How social procurement can turbocharge social enterprise growth
7 July 2020 at 3:07 pm
Social procurement is the biggest growth opportunity for the sector, but we can’t have social procurement without certification, writes David Brookes, managing director of Social Traders.
I read Pro Bono News’ recent article – Look how far we’ve come: Social enterprise – with interest, and wanted to provide my perspective on the future opportunity for social enterprise.
The social enterprise sector is poised for growth, particularly post COVID-19. From a cottage industry to a major part of the impact economy, the understanding and value of social enterprise is on the rise.
Where we beg to differ with Pro Bono News’ article is with respect to the intent of social enterprise certification.
The biggest opportunity to turbocharge the social enterprise sector’s growth is social procurement – unlocking the buying power of business and governments. Social enterprise certification is what provides the confidence and trust that government and business buyers require.
Certification is not about everyone signing up to a definition as conveyed in the recent Pro Bono News article – it’s about unlocking the opportunity of social procurement so the sector can grow.
The social enterprise sector has come a long way
The social enterprise sector has grown from place-based and local impact, to a sector recognised as having a significant impact on disadvantage.
The social enterprise model now provides a strong alternative to more traditional approaches to solving intractable disadvantage – using sustainable market mechanisms.
This growth and recognition has been enabled by a few key developments. Firstly, there were case studies of innovative social enterprises and their ability to respond to complex social challenges. Shortly after this, sector intermediaries emerged along with research to support growth and recognition of the sector. More recently, we have seen catalysing government policy that legitimises and underpins the sector as a whole.
Despite the impacts of COVID-19, growth in the Social Traders marketplace has not slowed down. A more enabling policy environment for social enterprise is emerging in Australia. New state governments are coming on board and some of our new global business buyers are committing to social procurement targets right across their operations. We’re also advocating to the federal government to embed social procurement into the long-term economic response to COVID-19.
The next big opportunity for a step change in the social enterprise sector, is unlocking the buying power of governments and businesses.
Social procurement is the biggest growth opportunity for the sector
In the Finding Australia’s Social Enterprise Sector (FASES) study, 75 per cent of social enterprises identified social procurement as their biggest growth opportunity.
What’s most exciting about social procurement is that it builds social enterprises into existing government and business practices. It creates additional value through business purchasing of goods and services.
Governments and businesses can enable social enterprises to grow dramatically and increase their impact, simply by changing the way they buy goods and services they would have done anyway.
Our modelling suggests that social enterprise procurement could be worth $1 billion a year by 2030.
Certification is the backbone of social procurement
Certification is not about creating a definition to reduce confusion, it’s about unlocking the possibilities for sector growth through social procurement.
We can’t have social procurement without certification. We can’t expect buyers to invest in social enterprise without a strong degree of independent credibility and legitimacy applied to individual social enterprises and the sector as a whole.
Certification is about de-risking the social procurement process for business and government buyers.
Social Traders certification accounts for the breadth of the sector and is designed to evolve
The Social Traders certification framework reflects the international definition of social enterprise and takes into account the diverse ways that social enterprises operate and captures all operating models.
ST Certified is inclusive of not for profit, limited profit, and profit distributing businesses that trade primarily for a social or environmental purpose. It also covers the full host of legal structures available to any other business.
What unifies certified social enterprises under the framework is their primary intent to tackle underserved markets – their public or community benefit outweighs private benefits.
While a primary social or environmental purpose will always be a requirement for certification, we are constantly reviewing how we assess against the certification framework as the social enterprise market evolves.
The social enterprise sector has a bright future
Using the rigorous Social Traders certification framework to unlock the buying power of business and government, the social enterprise sector has the opportunity to grow dramatically.
At Social Traders, we’re privileged and excited to be one of the organisations that is here to support the sector to grow. Now is the time to raise the profile of the sector, so we can see social enterprises become part of the mainstream economy.