Social Enterprise of the Year – a reflection

It was 2 years ago this week that the social enterprise I was Director of, SEED, won the small Social Enterprise of the Year award. It was a mighty achievement for a community based enterprise to win this national award alongside some wonderful colleagues making a difference through business such as Thank You Group, 40K, and Cleanforce.

The award gave SEED a lot of media coverage (I swooned quietly while beinginterviewed by Natasha Mitchell on Radio National’s Life Matters), and t gave SEED a position as leaders in Australian social enterprise, however as with any business venture there’s a rollercoaster ride of winning and losing major contracts. The award, prestigious as it is, did not guarantee an income stream or buffer the enterprise from the forces of the market.

I’m reminded with two years hindsight that the journey to 2014 was a long one, driven by SANDBAG, SEED’s parent NFP, and starting with building micro enterprises using community development frameworks; listening deeply to people experiencing disadvantage and long term unemployment, and working with them, not for them, to create businesses that could start to address some of their self identified problems.

The ten plus years journey to SEED winning the national award was filled with teamwork, collaboration, and support. Over those years, SANDBAG was led by Susan Black, and then Maggie Shambrook, both of whom supported my role building the enterprise as a functional business, while driving home the importance of grassroots, participatory work. At least 70 staff worked for SEED, with some still there after many years, and many going on to other employment.

We were fortunate to be supported by the wonderful Westpac Foundation, Ian Potter,SVA via the Federal Government’s Job Fund, and Qld State Government’s Department of Communities.

Those ten years also saw the sector in Queensland develop and mature, with the Queensland Social Enterprise Council becoming the only peak for the sector in Australia. And, a special mention to David Brookes and Mark Daniels at Social Traders for the vision of a National Social Enterprise Awards and their incredible work and tenacity in social procurement development, which undoubtedly helped SEED win contracts with Brisbane City Council, and the State Government’s Economic Development Queensland who instinctively ‘got’ that by buying services from a social enterprise they would also be contributing to a better society.

I have since moved on from SEED and am using the failures and learnings (aka flearnings) gained over five + years running a social enterprise to develop innovative solutions to social problems with Marist Youth Care. Some of our innovations include creating employment for disadvantaged youth via a traditional start-up social enterprise in the trades; and a suite of innovation and entrepreneurship programs.

I can’t wait to see who wins the 2016 awards and I’m sure I’ll be there in Melbourne at the ceremony celebrating doing business with a difference and cheering on the finalists!

Posted in A Social Entrepreneurs Diary | Leave a comment

A return to Mutualism for Social Enterprise

This gallery contains 4 photos.

Social entrepreneurs have traditionally worked like this, creating mutual networks, using open source models, and working together collectively when called for. This is why and how NMG was formed, and then morphed into QSEC. Continue reading

Gallery | Leave a comment

New Business Models in the Not for Profit Sector

There’s more consultants than you can shake a stick at in Not for Profit (NFP) sector telling us that we need to diversify our income streams, build new models, and drool over Social Impact Bonds (SIB’s).

There’s a couple of concerning issues arising from this; 1. the narrative that NFP’s are inefficient, and can’t manage their budgets or run businesses. 2. the resultant marketization of the sector, enabling government’s to divest themselves of the long held social contract that they should redistribute wealth through taxation to fund social services.

To do away with the first myth; NFP’s in Queensland run budgets of a few thousand dollars to over a Billion dollars (Uniting Care Qld and Goodstart Childcare). I have worked in the sector for 20 years in variety of roles from support worker to Director level, and I know that the skill and tenacity of most NFP CFO’s and CEO’s regularly surprise and outstrip those in the private and government sector.

The argument that the sector must diversify it’s income is driven by government’s who claim that their own budgets (read the money they look after for citizens) are in deficit, and so we must find new ways of raising money to spend on social services.

 

The consultants and intermediaries driving these changes are often corporate refugees, who fed up with working without a higher purpose bring their considerable skills to bear in the NFP sector; but ultimately have no idea of what it’s like to work with the poor, on the ground, day in day out, bearing witness to extraordinary equity discrepancies that exist in modern Australia. Lived experience is a pretty good starting point to design innovative ways of funding the things that actually work, redress inequity and create impact.

