What does a Social Entrepreneur Earn?

Or: Let’s talk about money, honey!

Money, money, money – the financial side of many social enterprises is a mix of sales, subsidies and donations. We claim to be independent of donations but how does this work exactly? Where does our money come from? How do we spend it? What do you earn as a social entrepreneur? In this blog post, we share our answers to the 10 key questions around money. Why? Because we think it is our duty to be transparent and accountable to all who support our cause. Money might be a taboo for some – we feel it’s important to talk about it. Whilst BOOKDBRIDGE clearly isn’t about money, it wouldn’t work without. 

#1: What is your budget?

When we asked this question to our Bridgebuilders at the 2016 Summit, the average of all educated guesses laid around EUR 2m. Millions are also what we hear when colleagues of international NGOs estimate what we need to earn in order to do what we do. The truth for 2016: our budget was EUR 495,346. In the chart you see where this money comes from.

budget 2016
Budget 2016 of BOOKBRIDGE FOUNDATION and BOOKBRIDGE GmbH

This sum includes all income from all our legal entities, namely BOOKBRIDGE FOUNDATION and BOOKBRIDGE GmbH. The latter is 100% owned by our Foundation and generates sales with our Capability Program.

#2: How profitable is BOOKBRIDGE?

Our profit margin on the Capability Program in 2016 was 14%. BOOKBRIDGE GmbH offers the Capability Program as a unique action learning program to companies, not-for-profit organizations, government institutions and individuals. The program is offered in partnership with BOOKBRIDGE‘s country organizations in Mongolia, Cambodia and Sri Lanka. The country organization prepares, accompanies and follows up on the business challenge for each Capability Program. For this service, they earn part of the program‘s revenues. Thereby, they can sustain the operations in their own countries.

Profit margin of BOOKBRIDGE GmbH from 2013 to 2016

What happens with the profit?

As BOOKBRIDGE GmbH is fully owned by BOOKBRIDGE FOUNDATION, the profit is re-invested into our network of learning centers. Similar to our learning centers, we use the profit to re-invest into our organization, pay back loans to our investors and put money aside as savings for bad times.

You claim to be independent of donations. Why do you still accept them?

Because we are able to forward 100% of all donations directly to their beneficiaries. And this is what most donors dream of, right? So why should we say no if this really helps people and comes with no effort by us? Through the sales generated by BOOKBRIDGE GmbH and our Capability Program, we are able to cover all our so-called overhead expenses – staff costs, sales, marketing and administration. This is pretty unique in the NGO landscape. And we are proud of this! Most important for us is that we do not depend on donations.

We can continue to exist without any donations, yet let us be very clear: we are very happy for each EUR received. Donations help us to fund activities which would usually not be funded. In 2016, we could provide our learning centers with some extra funds to

We are very happy for each EUR received but we can also continue to exist without it.

#3: Where does your money come from? How dependent are you on whom?

Good question. First of all, all our money comes from people we know personally and organizations we trust. Second, this questions needs to be answered separately for BOOKBRIDGE FOUNDATION and BOOKBRIDGE GmbH. This is why you find two actually really pretty pie charts:

2016 Origin of funds for BOOKBRIDGE FOUNDATION and BOOKBRIDGE GmbH

As you can see from the graphs, the maximum dependency on one stakeholder amounts 20% for both legal entities. If this stakeholder drops out, this does not automatically mean that we will end up making a loss at the end of the year. The reason is that most of our costs are variable, e.g. if we do not have enough candidates to run a program, we simply do not run it. This still leaves us with some fixed costs. However, these are much lower than the variable costs associated with one program run.

Why are there no names behind the percentage figures?

For legal reasons, we are not allowed to display full names here. For BOOKBRIDGE GmbH, you may find the names of our clients here. For BOOKBRIDGE FOUNDATION, you can find the names of the top income sources on the websites of our learning centers. These are the investors investing EUR 20,000 each into our Social Business Fund.

We are completely independent from government and church funding. In the history of BOOKBRIDGE, we have never received nor taken any donation or subsidy from a government or a religious group for our work. All funding is based on money donated from the private sector.

#4: How do you spend your money?

Wisely 😉 Again, this question needs to be separately answered for BOOKBRIDGE FOUNDATION and BOOKBRIDGE GmbH. While BOOKBRIDGE GmbH covers all staff, admin and program costs, BOOKBRIDGE FOUNDATION primarily invests into learning centers via its Social Business Funds and forwards donations to worthwhile projects around our learning centers. The profit of BOOKBRIDGE GmbH is re-invested into the Foundation as the GmbH (limited liability company) is fully owned by the Foundation.

#5: What salary do you earn as a social entrepreneur?

This is a sensitive and valid question. Sensitive because salary is an untouched topic in many cultures. Valid as many myths exist around social enterprises and their remuneration. As we follow Muhammad Yunus’ 7 principles of Social Business, we expect a market wage with better working conditions.

How does this look like in reality? In 2010, we started with a unitarian salary in Germany. The idea is that everyone in the BOOKBRIDGE Team earns the same salary, adjusted to the purchasing power of his/her respective country. The rationale behind this is that each team member is of vital importance to the success of our Capability Program and the impact of our learning centers. As we are quite cautious business folks we kept our salaries – especially in Germany / Switzerland – quite low for the first decade of the BOOKBRIDGE history. After years of sustainable success also in commercial terms, our board encouraged us last year to start closing the market gap in remuneration.

