Nashville social enterprises have purpose beyond profits

The problem that Patrick Woodyard observed while working in Peru was that thousands of skilled shoemakers were struggling for customers. The influx of imported shoes was undercutting their trade, and providing for their families was becoming increasingly difficult.

An idealistic 25-year-old, Woodyard became determined to find a market for the handmade shoes in the U.S. In 2011, he formed a business that would distribute, sell and help design shoes and leather accessories made in Trujillo, Peru. The next year, he chose Nashville as his home.

Woodyard's shoe company, Nisolo, has since become one of the most recognized names in the city's social enterprise movement that has taken off in recent years, spurred by an emphasis on conscious consumerism and by the influx of people launching this type of business. Nashville's students, postgraduates and midcareer professionals are increasingly looking to create or join companies that have a purpose beyond profits.

"Part of it has to do with young, enthusiastic, bright people seeing other companies go before them and have a bit of success, and it definitely gives a little bit of that courage to step out," Woodyard said.

Social enterprises have been building a presence in Nashville for decades, with Goodwill Industries and Habitat for Humanity creating businesses that support their nonprofits. But in recent years, a new wave of programs and organizations supporting social enterprises has taken shape: Belmont University launched the nation's first social entrepreneurship major, the Nashville chapter of the Social Enterprise Alliance was formed, and the Nashville Entrepreneur Center opened with a focus on social enterprises. Most recently, Vanderbilt University social entrepreneurship professor Jim Schorr was named president of the national Social Enterprise Alliance.

The definition of a social enterprise varies, but the alliance describes them as "businesses whose primary purpose is the common good." Enterprises such as Nisolo offer an employment model in which the products they sell provide income for those creating them. Others address needs unmet by traditional businesses. For example, the Nashville Mobile Market sells fresh produce and meats in areas without groceries.

And there are other variations: Founders of Everly, a local natural drink mix company, subsidize existing nonprofits to bring lifesaving oral rehydration salts to sick children in Zambia. Many social enterprises are born out of nonprofits or they stand alone as a for-profit company.

Retail-oriented social enterprises are responding to demand for natural, quality products as shoppers are increasingly concerned about how the products they use or consume are made. Retailers and boutiques have recognized the shift and made shelf space for goods made by these local businesses. Products from Nashville social enterprises — fashionABLE, Nisolo and Red Earth — are sold in a growing number of Nashville boutiques, and Whole Foods has added products made by Thistle Farms and Everly.

The next generation of entrepreneurs

On the entrepreneur side, the growth can be seen in the number of people studying the concept. Since it launched in 2008, 42 students have graduated from Belmont's social entrepreneurship program, according to founder Bernard Turner; meanwhile, at Vanderbilt, classes are oversubscribed, Schorr said. They both note that interest in social enterprises is in some ways generational.

"In my generation the idea of a career in business was make as much as you can doing whatever Monday through Friday and then maybe give back when you are old, or give back on the weekends by volunteering," Schorr said. "There was a separation between the idea of career and serving. ... Today that notion doesn't make any sense to young people."

It also doesn't make sense to some who have built careers in the corporate sector. After 12 years of working for corporate retailers, Darrell Hawks left a merchandising job at Kirkland's in 2012 to lead a social enterprise called PRO Employment, which operates as a temp agency employing former inmates. That same year, after working nearly 15 years for health care and marketing companies, Heath Shackleford founded Good.Must.Grow, a marketing company that offers subsidized rates for other social enterprises and nonprofits.

"For me it was aligning what my passions are with my profession," Shackleford said, explaining that he would feel a disconnect when he explained his previous job and its purpose to his two young sons. "I was trying to instill values and was not walking the walk."

Quality trumps mission

A point that Woodyard emphasizes, and a recurring concept among local social enterprise founders, is that product quality trumps mission. While the impact Nisolo is having in Peru motivates him and his team each day, his focus is creating a top shoe brand.

"If you look at shoes or our branding you may not even recognize there is a social impact aligned with it," he said. "That's because we expect to compete on all others levels as well, and I think that's why we've been able to find success. ... The more we can educate consumers that they don't have to sacrifice quality in order to have a positive impact, the more likely it will be for this to actually become a sustainable movement over time."