The marketization of the sector is best exlempified by the obsession with SIB’s and Payment by Outcomes. However, as mentioned I share the

“philosophical” critiques regarding the implications of introducing private for-profit capital into the social services arena as “an abrogation of government’s responsibilities to address social problems.” (1).

We are opening up the social sector to flawed business business models. A huge investor in SIB’s in America is Goldman Sachs – yep, the very same bank that was accused of triggering the GFC by ‘misleading markets’, ‘manipulating clients’, and operating a ‘culture of greed’. (2).

Are these the sort of investors we want in the NFP space? They have even managed to wangle a potential 87.5% return on a SIB in the States by insuring and minimizing their risk through Bloomberg Philanthropies (1).

It’s strange that in the current paradigm where government and philanthropics are rightly obsessed with measuring outcomes, there has been very little evidence that SIB’s actually work. According to a Brookings Institute report as at 1 March 2015, there were only 38 SIBs in existence worldwide, with very little evidence of their efficacy.

This type of funding ignores developmental ways of working with people; community development work is essential to community capacity building and assists often the most marginalised to have a voice. It is a method that works alongside people and not for them, it is an empowerment model interested in the process of change as much as the resultant outcomes; therefore making it difficult to measure using market based analysis tools. Community development is the the Slow Food Movement of the social sector.

Having run social enterprises for a decade I don’t believe that they either, are the answer for most NFPs seeking to diversify income; unless they want to diversify by loss. The sector in Australia is littered with failures of social enterprise started by organisations big and small.

A major reason is not that NFP’s don’t understand how to run budgets and business models, it’s that they have severely underestimated risk and the market for their goods or services. Even models I’ve seen tested by the so-called experts in private sector finance badly misjudge risk and cashflow.

Additionally social enterprise startups in existing NFP’s often fail because they are not driven by someone with “founder’s-desire”. A founder in any type of enterprise will generally be willing to work 80 hours a week to see their project succeed, and if they fail it’s usually their own money they have failed with.

This begs the question; what if the best learning in business is from failures? How can social entrepreneurs legitimately take risks with NFP’s money, fail, learn, take more risks, fail, learn, repeat? A private entrepreneur can do this until bankrupt if they so desire, but is it ethical to do this with public funds? What does it say about the risks for organisations’ long term viability? If NFP’s are being pushed into marketization, especially those looking at entrepreneurial solutions to their lack of funding they would do well to think long and hard about risk.

I’m all about innovation (it’s in my job title after all), and I’m desperate to see great new innovation come about in the NFP sector especially from millennials and Gen Z, but I caution against the ‘NFP model bad – market good‘ narrative. A properly funded social sector is essential to the well being of society, and funding social innovation that doesnt have to rely on a market driven fetish would go a long way to see Australia succeed in the 21st century.

1 https://nonprofitquarterly.org/2014/06/12/eight-sobering-thoughts-for-social-impact-bond-supporters/
2 http://www.abc.net.au/worldtoday/content/2011/s3191452.htm

Postscript Social Innovation Definition from Open Conversation

Social innovation is about tapping into the ingenuity of charities, associations and social entrepreneurs to find new ways of meeting social needs which are not adequately met by the market or the public sector. It can help bring about the behavioural changes needed to tackle the major societal challenges, such as climate change. Social innovations empower people and create new social relationships and models of collaboration. They are thus innovative in themselves and good for society’s capacity to innovate. (European Commission Innovation Union, 2010)

Posted in A Social Entrepreneurs Diary | Leave a comment

Four Elements of Social Enterprise for Structural Change

Social enterprise can contribute to positive economic, structural change by modelling a new way of doing business; and I believe there’s four elements they must be practicing as part of a new model.