Today, we operate with salary bands for each country and team. The salary band starts with USD 800 and goes up to EUR 6,000, depending on the country you are based in and the relative purchasing power. We want to strengthen the self-responsibility and entrepreneurial freedom of each one of us. This means that each of our team members can pick his or her own salary in accordance with the team and the budget. If the budget follows the plan, the salary is paid out as planned. If not, the salary is adjusted. While we have moved away from one unitarian salary in each of our countries, we are proud that we still keep the idea of each team member being equal in the importance to make our organization work.

Depending to what you compare our salaries to, you end up with your own judgment on how attractive it is to work for BOOKBRIDGE as a social enterprise, e.g.

  • our salary in Germany is 83% higher than what you would earn on average at a for-profit social business, according to the 2017 salary report at thechanger.org. Great!
  • our salary in Switzerland is average, according to Verteilungsmonitor of the University of Basel. For both, Germany and Switzerland we deliberately decided not to compare our salaries to jobs with similar profiles in the for-profit sector.
  • our salary in our Asian countries is high when you compare it with local organizations. If you compare it with international NGOs like Care, SOS Children‘s Villages and the Red Cross, our salaries are much lower. Given our bottom-up approach, this is also not what we want to be compared with.

The salary is only one side of the medal. Coming back to Yunus’ principle of a market wage with better working conditions, how does BOOKBRIDGE score on all other things than salary? See what Carsten thinks BOOKBRIDGE gives to him:

Benefits which Carsten sees in working for BOOKBRIDGE

#6: How are your learning centers performing financially?

Our learning centers are doing well. In 2016, our learning centers reached out to 164,000 community members in Mongolia, Cambodia and Sri Lanka. 11 out of 19 learning centers showed a sustainability rate above 100%. Out of the remaining 8 learning centers, Cannak, Sreydieb and our micro learning center in Angroka broke even in 2016 but showed an average below 100% for the entire year. Only 4 out of 19 learning centers still have a longer way to go to reach break even. All of them have only started their operations in the last 18 months.

Community outreach and sustainability rate among our entrepreneur-run learning centers in 2016

As per February 2017, we are proud that 19 out of 22 learning centers are fully financially self-sustained. 2 out of the remaining 3 learning centers have been created in the last 10 months. They still need time to reach break even. And the last learning center, the one Sothika took over last year in Ang Tasom, can in the meantime compensate the loss with the profits of his 5 micro learning centers. Enjoy these impressive figures. We are proud of all of them!

Sustainability rates of our learning centers as per February 2017.

Are your learning centers able to pay back loans?

Yes, they are! Our entrepreneur-run learning centers have received a loan by our Social Business Fund. Since the start of our Social Business Fund in 2014, EUR 236t have been invested into these learning centers. Currently, EUR 199t are still placed while EUR 49t have been paid back (21%).

Investments and paybacks of the BOOKBRIDGE Social Business Fund

#7: How do you ensure checks and balances in the way you handle money?

We ensure proper checks and balances in three distinct ways:

  1. All legal entities are audited by professional external auditors
    Every year, all our legal entities are audited by independent auditors. The results are presented to the Board of BOOKBRIDGE FOUNDATION and published as part of our impact report.
  2. BOOKBRIDGE Foundation is governed by an independent and qualified Board
    The BOOKBRIDGE Board meets every 3 months to supervise and check the strategic direction of the entire organization. Whilst all board members have been part of our Family of Bridgebuilders for many years – t hey have either taken part in one of our programs or visited our learning centers – they are all independent, experienced and qualified for the important job they are doing. There is a job profile for every board member position and all board members work voluntarily and do not receive any salary or compensation.
  3. We open up as a transparent organization with each Capability Program
    With the start of each Capability Program, we turn all candidates into temporary members of the BOOKBRIDGE Team. This includes that we open up as an organization and show them what is going well and what is going not so well. By creating a new learning center, candidates realize where we can still get better. This allows us to improve on a constant basis and get valuable input from external sources.

#8: Did you take loans yourself to kick-start BOOKBRIDGE?

Since our start in 2010, BOOKBRIDGE GmbH took up loans amounting EUR 423.000 from 6 courageous impact investors. In monthly briefings and bi-yearly conference calls, all six tell us that they are happy and impressed with the impact of their investment. This makes us proud! Out of the EUR 423t taken as loans, EUR 250t (59%) have been paid back so far. EUR 173t will be paid back in the next 4 years.

Loans taken by BOOKBRIDGE GmbH as of April 2017 [in EURt]

#9: Do you own large assets like real estate, stock or others?

No, we don’t. So far, we have remained small and beautiful. Following the principles of Social Business, all loans given or received are interest-free. BOOKBRIDGE GmbH puts its money on interest-free accounts at GLS Bank, a German ethical bank. BOOKBRIDGE FOUNDATION also does not gain any interest from its bank accounts in Switzerland.

#10: How does your budget for 2017 look like?

In 2017, we aim at growing in sales and profits as well as subsequently in investments into our learning centers. Sales by BOOKBRIDGE GmbH will increase from EUR 387t to EUR 537t by conducting our 10th Capability Program with two teams in parallel for the first time in our history. Leaving everything else equal to 2016, this will hopefully result in an increase in profits from EUR 54t to EUR 95t. As we will conduct one program more, we will also setup one more learning center. This will increase the investments by our Foundation and subsequently the budget from EUR 107t to EUR 156t.

2017 Budget for BOOKBRIDGE Foundation (green) and BOOKBRIDGE GmbH (orange) [in EURt]

Any questions?

It is not easy to make everything self-explanatory. If you have questions on the numbers presented, feel free to leave a comment or contact Carsten directly.

Carsten

Carsten Rübsaamen
CEO
carsten [at] bookbridge.org

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