The Missing Piece: How Close Is Social Enterprise in Reaching its Full Potential?

Mark Daniels, Head of Market Development at Social Traders highlights the role social enterprise currently plays in Australia and explores the barriers preventing it from reaching its full potential.

Social enterprise has the ability to play a significant role in daily life.  In Australia today there are 20,000 social enterprises operating contributing 2-3 per cent of national GDP.  Many of us don't even know we are dealing with social enterprise through many of the services and products we purchase.

I am a conscious consumer and I love social enterprise. With very little effort I found that I could engage heavily with social enterprise as a consumer.

I bank with a social enterprise. My children went to crèche at a social enterprise and many of their friends go to schools that are social enterprises.  We get a fruit box delivered to home from a social enterprise. We buy our wine from a social enterprise. My superannuation fund is a social enterprise. My health and car insurance are with social enterprises. My kids have swimming lessons at a social-enterprise-run aquatic centre. I buy most of my Christmas and birthday gifts from social enterprises.  My business shirts are made by a social enterprise.  When I get the chance I eat and drink at social enterprises. And, occasionally I take a load of waste to the social enterprise which operates the local transfer station.

Many of us have interactions with social enterprises without even knowing it.

The concept of businesses that are purpose built to deliver social change has caught the attention of the  Not for Profit sector, the corporate sector, younger generations and rural and regional communities in Australia that are facing economic decline.

Of course, businesses delivering social change are not new. But there is a new impetus driven by increased community needs, by changes in Government contracting, by changing buyer behavior which are creating new markets and challenging the viability of old business models and the emergence of a new generation of changemakers.

The question is: how close is social enterprise in Australia to reaching its full potential?

Today, the UK is widely regarded as the international leader in social enterprise with some 68,000 trading social enterprises contributing over 5 per cent to British GDP.

Ten years ago social enterprise in the UK was in a similar position to where social enterprise in Australia is today – positive impact and readily accessible but low public awareness and seen as niche.

Social enterprise in the UK has become the benchmark for the rest of the world largely due to the conducive environment for social enterprise development and investment developed by consecutive Governments over the last 15 years.

Through developing the necessary policies, framework and environment, social enterprise in the UK has flourished.

Key factors contributing to the development of a flourishing social enterprise sector in the UK have been:

• development of a £600 million Big Society (social enterprise) Capital Fund and a range of smaller funds that hold in excess of £1 billion designed to invest in social enterprise at different points in their lifecycle
• creation of a company form for social enterprise – the Community Interest Company – which enables social enterprises to access the donations available to the charitable sector as well accessing private equity which is often favored in the private sector
• introduction of the Social Value Act which requires that public authorities take into account wider social and environmental value when they choose suppliers
• introduction of legislation enabling public servants the right to put forward proposals to take over and run their services as social enterprises or mutual organisations, and
• introduction of social enterprise into the education system where it is now taught to students in secondary school.

These policy platforms have driven strategies and funding to ensure that there is a holistic and integrated response to the needs of social enterprises.

Governments of several other countries including Canada, Finland, South Korea, Hong Kong and Taiwan are also playing a proactive role in developing an enabling policy environment for social enterprise.

In Australia, there is currently no social enterprise strategy at a Federal or State Government level. Responses from both Federal and State Governments have been ad-hoc and are not linked to broader economic or social policy objectives.

In 2012, the Federal Government provided co-funding in three Social Enterprise Development Investment Funds and it continues to support Australian Disability Enterprises, but beyond these endeavors there is a policy vacuum. Patrick McClure’s call for a national social enterprise strategy in Australia as part of ‘The Review into Australia’s Social Welfare System’ is encouraging.  In Victoria, the State Government has invested in social enterprise development – through co-funding the establishment of Social Traders – however it is not currently a part of State Government policy.

So while there have been steps in the right direction the question remains – how much more impact and value could Australia’s social enterprise sector contribute through a stronger policy environment?

If Australia is where the UK was 10 years ago, it is difficult to imagine Australia getting to where the UK is now in the absence of significant government policy and strategy. In all likelihood the gap will continue to grow.

The state of Australia’s social enterprise sector is one of the key themes that will be explored at the Social Enterprise Masters Conference on 3rd June in Melbourne.  Social Traders international guest speaker at the event Jonathan Bland – the architect of UK and European Union social enterprise policy and strategy – will provide his thoughts, views and experience on helping social enterprise in Australia reach its full potential.

The event will also see the launch of the only national research into social enterprise – undertaken by Social Traders and the Centre for Social Impact, Swinburne University – focusing on the opportunities and challenges facing Australia’s social enterprise sector.

The national conference will provide opportunities for exploring strategic and operational issues facing social enterprise and features many leading Australian social enterprises including recent Australian Social Enterprise Award winners.

About the author: Mark Daniels is head of Market and Sector Development at Social Traders.