Anna Hughes explains why we need to stand up and take notice of social enterprise – ‘for-profit’ organisations with a purpose – and the potential for our economy and society
The Government is about to take the wraps off recommendations from three years of work and a $5.5 million investment into how to grow social enterprise.
Take a straw poll of those around you – do they know what social enterprise is?
A few years ago, I had no idea.
I didn’t know that in 2014, the National government had a position statement on social enterprise or that it had invested money to support its development. Or that the last Labour-led government had committed millions of dollars to finding ways for social enterprise to thrive.
Since then, an increasing number of social enterprises across New Zealand are changing how we do business, for good. And more people are looking for purpose-driven organisations to belong to, support or buy from.
If I hadn’t asked ‘What is social enterprise?’ some time ago I wouldn’t have realised that one of my work colleague’s side hustles – the period poverty social enterprise Dignity – was instrumental in getting political attention which would lead to a trial, and then the recently-announced Government initiative of free period products in all schools.
I wouldn’t have known that Tupu Toa – the outfit that creates internships in corporate organisations for Māori and Pacific tertiary education graduates and the force behind getting interns into where I have worked – was a social enterprise.
Or that the Good Registry, where former colleagues in the same industry as mine have created a social enterprise to bring good to gift giving.
Making an impact
The Government will shortly get the results of a partnership between the Department of Internal Affairs (DIA), and Ākina (described as New Zealand’s leading impact development organisation) called the Impact Initiative.
More than a dozen recommendations are expected to be pitched up to the Government to create private sector social enterprise answers to public policy challenges.
There’s a strong argument from those involved in this work, that there is an urgency for it in a Covid-19 world, because of the role social enterprise can play in solving government, business and community challenges.
Social enterprise 101
What is social enterprise?
In layperson’s terms, they are ‘for-profit’ organisations with a purpose, that use their profit for social good.
Social enterprise “seeks to connect the not-for-profit world with the for-profit world, creating positive social change,” according to Billy Mathewson, former principal advisor in social entrepreneurship at Auckland Council, who put together 30 years of the development of social enterprise.
Ākina describes social enterprise as “impact-led organisations that trade to deliver positive social, cultural and environmental outcomes”.
Whatever words you use, social enterprises contribute hundreds of millions of dollars each year to our economic growth, and hundreds of millions more creating a better society through social impact.
A few months ago, the number of social enterprises was put at 3000, contributing an estimated $1 billion in GDP a year.
Economic researchers BERL have estimated the number could be as high as 6600, or as low as 1360, contributing up to $1.8 billion in GDP each year, plus several billion dollars more in social, environmental and other value.
The Government should be expecting to hear more about the importance of social procurement, along with better measurement of the impacts of social enterprises and a stronger pathway for impact investing.
Social procurement is already growing. It aims to change our traditional view of procurement, and at the same time unleash more impact from social enterprises as their goods and services are considered in procurement processes.
It includes a commitment to examine the supply chain and buy from impact-led businesses. The social procurement platform www.fwd.org.nz aims to make this easier, by connecting buyers and sellers. The approach delivers greater value from the procurement process, thanks to the impact of the procurement, the measurement of that impact and the support of the local economy.
New Zealand’s ability to provide opportunities for impact investment is relatively immature. Financial advisors and the industry often look to Australia for guidance.
The Government is likely to be asked to develop ways for investment and funding criteria to consider impact and for dedicated impact investment funds to be promoted.
One of the Australian descriptions of impact investments goes like this: these are investments made into organisations, projects or funds with the intention of generating measurable social and environmental outcomes, in addition to a financial return.
Impact is at the heart of the conversation with Government on social enterprise – but it’s relevant for any business or organisation. An impact model or approach can sit alongside a business model, neatly articulating impact goals and the activities to achieve them, and describing what activity delivered, in what way, will deliver what positive outcome or impact.
There’s an intersection between profit-making, government policy, business and difference making that means we all need to stand up and take notice of what social enterprise is and where the potential is for our economy and society.
Let’s listen to the advice the Government gets in the next few weeks on this, and see what role there is for us to play in that. How about starting now, by signing up to social procurement?
Listen to Anna Hughes’ ‘Books That Work’ podcast available on Apple and Spotify or where you usually listen to your podcasts, or on booksthatwork.co.nz.