Mining Social Enterprise Potential in WA
22 April 2015 at 12:02 pm
A unique social enterprise solution is the result of a $30 million corporate-NFP partnership aiming to revitalise a remote West Australian mining town, writes Nadia Boyce in this weeks Spotlight on Social Enterprise.
BHP Billiton recently announced a $30 million investment for a new shopping centre in the WA town of Newman, located around 1,200 kilometres north of Perth – part of the biggest partnership in Australia between a Not for Profit organisation and a multi-national company.
The shopping centre is to be developed as part of an innovative community partnership with housing Not for Profit St Bartholomew’s House (St Bart’s). Under the partnership model, St Bart’s will use profits from the facility to provide ongoing support for Newman, as well as to create a Community Trust that will provide small grants for local community projects.
BHP has hailed the partnership, which could extend for up to 30 years, as the largest investment the Company has made in Australia.
The arrangement is an unusual one: Newman is far removed from the usual catchment area of Perth-based St Bart’s, which will aim to come in, manage the project and gauge the social needs of the town drawing on the expertise it has gained in management and community development as a social housing provider.
BHP says the partnership “sets a new standard in corporate philanthropy” – and St Bart’s CEO John Berger is similarly brimming with confidence. Pro Bono Australia News spoke to Berger about what drove St Barts to “dip a toe in the water,” the challenges that lie ahead and how his organisation has successfully managed its growing portfolio of corporate partnerships.
St Bart’s is a mid-size Not for Profit that has been operating for over 50 years, with a vision of preventing homelessness. The organisation now employs around 120 full-time staff to run its social, affordable and transitional housing programs. With a desire to build its stable of corporate partnerships, its selection for the Newman project was a welcome success after some initial setbacks.
“Our antenna has always been up for looking at different ways of funding social outcomes,” CEO John Berger says. “We had previously applied to BHP two years ago for funding for the rebuild of some affordable housing, but our application was unsuccessful.”
When BHP sought a Not for Profit partner to help revitalise the town – including through the development and management of a shopping centre – St Bart’s grasped the opportunity. Berger theorised that local charities in a town of Newman’s size would likely not have had the capacity to take on such a project, driving BHP to widen its hunt for a suitable partner to which it could outsource its community work.
“They must have made the decision that they needed to go further afield. They came back to us, and half a dozen other charities, and invited them to put an expression of interest in this project,” he says.
He attributes success in the tender process to the organisation’s previous experience with major redevelopments.
“In some ways we were able to demonstrate we had been involved in a major project and were able to build and deliver on an outcome,” Berger says. “BHP said that they valued our capacity to undertake a larger project and our strong governance, and systems we had in place around dealing with a large project, and the fact we were a successful agency in the homelessness space.
“In the previous two years we had been involved in a major building project, establishing accommodation for 154 people on a single site, including our business administration office. We were successful in one of those economic stimulus packages back in 2008 after the GFC…That project got the go-ahead, and was valued at $33 million.
“We had to develop board members and other partnerships with key people to give us the expertise to manage that process. That was one of the strengths we were able to extoll. A number of our [board] members also had an understanding about the situation in the PIlbara, and the situation in Newman, and had a sense of what BHP were trying to do.”
According to Berger, the key to success in corporate partnerships is finding common ground between the core values of a particular project and the organisations going into the partnership.
“You have to have a strong alignment between what BHP want to achieve with this project and who we are, as well as an organisation. When I think about BHP’s commitment to what they’re trying to achieve in Newman, and what we’re hoping to achieve, I think there’s a really close match,” he says.
“Obviously we need to have agreements in place. We have a formal agreement now between the two organisations to talk about how the project will progress and the key milestones in that. Obviously we will have a governance framework, in terms of who speaks to whom between the organisations and at what level, and how decision making is resolved.”
A New Era for Newman
The partnership is set to improve the liveability of Newman, a small mining town in the state’s North Western Pilbara region, with a population of around 7,000 and a fly in fly out workforce of around 4,000. The town was officially established by a subsidiary of BHP in 1968 and the company’s nearby Mt. Whaleback mine is one of the largest open cut Iron Ore mines in the world.
“Newman is very much a service town, and obviously the infrastructure that’s in the town needs to be built up to be more self-sustaining,” Berger says. “Obviously it’s been very focused on mining, so the idea is to build the town’s infrastructure. It needs to be developed so there are other opportunities and employment in that township.
