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Harvard Case - Fundacion Comunitaria Oaxaca (FCO)

"Fundacion Comunitaria Oaxaca (FCO)" Harvard business case study is written by Angel Maass, Loretta Serrano. It deals with the challenges in the field of Social Enterprise. The case study is 28 page(s) long and it was first published on : Feb 16, 2005

At Fern Fort University, we recommend that FCO adopt a hybrid organizational model that leverages its existing strengths in community development and social entrepreneurship while embracing new opportunities for impact investing and social innovation. This approach will allow FCO to scale its impact by attracting diverse stakeholders, including investors, corporations, and government agencies, while remaining true to its mission of empowering marginalized communities in Oaxaca.

2. Background

The case study focuses on Fundaci'n Comunitaria Oaxaca (FCO), a non-profit organization established in 1998 with the mission of promoting sustainable development in Oaxaca, Mexico. FCO has a strong track record of supporting local communities through initiatives like microfinance, education, and environmental conservation. However, FCO faces challenges in scaling its impact due to limited resources and a changing landscape of development funding.

The main protagonists of the case study are:

  • FCO leadership: They are committed to FCO's mission but are seeking innovative ways to expand its reach and impact.
  • Local communities: They are the beneficiaries of FCO's programs and have a strong stake in its success.
  • Potential investors and partners: They are interested in supporting impactful initiatives but need to see a clear return on their investment.

3. Analysis of the Case Study

Strategic Framework: We can analyze FCO's situation using the Social Enterprise Canvas framework, which helps to understand the core elements of a social enterprise:

  • Problem: FCO addresses the problem of poverty, lack of access to resources, and environmental degradation in Oaxaca.
  • Solution: FCO offers a range of programs and initiatives focused on community development, microfinance, education, and environmental sustainability.
  • Target Beneficiaries: FCO's target beneficiaries are marginalized communities in Oaxaca, including indigenous populations, women, and rural residents.
  • Revenue Model: FCO's revenue model relies on grants, donations, and fundraising efforts, which are limited and unpredictable.
  • Impact Measurement: FCO measures its impact through various metrics, but there is a need for more robust and standardized impact assessment.
  • Partnerships: FCO collaborates with local NGOs, government agencies, and private sector partners.
  • Governance: FCO has a strong governance structure with a board of directors and a dedicated staff.
  • Sustainability: FCO strives for sustainability through long-term program development and community empowerment.

Key Challenges:

  • Limited Funding: FCO relies heavily on grants and donations, which are often insufficient to meet its growing needs.
  • Scaling Impact: FCO struggles to scale its programs due to limited resources and a lack of access to new funding sources.
  • Impact Measurement: FCO needs to improve its impact measurement and reporting to demonstrate the value of its work to potential investors and partners.
  • Competition: FCO faces competition from other NGOs and development organizations operating in Oaxaca.

4. Recommendations

1. Embrace Impact Investing: FCO should actively pursue impact investing opportunities by developing social impact bonds (SIBs) and venture philanthropy initiatives. SIBs allow investors to receive a financial return based on the social impact achieved, while venture philanthropy provides funding for innovative social enterprises with high growth potential.

2. Develop Hybrid Organizational Model: FCO should transition to a hybrid organizational model that combines its non-profit mission with social enterprise activities. This model allows FCO to generate revenue through social enterprises while maintaining its commitment to community development. Examples include:

  • Social Franchising: FCO can license its successful programs to other organizations, generating revenue and expanding its reach.
  • Social Impact Businesses: FCO can create social impact businesses that address specific community needs, such as sustainable agriculture or eco-tourism, generating revenue and creating jobs.

3. Strengthen Impact Measurement: FCO should invest in impact measurement and evaluation to demonstrate the effectiveness of its programs to potential investors and partners. This includes:

  • Developing a robust impact measurement framework: This framework should align with internationally recognized standards and include key performance indicators (KPIs) that measure social, environmental, and economic impact.
  • Utilizing data-driven approaches: FCO should use data analytics to track progress, identify areas for improvement, and demonstrate the value of its work.