Becca Stevens, one of the city's social enterprise pioneers, founded Thistle Farms in 2001. The company employs women who have survived addiction or prostitution and were living at the residential nonprofit she founded called Magdalene House. The business has evolved from candles to natural bath and body products and has employed about 140 women since its inception. The women's stories have gained national attention and have motivated customers and volunteers to support the business. Still, Stevens stresses the importance of the product.

"We can tell a story and people will buy our products once," she said. "If they don't love them, they are not going to buy them again."

Looking ahead

Social enterprises are becoming more prevalent nationally as well, with more than 60 percent of social enterprises forming since 2006, according to a Great Social Enterprise Census survey. At the same time, Nashville has established itself as a city supportive to their causes.

In 2014, the Nashville Entrepreneur Center and the local Social Enterprise Alliance chapter hosted the national Social Enterprise Alliance Summit, drawing social entrepreneurs from across the U.S. and facilitating a "Business for Good" competition that drew more than 200 applications. Don Leyrer, chair of the local chapter, estimates about 40 Nashville social enterprises attended.

And the movement doesn't seem to be slowing down.

In September Warby Parker, a New York-based eyewear retailer that also helps provide glasses to underserved communities, announced it would open a second corporate office in downtown Nashville. Meanwhile, Refinery Nashville opened as a co-working space with a focus on social enterprise companies.

"There is no question there is a tremendous amount of momentum now," said Dan Surface, who founded the Nashville chapter of the Social Enterprise Alliance in 2009. "From the very beginning it was about creating an ecosystem for social enterprise ... to make this one of the places in the country to come to because of everything that is happening around it and all the support you are going to get."

Reach Jamie McGee at 615-259-8071 and on Twitter @JamieMcGee_.

Local social enterprises

Nisolo

After college, Patrick Woodyard moved to Trujillo, Peru, to work in microfinance. The conversation turned to shoemakers one night when he heard a client's husband working on a pair of shoes. He observed the quality of the handmade products and learned of the waning market.

In 2011, Woodyard formed Nisolo, a shoe and leather accessory brand, and now employs 35 Peruvian shoemakers. The social enterprise, working out of a Germantown building, generated $820,000 in sales last year. He expects this year's revenues to climb to $1.9 million, and he is raising additional capital to expand his team, which includes seven full-time and three part-time workers.

Most sales come from online consumers, but Woodyard said stores have been overwhelmingly receptive to selling Nisolo goods. More than 30 boutiques have reached out to the company asking to add his brand.

For the shoemakers, the growth has meant income increases by 300 percent on average, allowing them to rebuild homes and pay for their children's education, Woodyard said. Additionally, Nisolo conducts monthly courses on financial management to help ensure the increased income leads to saving.

"Customers really like our product for the products themselves, and when they find out about the cause behind it and understand what we are doing and why we are doing it, they go from a brand follower to a brand loyalist and aficionado that is going to go out and tell the world about our company," Woodyard said.

Thistle Farms

Becca Stevens created Thistle Farms in 2001 — before the word "social enterprise" had entered the mainstream — to provide employment for the women living at Magdalene House. Many had lived on the street and had struggled with addiction, and jobs were hard to find. Making and selling candles and bath products became a solution.

"We did it simply because it made sense for the women we were serving," she said. "If people couldn't get jobs, we had to start our own company."

Now the soaps and lotions made from natural oils are sold in 400 stores, and Stevens expects to generate $1.2 million in sales this year. She has since opened Thistle Stop Cafe on Charlotte Avenue, which has a similar mission, and it has been self-sustaining since it started.

Stevens attests to the challenges of running a social enterprise that works as an employer. In addition to learning to serve coffee or sell products, the women employed are fighting the threat of relapsing into their former lifestyles. "We are also trying to help shape a whole person," she said. "You are training someone not just to make a latte."

She shared the story of a saleswoman recently asking her to check out a car she had bought after years of selling Thistle Farms products — her first car bought through legally earned wages. "That's an amazing investment to make in our community," she said of all the consumers who had made that purchase possible.