Germany: social franchising, the new non profit frontier

Julia Meuter, 29, is project manager at the association of German foundations, Bundesverband Deutscher Stiftungen. She is co-author of a manual on social franchising published in June that aims to revolutionise the way the non profit world looks at franchising. Far from being the McDonaldisation of the non profit world, social franchising – the systematic replication of successful social projects – can help to increase social impact, to channel resources and ultimately to ensure maximum results in project delivery.

The manual, Social franchise: A way of systematic replication to increase social impact, can be downloaded directly from www.stiftungen.org/social_franchise and a step by step summary will soon also be available in toolkit form on VitaEurope.org.

The idea of taking successful social ideas with proven results and replicating them elsewhere sounds like fairly straightforward logic. Why has it taken so long for social franchising to take off?

Yes, there are good arguments for social franchising: there are many projects on the local level that address current social challenges effectively, but most of them do not reach their full potential. Often their impact does not extent beyond their local environment, rather in the search for solutions to today’s problems the wheel is reinvented over and over again and resources, time and trust are lost. So the question arises: why not take those projects that have proven to work and implement them, with local adaptations, somewhere else?

I think that the desire to be associated with new and innovative projects has played a large part in preventing the development of social franchising so far. Most actors in the non-profit sector don’t want to copy other people’s ideas and visions and don’t want others to copy theirs. Another reason is that most people associate franchising with images of McDonaldisation.

But I feel that now may be a good time for this method to take off because while there are more and more non profit organisations on the stage, not all needy people are being reached. At the same time competition for funding increases and organisations look for alternative and more effective ways of increasing their social impact. Social impact can be increased by scaling up projects through social franchise rather than pouring more money in the development of new projects.

Is social franchising not just another way of saying “sharing best practices”?

Sharing best practices is a key element of social franchising, but they are not interchangeable. Social franchising has a number of other advantages and sharing best practices can be carried out at a much looser level. You could say that social franchising is a way of systematically sharing best practice.

How problematic is it to ask a sector that is sensitive to social and environmental issues to follow a business model that is not generally associated with furthering social goals?

I think that many actors in the non profit sector discount social franchising from the outset because it draws up images of McDonalds that in their opinion does not fit in with the notion of the social sector. First of all because franchises are often symbols of the negative effects of globalisation and their profit maximising approach is in contrast with approaches that seek to maximise social impact.

Secondly, in McDonalds or other commercial franchises the various units are often identical replicas, down to the very last cup. This degree of standardisation is seen to be inappropriate for the social sector as success often depends on tacit knowledge and beneficiaries often need special and individual care.

But social franchising does not necessarily have to have a cookie-cutter approach; it is about finding out what works and which elements of the project have led to the desired outcome. These are then passed on systematically in order to achieve the same goals elsewhere. In this sense, social franchising does not follow business models but rather adapts them to its needs. Our aim is to showcase social projects that have successfully been franchised and transform the connotations franchising has with McDonalds.

Are donors suspicious about social franchising too?

There is this possibility. For a start they may have the same prejudices as organisations and they tend to want to be associated with new and innovative projects. However, social franchising offers a number of advantages to donors: social franchise projects are less likely to fail as the projects have already been tried and tested and often have a reputation, so donors know what to expect, what they are investing their money into. Moreover, social franchise projects are usually more systematic and transparent than other non profit projects as developing a social franchise system is much more complex than running a single project.

Having said this many potential donors or investors are unfamiliar with the method of social franchising and don’t see its benefits. We hope with the social franchise manual and the increased coverage about the method, more donors will see the possibilities that arise from transferring successful projects and will support those efforts.

What help/resources are available to people wishing to embark on a social franchising adventure?

I don’t think that there is currently enough support for those who wish to franchise their project. Organisations like CAN in the UK have supported potential social franchise projects, for example through their Beanstalk Initiative as well as their Breakthrough social investment fund. Also here in Germany we have some foundations that specifically searches for and supports social franchise projects: for example the Stiftung Bürgermut. So-called Venture Philanthropy Funds are also a good way to turn to if you want to start a social franchise. They are not only more open to new approaches to maximize social impact, but also provide technical support in addition to funding. But all of these are rather limited in their scope. We need more of this. We need more guidelines, seminars and sources for consultation.

The framework presented in our social franchise manual is a good start for organisations which would like to franchise their projects. But there is still much scope for improvement. In cooperation with the Bertelsmann Foundation the Association of German Foundations currently conduct a study exploring methods of transferring successful projects, including social franchise. By researching existing social franchise projects and learning from best practice, we are aiming to set up specific guidelines and indicators in order to facilitate the replication of successful projects. We hope that by providing more support, more organisations will consider franchising their projects.