Social Enterprise - a Threat to Traditional Charity?

Social enterprise is gaining more and more traction in Australia, following its success in the US and UK but is it a threat to the traditional charity model, asks Daniel Flynn, Managing Director and Co-Founder of Thankyou Water.

Social enterprise, as an alternative to the traditional charity model, is gaining more and more traction in Australia, following its success in the US and UK.

A business model that exists solely for a social purpose, social enterprise is commonly seen to offer consumers a charitable alternative to products or services they would otherwise buy.

But the growth of the social enterprise sector raises the question: is there room for both social business and traditional charity to co-exist, as philanthropy evolves here in Australia?

I am one of the founders of Thankyou Water. We are a social enterprise that sells bottled water here in Australia in over 3,000 outlets to capture as much of the insanely large $600 million bottled water industry as possible.

We exist purely to help people in the developing world gain access to safe water. When we started in 2008, founding ‘another charity’ just didn’t make sense. There were already stacks of groups working hard to help the 780 million people around the world who still don’t have access to safe water. And we knew that those existing charities were in desperate need of more funding for their water projects.

This led us to run with a project-based model. This model means we concentrate on raising the money needed for projects and then make ourselves open to any NGO specialising in water development to submit a project proposal. If the proposal meets our detailed criteria, we fund the project on the condition that we receive detailed reporting every step of the way. We then visit major projects to match up reporting with results.

Our current project partners include Samaritans Purse, Oxfam, World Vision and Red Cross. But the amount of people who ask why we don’t build our own wells in the developing world still astounds me. They reason that by doing this we’ll save on costs and ultimately have a bigger impact.

Over the years, I’ve sat down with many up-and-coming social entrepreneurs who talk through their grand plans. Probably because of the nature of what we do, I’m often meeting with people specifically wanting to sell a product here and use the profits to help people in the developing world.

When sitting down with these people I get just about as excited as they do about their idea, but it often ends a similar way: “…and we’ll be running all the programs overseas ourselves so that we know where the money is going and we can save on costs”.

It’s at that point they often lose me. This is because if you dig deep into any successful business or brand in the for-profit sector, you’ll discover the key to their growth is strategic partnership.

The majority of these companies outsource everything from manufacturing, technology and product components in order to save on costs, reduce risk and produce a far better result than trying to go it alone.

The truth is, we live in the fast pace, high-tech age that wants results now. Everyone wants to walk into a village in a developing nation, fix a problem and then leave to ‘help more people’. But sustainable development doesn’t work like this. Similar to successful for-profit companies, we need to work with great partners to get great results.

So, does social enterprise threaten traditional charity? Thankyou Water’s journey has led me to believe that the opposite is true. While these kinds of partnerships may not be possible in all cases due to the various structures of different social enterprises, I believe there is certainly a great opportunity for both models to complement each other.

Having said this, I’m of the opinion that this process is reliant on established charities being willing to challenge traditional thinking and work with new, often bold ideas. No one wants to reinvent the wheel, but I believe the wheel will continue to be reinvented if new and traditional models don’t find a way to work together. 

About the author
Daniel Flynn is the Founder and Managing Director of social enterprise, Thankyou Water. Flynn was named Victorian Young Achiever of the Year for 2013 and was a finalist in the 2012 Young Australian of the Year Awards.