'Social Procurement' Growth Area in Australia

Social procurement is becoming an enormous growth area in Australia as organisations become more interested in triple bottom line accounting, but more needs to be done to encourage that growth according to a Social Traders Background Paper.

The document called Building Social Enterprise through Social Procurement describes Social Procurement as organisations and individuals choosing to purchase a social outcome when they buy goods or services. It describes Social Procurement as a key plank in the development of social enterprise because it recognises and places value on the benefits that social enterprises provide.

According to Social Traders there are currently a small number of government bodies, corporates and Not for Profits that socially procure, but they say there this as an enormous growth area as organisations become more interested in triple bottom line accounting.

It says the really attractive thing about social procurement is that money that has to be spent on procurement anyway can now be spent in a way that will have lasting social outcomes such as job creation, community building or supporting fair trade in developing countries.

Social Traders was set up in June 2009, with its base in Melbourne, to facilitate, support and advocate for the development of social enterprise in Australia. Joint funding from the Victorian Government and a private Foundation with support from leading community sector organisations has resulted in Social Traders being set up as the first independent social enterprise development organisation in Australia.

Social Traders says it will be undertaking significant work in the area of social procurement in the next 18 months including pilots and research projects and already Brisbane City Council and the Victorian Department of Human Services have shown leadership in this field.

The aim of the background paper is to develop people’s understanding of social procurement and some of the barriers to social procurement in Australia.

It says there are many organisations socially procuring in Australia. They include community sector organisations, state governments, local governments, corporates and SME’s. The buyer understands that they are purchasing more than a service.

The Background Paper says the barriers to procuring from social enterprise are many and varied.

• Procurement policies are designed to ensure probity, government procurement policy is mandated by acts of parliament. Significant changes to policy require real impetus.
• The motivations for institutional/organisational procurement have traditionally been driven by economic and risk factors
• Many organisations face significant silos between social units (whether social policy divisions in government or community affairs divisions in corporates) and purchasing departments
• People don’t know what social enterprise is, from Board and CEO level right through to procurement officers
• Procurement decisions tend to be measured based on inputs and outputs, social procurement brings the added dimensions of impact and outcomes, which are harder to
• measure.
• Some organisations that want to socially procure have not been able to find organisations able to provide that service or the quantity of service or product that is required.
• Most significantly however, is the concern that the social enterprise will not be able to provide the desired quality, at time and on cost. In some cases these are legitimate concerns and there is a need for social enterprises to build a reputation for reliability and perhaps meet certain standards through an accreditation process if they intend to win work.

The paper says each of these issues needs to be addressed. There are some that will be addressed through legislative change, through promotion and through an education campaign about social enterprise to develop the Demand side.

On the Supply side it says a lot of work needs to be done to build the capacity of social enterprises and to ensure that these organisations are robust and reliable.

Social Traders says there is also a need for a directory of social enterprises so that everyone will know what is out there.

The Background paper can be downloaded at http://www.apo.org.au/research/building-social-enterprise-through-social-procurement