-tiered' level of service to the users of SCH's charitable services.

Additionally, the organization's Board and management contacted and engaged relevant stakeholders, such as local city councilors, volunteers, and donors, to ensure broad awareness and to build support for ATTH as a for-profit division of SCH, thus minimizing the potential for reputation damage.

Balancing Supply and Demand

ATTH also faced the issue of attracting qualified, experienced employees while offering a limited number of work hours per week. After several potential employees refused employment offers at significantly higher pay than major competitors (though less than the pay achieved by independent providers), the enterprise elected to offer a guaranteed number of weekly hours in exchange for employees' availability to perform cleaning work or work of similar complexity within SCH.

When they are not engaged in cleaning tasks, ATTH employees prepare mailings and assist with SCH programs, such as Meals on Wheels. New employees typically have enough cleaning work to fill their guaranteed hours within one month of accepting a position with ATTH.

ATTH's new customers tend to arrive in waves. To meet demand, ATTH was forced to decide whether to hire staff on short notice and risk compromising its service quality or to hire staff in anticipation of demand and risk compromising its short-term profitability. This issue made managing day-to-day operations challenging; yet, the organization felt that it was essential to maintain the right balance to ensure quality of service, customer and employee satisfaction, and the financial health and growth of the enterprise.

ATTH's marketing emphasizes its service quality, competitive pricing, and social mission. It has tried to ensure quality of service by hiring experienced cleaning staff and by implementing a continuous quality assurance follow-up with clients, including feedback forms left at the end of each visit and occasional e-mail or phone courtesy calls. In addition, management endeavors to accommodate client change requests and additional requirements in order to deliver a tailored service.

Embracing Enterprise

From the outset SCH was careful to differentiate ATTH from its social mission. It wanted the business to stand on its own as a provider of excellent service to customers. SCH therefore launched ATTH as its for-profit division with trademark protection. The result was a hybrid organization in which for-profit and nonprofit values coexist.

SCH management initially declined to use the expression "for-profit" to describe its social enterprise, fearing that others in its community would react negatively. However, it began to more openly embrace the enterprise because ATTH's success--and thus the success of SCH--depends on its pursuit of its profit mandate.

These and other issues have been resolved through dialogue and negotiation between the organization's two distinct parts. ATTH's existence continues to challenge SCH to learn to exploit synergies and manage friction in this hybrid environment.

Social enterprise is just beginning to take root in Canada. The authors hope that ATTH's early learnings will encourage other non-profit organizations to consider social enterprise as a model for building organizational capacity and promoting greater self-sufficiency.


All Through The House; Social Enterprise Initiative at the Rotman School of Management, University of Toronto