A recently shared scan has revealed the gaps and challenges facing social enterprises in Detroit.

But what does “social enterprise” mean? In a recent blog, Jennifer Ludwig, program partner for the Max M. and Marjorie S. Fisher Foundation, acknowledged that “it is difficult to pin down an evolving concept utilized across a broad range of contexts.” She refers readers to the working definition from Social Enterprise Alliance: “Organizations that address a basic unmet need or solve a social problem through a market-driven approach.”

The Fisher Foundation has worked with a number of Detroit-based small business social enterprises through its impact investing practice.

For instance, Rebel Nell, a Detroit-based company empowers women through employment, teaching them how to create jewelry from chipped graffiti paint and offering classes in financial resources. Artesian Farms provides sustainably grown, pesticide-free, non-GMO produce and all team members live in Brightmoor.

Ludwig shares that the foundation recognized the potential such businesses have to contribute to the city’s economy while creating a positive impact. Conversations with these companies and others led the foundation to commission the report Funding for Social Enterprises in Detroit: Assessing the Landscape, prepared by Avivar Capital.

The report details what a social enterprise can look like in practice. The foundation is sharing the report publicly for the first time in hopes of highlighting the challenges facing Detroit social enterprises while also gaining insights into how to strengthen the local ecosystem.

Key findings:

• There’s a shortage of capital for small business social enterprises.

• Most early-stage equity capital available in Detroit is geared toward tech-enabled firms.

• Small business social enterprises face significant barriers to obtaining debt financing.

• There’s been an increase in the number and quality of local support organizations and efforts are being made to strengthen Detroit’s entrepreneurship ecosystem.

• There’s need for an impact fund to provide direct equity investments in small business social enterprises in Detroit.

“There is a critical need for direct seed investments of social enterprises in Detroit,” Jennifer Oertel, CMF’s impact investing expert in residence said in the report.

The scan provides recommendations to help reduce barriers and fill gaps for social enterprises.

Recommendations:

• Create an impact investment fund to provide debt and equity capital for small business social enterprises in Detroit.

• Partner with local entities to manage the fund and provide a dedicated ecosystem of support.

Want more?

Read the full report.

Amy Peterson, CEO of social enterprise Rebel Nell, will join Meredith Freeman, director of alignment and impact investing from the Fisher Foundation and others in presenting What’s the DEAL with Impact Investing?, a breakout session at CMF’s Annual Conference taking place October 6-8 in Traverse City.