Predictions for 2020: Social enterprise
13 February 2020 at 8:13 am
2020 is bound to be a cracker year for social enterprise with hints of a funding shakeup, skyrocketing social procurement, and oodles of opportunities on the horizon, write Jay Boolkin and Anne Lennon, co-founders at Social Change Central.
Social enterprise has gained massive popularity over the past few years. In 2019, it made considerable progress and arguably “entered the mainstream”. From disability to health, social enterprises, and the ecosystem that surrounds and supports them, are constantly changing, which makes it difficult to predict what the future holds. That being said, it is a safe bet to assume that the social enterprise landscape will continue to evolve and capitalise on its current momentum. Predicting the future is hardly easy, but when you watch anything closely enough it is possible to pinpoint trends and garner an idea of where things are likely headed. In light of this, here are some of our 2020 predictions for social enterprise.
Social enterprises are a market opportunity in and of themselves. In 2020, more and more traditional service providers will develop offerings targeted at helping social entrepreneurs. From web developers to accountants, social enterprise will increasingly become a staple of “who we work with” for these businesses.
In every successful business, there comes a time when it needs to grow. Sometimes growth happens organically but usually, investors are needed to provide capital. The ability of a social enterprise to attract investors depends on many factors. One of these is being “investment ready”.
This year will see a democratisation of quality, capacity-building opportunities to help social enterprises become investment-ready. As a result, more social enterprises will become better equipped to attract and secure investors. This will be a timely and welcome development, with more financial institutions, foundations and high-net-worth individuals looking to invest in impact-focused businesses.
Jobs jobs jobs
There are only around 25 employment-focused social enterprises in Australia that pay award wages and are employing more than 50 people. The increase in the number of promising social enterprises, as well as more tailored support like White Box Enterprises, should see an increase in the number of large-scale employment-based social enterprises in Australia. The rise of social procurement will also fuel this growth.
In 2020, there will be an increase in the number of environmentally-focused social enterprises somewhat in response to the bushfire crisis, which has had a devastating impact on people, communities, properties and wildlife. More broadly, as the threats of climate change are further entrenched into the public psyche, there will be mounting pressure on all social enterprises to make concerted efforts to reduce their negative environmental impacts.
Shame prevents social enterprise founders from willingly sharing their problems, and this can be a vicious cycle. It propagates a culture where no one wants to talk about failure and the shame associated with it worsens. As more people grow interested in and practise social enterprise, 2020 will see more open conversations about failure. Inspiring success stories and promising ideas are important in growing enthusiasm around the latent potential of social enterprise. Arguably, just as important is the need for more open dialogue around failure, especially with more and more social enterprises starting up (and thereby more inevitable failures). In the long run, greater sharing of lessons learned and practical knowledge will pave the way for more successful social enterprises which will mean more people will be positively impacted.
Social procurement skyrockets
More organisations will actively choose to buy goods and services with intrinsic social and environmental outcomes. In particular, 2020 will see a dramatic increase in small-to-medium enterprises and government directing their procurement spend to social enterprises. We will also see more suppliers looking to partner with social enterprises or even themselves seek to adopt a social enterprise model to share in the increasing dollars that corporates and government are directing to social procurement. At the big end of town, the commendable work of Social Traders will continue to play a critical role. At a local government level, Councils will increasingly begin exploring and developing social enterprise-specific strategies and action plans.
Oodles of opportunities
In 2020, there will be more opportunities targeted at social enterprises than ever before. There will be a plethora of events and conferences to choose from, funding to apply for, workshops to attend, awards to be won.
To the exasperation of some, there will continue to be a debate surrounding how social enterprise should be defined, and by whom. Some will argue that sidestepping a definition creates a diverse and inclusive environment, while others will maintain it puts the value and meaning of social enterprise at risk of being co-opted and misused – much like “sustainability”, “CSR” and “triple bottom line”. With the potential of legislative and regulatory frameworks to greatly influence social enterprise’s ability to succeed, 2020 will see key sector stakeholders and government policymakers increasingly working together, which may, in turn, put the definition debate to rest.
Breaking it down
The entire social enterprise ecosystem will become even more well-connected. Early evidence of this is the Social Enterprise Australian Facebook Group, which attracted more than 1,500 members in three days. Representative state-based initiatives – like QSEC, SENVIC and SECNA – will continue to evolve and play an important role in catalysing and developing nation-wide ecosystem connections.
Innovative new funding mechanisms will be developed and replicated building on Beneficial Outcomes Linked Debt – or BOLD – an Australian-first loan scheme, launched late last year and designed and led by IIG, where social enterprise Xceptional’s loan balance will be reduced not just by their cash repayments but also by the number of people they place in jobs.
More funders will also begin considering broader ecosystem investments, rather than just grant-making for individual social enterprise start-ups, scaling or program delivery. While ecosystem projects are often not the sexiest or tangible areas to fund, there will be an increased understanding of their critical importance in establishing and sustaining social enterprises.
Charitable social enterprises
Mounting pressure on the social sector to become sustainable and viable will lead to impact-focused start-ups establishing as social enterprises instead of charities. At the same time, charities will seek to diversify their income-generating activities to include more revenue streams (further complicating the social enterprise definition discussion for some).
Over the fence
Having been awarded the second-best country in the world to be a social entrepreneur in 2019, Australia is now legitimately labeled as a world-class social enterprise hotspot. In 2020, we will increasingly look beyond our own shores and actively engage with the wider global social enterprise movement. Early evidence of this was the strong Australian contingent that attended the Social Enterprise World Forum in Ethiopia in October, the third-largest delegation behind Ethiopia and Taiwan.
Whether the above predictions come to fruition or not, 2020 is bound to be a cracker year for social enterprise. We can’t wait to see what unfolds.
This article is part of a series of 2020 predictions from experts across the social sector.