Why “social enterprise” needs to be in your vocabulary, and on your shopping list

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“Social enterprise” is a term often bandied about, but how many of us really know what it means or how it’s different from a charity or not-for-profit?

In Australia, the closest we have to an official definition of “social enterprise” is the one developed for the Finding Australia’s Social Enterprise Sector (FASES) report, the first ever research into social enterprise in Australia. It describes social enterprises as organisations “…led by an economic, social, cultural or environmental mission consistent with a public or community benefit.”

This might sound like a charity or not-for-profit, except that social enterprises sell goods or services to fulfil their missions and “derive a substantial portion of their income from trade”. They then “reinvest the majority of their profit/surplus in the fulfilment of their mission”.

So, unlike charities or not-for-profits – which generally rely on donations or fund-raising – a social enterprise must compete in the marketplace just like any other business, even if 100% of its profits go to a specified cause.

The Bread & Butter Project sells artisan breads for the purpose of helping train refugees and asylum seekers. It approaches its retail clients in the same way any other bread supplier would: by trading on the basis of quality ingredients, freshness and price.

“Maybe some customers buy it for the cause – the mission is appealing – but what keeps them coming back is its good bread,” says Jessica Grynberg, a founding member of The Bread & Butter Project.

Profit with a purpose

How a social enterprise earns its income, and how it “gives back”, varies according to the mission and the need.

Some are quite inventive, like Street Art Murals Australia (SAMA). Its main focus is working with young street artists to find legal channels for creative expression. SAMA sells three products to finance its social venture: mural commissions, workshops, and consultancy to governments.

15% of SAMA’s net sales go directly to a Blue Mountains-based charity for young people. The business then devotes 100% of the remaining net sales, minus expenses, to support graffiti and street art culture – whether it’s funding workshops for young people in need or lobbying local governments to implement community-friendly graffiti management policies.

“With every mural and workshop we sell, more street artists get jobs, the community has a positive interaction with the art form and our urban environments are beautified,” says SAMA founder Jarrod Wheatley.

Why social enterprise had to happen

Social enterprises sprang up in response to community needs that weren’t being met.

One high-profile example is The Big Issue Australia, which helps the homeless and others in the community who would otherwise not be able to get mainstream employment. Vendors pay $3.50 per magazine and sell them for $7, keeping the extra $3.50 for themselves.

The founders of Thankyou saw the need to support food, water, health and sanitation programs around the world. 100% of after-cost profits from their supermarket products – hand wash, water, muesli and more – goes to a trust, which then distributes the funds.

According to researcher Professor Jo Barraket who worked with intermediary organisation Social Traders to produce the FASES report, “Social enterprises are not new but they are receiving new attention. And there are new types emerging in response to contemporary social problems and new market opportunities.”

“They are important because they form part of a diverse economy – in diversity, there is resilience,” Barraket says.

Why they’re gaining traction

“Social enterprises are innovative, fast moving and directly respond to social issues in the community. Social enterprises also tap into the community’s desire to help,” says Jarrod Wheatley.

He believes they fit with the current zeitgeist: “we like the idea of a charity ‘standing on its own two feet’, earning its own money,” he says.

It’s a zeitgeist embraced by Generation Y, says Barraket. “Millennials in particular seek more meaning in work and look to combine their personal ethics with career development.”

Another factor contributing to the growth of social enterprise is the new shift towards a consumer-driven marketplace. The National Disability Insurance Scheme (NDIS) is a good example of this kind of reform: people with disability hold their own funds and choose which services and service providers they use.

Social enterprise infiltrating big business

Mark Daniels is Head of Market and Sector Development at Social Traders. Their mission is to develop, open up markets, and provide appropriate capital to social enterprises – connecting institutional purchasers with a database of social enterprises.

“We’re working with 15 corporates at the moment to build social enterprise into their supply chain… we call it social procurement,” Daniels says.

“It’s certainly not perfect yet but we are moving towards a world where value will start to be measured differently.”

ING DIRECT is one example of big business supporting social enterprise. Its Dreamstarter initiative is designed to help launch start-up social enterprise businesses, accelerate business growth and scale their impact.

Since its inception in 2013, Dreamstarter has helped more than 50 projects, through crowdfunding, bursaries and grants for growth, as well as learning programs that help build capacity.

Crowdfunding is conducted through a crowdfunding platform powered by StartSomeGood, with ING DIRECT pledging to match up to 50% of the fundraising target for each campaign, and promoting the campaigns to its own customer base.

2016 oct 18  Guardian News and Media

Source: The Guardian

Note: this article does not represent the viewpoint of this website.

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