Social enterprise and charity generally exist to address the results of inequality and disadvantage; feeding the poor, educating the disenfranchised, employing the unemployable. Where social enterprise differs from charity is by modelling a new way of doing business, a model that creates equity, a model for people and not solely for profits.

Social enterprise for structuralchange (1)

The Four Elements which I think are essential for social enterprise to create a fairer society through business are:

The Business model – A social enterprise must trade for a social, cultural, or envirnomental purpose (without a viable business model a social enterprise is a charity).

Openess and Transparency – In order to be exemplars of the sharing economy, social enterprises should be as open source as possible. Food Connect have been doing this for a decade, sharing software, knowledge, and skills freely to be a driver in the Fair Food movement in Australia.

Social enterprises should extend this openess to their financial modelling; showing people how they make money, where it gets spent, and what their profits (or not) are. Fear of showing up failure is understandable; but failure is our greatest lesson. By showing the world how we make or lose money, and where we spend it, we liberate ourselves from the tyranny of “keeping up appearances” associated with conventional (and some social) enterprises, who maintain secrecy in order to appear successful. I’m not advocating for a detailed PnL to be published every month, but at least a high level (and honest) overview would be a good start.

Outcome and Impacts – A social enterprise must be creating positive social outcomes and impacts, be measuring them, and then publishing them just as it should be publishing its financials. There are so many tools on offer to do this, social entrepreneurs just need to make the decsion to start measuring today.

The Structural Change – Is two fold:
1. Social enterprises should have a high level analyis of the structural issues causing the problems they exist to address. Without understanding that Trickle Down has failed, or why Arundhati Roy says Gush Up is creating massive wealth disparity, it’s difficult to move forward to create a fairer world; we’ll just keep operating in the same paradigm.

2. Social enterprises should be modelling a new world of doing business which runs counter to everything we have been taught about business; about competition, scale, and the profit motive.

The new world of busines needs to be acting collectivley and collaborating (that’s why we set up the Queensland Social Enterprise Council – so we had a collective voice); and there are already great examples of this in practice such as worker-owned coops, B-Corps, and enterprises creating foundations for profit distribution into ‘for-good’ work.

The way we will create great change is through educating ourselves as practioners about the dynamics of economic power, and creating demonstrable ways of doing business in a new paradigm. If not, we may as well be placing band-aids over the open wound of disadvantage.

Posted in A Social Entrepreneurs Diary | Tagged , , , , , , , , , | Leave a comment

Why are definitions of social enterprise important?

AAEAAQAAAAAAAAQgAAAAJGQ2ZDQ0ZTc4LWY0NzYtNDljYi1hODE1LTJhMWJjMDFkNTc1NA

Here’s a quick blog post I wrote on LinkedIn:

Why are definitions of social enterprise important? Why am I still interested in this debate ten years on from running my first social enterprise? These are the questions I asked myself this week as I pondered the importance of keeping a tight definition in the wake of social enterprise being highly represented in the Australian of the Year awards across categories, and raising the profile nationally.

As a practitioner of more than a decade’s experience in social and private business; and as someone who has helped shape the sector, and frame the debate in Queensland alongside many wonderful colleagues, I care deeply.

For me the importance of a tighter definition and a deeper conceptualisation lies in legitimacy; for customers of social enterprise, for practitioners, and for future social entrepreneurs. There may always be grey areas, and in truth social entrepreneurs operate across the continuum of social enterprise and social innovation, across a spectrum of social entrepreneurship.

The necessity of a continued debate is a ‘time thing’ due not only to the recent Australian of the Year Awards, but also because the sector is still immature and without a widely acknowledged narrative. The main problem I see is when organisations relying on charity to operate and with no apparent business model (that includes trade) are called social enterprise. They may be social, and they may be innovative, and they may create wonderful feel good outcomes for people in need; and they may even be driven by social entrepreneurs, but they are not social enterprises.

This article by Social Good Stuff ably demonstrates that in order to be a Social Enterprise, you need to trade, and not rely wholly on grants and donations to survive. If you’ve got no trade, you’re all social and no enterprise.