“One of the key drivers for BHP was things like having [a greater] variety of shops in the town, and the need for a meeting place.”
The shopping centre will meet that need. Construction of the complex, to be located in Newman’s newly redeveloped town centre, is due to commence in the middle of this year. The centre is expected to provide residents with a range of retail and dining options – including simple basics like a supermarket, discount department store and cafe.
St Bart’s may have seemed like an unusual choice. Operating out of Perth, the organisation is geographically removed from the Newman community and the social objectives of the project – to improve the liveability of the town – do not link directly with the organisation’s core mission of tackling homelessness.
Berger, however, says he sees value in the opportunity for St Bart’s to build on its experience in the development field and apply its skills. There could also be financial benefit for St Bart’s as an organisation, secondary to the funds to be pumped into Newman.
“In our strategic plan, there was some acknowledgment that St Bart’s has only been Perth-based and that we were open to the concept of looking at potential regional opportunities, but it wasn’t something we were vigorously pursuing upfront. However, when this opportunity came along, the two connected and we said we shouldn’t dismiss it as an opportunity,” Berger says.
“However, we did have questions about how we would benefit from this project, and how that would fit in with our vision and mission.
“BHP haven’t stipulated to us how we should apply all the monies, and they have acknowledged that part of the monies will be supporting us as an organisation, so I think there’s an internal value that we’re achieving through this partnership. We’re growing our core capabilities by undertaking this partnership. I think there’s indirect benefits too, that we’re receiving.
“The main beneficiary of this will be the Newman community….There’s a community trust, small grants for the community to access – football club film night, toy library more toys. BHP were keen for that to be built into model, but as for the rest of it, they’ve left that up to us to decide.”
Precisely how those decisions will be made is yet to be determined, but Berger flags a need for in-depth consultation with the Newman community.
"We’re remaining reasonably open-minded, and we’re keen to consult broadly with the community. We want to get an idea of what is the particular need in that community and we’re keen to get an idea of what is already funded. We want to make sure we’re not duplicating anything,” Berger adds.
“We’re having early discussions with groups like Social Ventures Australia and the Centre for Social Impact, and other groups that have have been in the space because we are keen to understand what is the situation in the town at this moment and what is the impact that this [shopping] centre will create for the community.
“We want to capture things, like bringing employment into the town and the benefits it’s creating, through to how the profits are being used and how they're improving the capacity of the town to be self-sustaining.”
A Future in Enterprise
Berger is hesitant to look too far into the future but is evidently confident about the trajectory of the project. For now, the focus is on the project build and securing major tenants for the shopping centre, which isn’t expected to be complete until December 2016 at the earliest.
“The BHP partnership is potentially 30 years, but there are milestones and KPIs we have to return on,” Berger laughs.
“We put a toe in the water. This has all been a one step at a time thing. We put a toe in the water and said: ‘Look, we’re really interested in this type of corporate partnership and its potential to deliver sustainable income for long-term benefit’.
“Apart from the project build itself, it was the whole concept of a sustainable funding source to generate a social benefit in the longer term that was of interest to us. So rather than using a one-off project where a corporate donates money and you achieve a particular outcome and that’s the end of it, what was really attractive to us was this notion of investment into an enterprise and that that enterprise has a level of sustainability. That was the key hook for us – we believe that is the future.
“I think that’s the challenge for the future, in the corporate and Not for Profit space – can we set up sustainable enterprises? And I think you’ve got to work to your strengths.
“It’s a tricky space…Obviously, we had a lot of questions along the way.
“Where I think it will be helpful is it will add to our credibility when we want to look at other projects, whether they be Perth-based or in other regions, for us to be able to say, ‘look at how we’ve made this one work’.
“I take my hat off to BHP for wanting to enter into this sort of partnership. They could have kept it in-house.They have a passion for the township of Newman, a commitment to make sure it's a vibrant township, and they looked for a partnership to achieve that outcome.”
Berger says the whole experience has shifted the way St Bart’s approaches its work.
“We’re looking at doing a major build for more affordable housing as part of our work and we’ll be looking for further corporate partnerships, so we’re looking now at ways we can do that in a more sustainable way,” he says.
“It re-orientates your thinking.”