Is an ecosystem-based approach the future of funding social enterprise?

It’s often discussed that funding the social enterprise ecosystem is important to help all social enterprises thrive – but what exactly is this ecosystem, and why and how should we fund it, ask Laura Reed and Jay Boolkin, in this article first published on Social Change Central.

Everything in life is part of an ecosystem – whether we’re talking biological organisms interacting with their environment or our more modern usage referring to a complex network or interconnected system.

Ultimately, in an ecosystem, everything is connected – it’s the idea that we all need to work together to survive and thrive and that the total is greater than the sum of its parts.

The social enterprise ecosystem has many participants – social entrepreneurs, social enterprises, intermediaries, academic institutions, businesses, government and philanthropists – all working on different aspects of social innovation. 

In Australia, the social enterprise ecosystem is emerging as an important part of building a more diverse and inclusive economy. Social enterprise can be found in every industry, in small communities and backed by large institutions and their efforts are making an important contribution to creating positive impact. From metropolitan to regional communities, ecosystem participants are evolving and adapting to solving pressing local needs, all while experiencing changing market conditions and emerging new technologies. 

At last count, there were some 20,000 social enterprises in Australia, employing 300,000 people and generating 2 to 3 per cent of GDP. This is expected to grow to 4 per cent of GDP, employing an impressive 500,000 Australians, within the next decade. 

The challenge

In Australia, we are disadvantaged by the tyranny of distance and a still nascent connecting infrastructure for the sector. We have tended to overlook the importance of building the underlying culture, networks and systems.

For funders, ecosystem investments can seem diffuse in nature and may feel hard to measure, however this doesn’t mean these investments can’t have enormous impact and create a ripple effect. 

It’s encouraging to see strong ecosystem connections emerging, however there’s still a long way to go if we’re to reach the full potential of social enterprise in Australia.

Imagine the potential if our social enterprise ecosystem were more strongly connected?

Funding the ecosystem

So, as funders, supporters and participants in the social enterprise ecosystem what can we do to strengthen the ecosystem?

As funders, we need to consider broader ecosystem investments, rather than just grant making for individual social enterprise start ups, scaling or program delivery.

Ecosystem projects are often not the most sexy or tangible area to fund but are critically important to establishing and sustaining social enterprises.

An emerging example of where funding the ecosystem is working can be seen in the experience of the Queensland social enterprise sector. 

Piece by piece, bringing together the building blocks of their ecosystem is leading to action, from the formation of the Queensland Social Enterprise Council – which exists to foster a vibrant, innovative and capable social enterprise sector that is sufficiently resourced and supported to achieve high social, cultural and environmental impact – to the recently announced $1 million in 2019-20 to support the development of a Queensland Social Enterprise Strategy.

For funders there are many areas in the ecosystem to invest in – it’s about finding a fit for your organisation and skill set, as well as considering what others are focusing on. 

Take a look below at the just some of the options…

Social enterprise ecosystem diagram

Funders can also encourage other funders and donors to get involved and consider co-funding projects that grow and strengthen the social enterprise ecosystem. 

And even if you’re not a funder, there are plenty of ways to support the ecosystem.

Ecosystem participants (eg social enterprises or entrepreneurs) can start by joining their state-based industry body and be an advocate for social enterprise, educating and challenging everyone to think about why and how social enterprises create profitable social benefit.

Ecosystem supporters (eg consumers or businesses) can preference purchasing goods and services from social enterprises and actively explore strategic partnerships that support the legitimisation of the sector.

About the authors: Laura Reed is head of social impact partnerships at Seventh Street Ventures and Jay Boolkin is co-founder at Social Change Central.

This article was first published on Social Change Central.