Responsibility Earns Returns on Social Enterprise

Social enterprise experts have urged prospective social entrepreneurs to choose an appropriate business model before setting up shop, during a panel discussion at the recent Victorian Not for Profit Summit.

At the Department of Human Services-run event event  in regional Victoria, the panel, led by Head of Enterprise Support and Investment at Social Traders Libby Ward Christie, brought together founders of Victorian social enterprises to share their stories.

Ward Christie provided key points of advice and warned her audience of representatives of the Not for Profit sector to avoid expectations of immediate profit-making.

“Social enterprise isn’t the panacea,” she said.

“I think it’s very important to understand the challenges of social enterprise. It’s not easy. It is not easy to find the model that may work for you.”

She said social enterprise models tended to fall into three main groups:

• Employment and training support for marginalised groups
• Services in direct response to social, cultural, environmental or economic community needs.
• Income generation for charitable purposes.

"Hopes of having a business with a revenue stream to fund charity work was the most perilous," Ward Christie said.

“Everyone thinks it a solution for their organisation but its actually the most challenging.

“People say, ‘We need one of those. We want to open up a business that makes a whole lot of money on the side! If it was that easy, everyone would be doing it.’”

“Not all social enterprises are about making massive profits. It really depends on your business model,” she said.

Enterprises that were employment based or addressed a community need tended to align more closely with the core principle of social enterprise as a social mission and the values of the organisation itself, she added.

Ward Christie emphasised that models of income generation for charitable purposes could be deceptively difficult to build and unsustainable in the long term, particularly in Not for Profit organisations without the necessary business expertise and experience.

Op shops, she said, were a rare example of success using that type of model.

“Unless you’ve got mass amounts of capital stowed away somewhere so you can purchase a mining company or a bank and start operating it, this model can be difficult,” she said.

Ward-Christie said there were around 20,000 organisations in Australia fitting Social Traders’ definition of social enterprise, where the organisation is primarily for public good or community benefit, trades to fulfil that mission, derive a substantial portion of income from that trade and reinvests the majority of surplus in fulfilment of that mission.

She said it was significant that there was now at least one social enterprise existing in Australia for every category of industry classification, the majority of which were small businesses.

“It shows they’re not just ‘this type of business’ or ‘that type of business’. There’s huge diversity.”

Content presented at the panel addressed those with entry-level knowledge of the subject  through to those beginning to implement their own social enterprise models.

In recent years many larger Not for Profits in Australia have taken to social enterprise as a means of boosting their financial sustainability and reducing their reliance on government funds.

The annual summit, presented by the Office for the Community Centre in the Department of Human Services, was this year designed to address a social sector characterised by service demand, increased and complex disadvantage, technological innovation, rapid rates of change, and a mixed public service economy made up of Not for Profit, private and government stakeholders.