Posted in A Social Entrepreneurs Diary | Tagged , , , , , | Leave a comment

Social Impact Data

At the social enterprise I lead we measure our social impact in a number of ways including some good old fashioned number crunching. Did you know that between July 2010 and July 2015 SEED employed 67 people, 47 (70%) of whom have been long term unemployed and/or marginalized from mainstream employment; during that time we earned almost $2Million in income from trade; paid $780,000 to, and created over 32,500 hours of employment for people who had previously been long term unemployed and/or marginalized. During this time SEED facilitated payments of $191,600 in PAYG tax to the federal government.

Many of our employees from a long term unemployed and/or marginalized may not have been employed elsewhere due to, in some cases mental illness, addictions, or disabilities. The above data shows that social enterprises create real economic and social value in the communities in which they operate, and for the state and federal governments. 

It is vital that social enterprises are able to articulate their outcomes through good use of data. And, its not just hard, quantitative employment data. At SEED we have also measured our social impacts via a 2011 Social Return on Investment (SROI), a 2013 Social Impact Assessment (SIA), and as it’s now 2015 and we committed to bi-annual reporting, we have just completed a new SIA and are awaiting the final report from the University of Queensland’s Masters in Development Practice course.

  I look forward to sharing more results and stories when they come in.

‪#‎socialEnterprisePays‬ ‪#‎socialEnterpriseWorks‬SEED SOCIMP 2010-2015 FY

Posted in A Social Entrepreneurs Diary | Tagged , , , , , , | Leave a comment

Community over competition

In the small suburb where I live, where the shopping strip is often referred to as the Village, there has recently been a disturbance in the usually harmonious business community. This has been caused by a pop-up coffee shop opening just two doors away from an existing, long standing, popular, hole in the wall coffee shop.

The owner of the new pop-up already has an established coffee shop in an adjacent suburb.

So, why has this ruffled feathers, particularly my feathers? For me the very fact of setting up a very similar business (I would image on a shoestring as its a pop-up) just two doors from a long standing existing business could be seen as aggressive competition; especially when it also appears the new business is attempting to compete on price (at first advertising coffee at $3 all day when the standard rate in town is $3.80 – $4.00). As we know, in business, no-one wins in a price war.

I have been running businesses and sitting on boards in Brisbane for the last ten years. I love business, start-ups and entrepreneurialism. I know that business has the power to effect great social change, but also the power to do harm. I am mostly interested in the new forms of business that have ethical and social considerations at the fore, e.g LUSH, Buffed, SEED PPM etc. These businesses show me that we don’t have to continue to do business they way its been done for the last hundred years (ultra competitive markets), because clearly the market is not always right.

To save relying on the flawed free-market methodology, I believe that when a new business owner writes a business plan they should do Community Risk Analysis; asking “if I open a business here, how will that affect others in this community” – what is the scale and probability of negative (and positive) community and social impact.

Overtly aggressive competition is anathema to everything I believe in; it’s a patriarchal, last century business  model, especially  in small towns. A debate was had on facebook when this pop-up popped up, with defenders of the free market stating that ‘people didn’t complain when other cafes started selling coffee in the ‘village’; these arguments were quickly responded to by people pointing out that those other cafe’s in question were not two doors (10 metres) away from an existing business and “have a point of difference from one another”.  There were other tired arguments on how customers will choose the best coffee etc, but these miss the central problem; the moral question of setting up two doors away from an existing almost identical model.

When we rely on the ‘market is always right’ type of argument we miss the point that, as Naomi Klein says, (the capitalist) “system doesn’t think as an entity; it thinks as  collections of self-interested profit-seeking units”;  and those self-interested profit-seeking units don’t take into account the effect one small business opening close-by to an existing similar business will have on the people that own the first business and of the staff that work there.

It seems fairly clear after living her for ten years that local residents enjoy the ‘village’ atmosphere, including the supporters of the pop-up business; but surely in village life businesses tend to be more collaborative and supportive. It’s time we put that into practice.

Posted in A Social Entrepreneurs Diary | Tagged , , , , , , , | Leave a comment