4. Foster Strategic Partnerships: FCO should actively seek strategic partnerships with corporations, government agencies, and other NGOs to leverage resources, expertise, and access to new markets.

5. Enhance Marketing and Communication: FCO should invest in marketing and communication strategies to raise awareness of its mission and impact, attract potential investors, and build a strong brand identity.

5. Basis of Recommendations

These recommendations are based on the following considerations:

  • Core Competencies and Consistency with Mission: The recommendations align with FCO's mission of promoting sustainable development in Oaxaca and leverage its existing strengths in community development and social entrepreneurship.
  • External Customers and Internal Clients: The recommendations address the needs of FCO's beneficiaries, potential investors, and partners.
  • Competitors: The recommendations help FCO to differentiate itself from competitors by offering a unique blend of social impact and financial sustainability.
  • Attractiveness: The recommendations are attractive to investors and partners because they offer the potential for both social and financial returns.
  • Assumptions: The recommendations assume that FCO has the capacity to implement the proposed changes and that there is a sufficient demand for impact investing and social enterprise initiatives in Oaxaca.

6. Conclusion

By embracing a hybrid organizational model, FCO can unlock new opportunities for growth and impact. This approach will allow FCO to attract diverse stakeholders, including investors, corporations, and government agencies, while remaining true to its mission of empowering marginalized communities in Oaxaca.

7. Discussion

Alternative Options:

  • Traditional Non-Profit Model: FCO could continue to operate as a traditional non-profit, relying solely on grants and donations. However, this approach would limit its growth potential and make it vulnerable to funding fluctuations.
  • Pure Social Enterprise Model: FCO could transition to a pure social enterprise model, focusing solely on generating revenue through social impact businesses. However, this approach could compromise its commitment to community development and social justice.

Risks and Key Assumptions:

  • Risk of losing its non-profit identity: FCO needs to carefully balance its social enterprise activities with its non-profit mission to avoid losing its core values.
  • Risk of failing to attract investors: FCO needs to develop a compelling investment case to attract investors and partners.
  • Assumption of sufficient demand for social impact initiatives: FCO needs to ensure that there is a sufficient demand for its social enterprise products and services in Oaxaca.

8. Next Steps

Timeline:

  • Year 1: Develop a strategic plan for transitioning to a hybrid organizational model, including impact measurement framework, social enterprise initiatives, and partnership strategies.
  • Year 2: Pilot social enterprise initiatives and refine impact measurement framework.
  • Year 3: Scale social enterprise activities, attract impact investors, and expand partnerships.

Key Milestones:

  • Develop a comprehensive impact measurement framework: This framework should be aligned with internationally recognized standards and include key performance indicators (KPIs) that measure social, environmental, and economic impact.
  • Pilot social enterprise initiatives: FCO should pilot social enterprise initiatives in areas where it has existing expertise and strong community support.
  • Secure impact investments: FCO should develop a compelling investment case and actively seek impact investors and partners.
  • Build a strong brand identity: FCO should invest in marketing and communication strategies to raise awareness of its mission and impact, attract potential investors, and build a strong brand identity.

By implementing these recommendations, FCO can position itself as a leading social enterprise in Oaxaca, driving sustainable development and empowering marginalized communities.

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Case Description

Describes the story of one of the first geographically focused foundations in Mexico, which was created by a group of international foundations (Rockefeller Foundation, International Youth Foundation, Ford Foundation, MacArthur Foundation, and Kellogg Foundation), and later joined by renowned businessmen and social leaders from Oaxaca, to respond to the social conflicts in the southern region of the country (i.e., Chiapas). FCO's experience offers an interesting view of cross-sector interactions between the business and social communities and of the strategic change from supporting rather isolated projects with limited interactions among actors to focusing on specific locations, explicitly promoting collaboration networks and social capital creation.

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