Social Enterprise in Australia

I have just returned from two weeks in Australia as a guest of Social Traders ( I had the privilege of speaking at the Australian Social Enterprise Masters Conference and the Australian Social Enterprise Awards. In addition to meeting some great social enterprise leaders, I also had a series of meetings with stakeholders including officials and politicians from the Federal Government, State Governments in New South Wales and Victoria and a number of foundations and corporates interested in supporting the growth of social enterprise.

My overall impression is that there is huge unrealised potential for social enterprise to make a very significant impact in Australia. In some ways the situation is similar to that of the UK fifteen years ago. There are lots of great social enterprises out there. The awards showcased some brilliant enterprises like Salvos Legal in Sydney that uses the profits from a commercial law practice in a “Robin Hood Model” to fund access to the legal system to excluded groups, or STREAT in Melbourne which is tackling the issue of the 5,000 homeless young people in Victoria. There is a wide range of models of social enterprise in Australia just like the UK with: co-operatives, trading charities and a growing number of limited companies trading for a social purpose. Social Traders estimate there are 20,000 social enterprises in Australia accounting for 3% of GDP. An official in the Victoria Government told me that in an analysis they had done of the top 100 employers in the state, 10 of them are social enterprises.

Nevertheless, social enterprises in Australia are having to push up hill. They are not recognised as a sector and many of the social enterprises themselves, don’t identify as such and they don’t get much help. There has been some support for the sector; the previous Federal Administration established three social enterprise development and investment funds (SEDIF’s); the Victorian Government provided core funding alongside a private foundation to establish Social Traders to support social enterprise development for the past 6 years; and in New South Wales there has been some pioneering social impact bonds on the back of some growing interest in social investment.

However, there has not been the level of strategic support for social enterprise seen in the UK or some other parts of Europe. The people I met were keen to learn about the strategic approach developed in the UK from 2002 with the first Government strategy on social enterprises under the Blair Government and the boost to social investment given by David Cameron’s Government and of the European Union’s Social Business Initiative. In the UK there are now 70,000 social enterprises, turning over £55B, employing 1m people and accounting for 55 of GDP. In just 10 years over 10,600 new Community Interest Companies have been established. There is a growing social investment market, supported by £600m from Big Capital and new a tax relief aimed at boosting investment in social ventures. The EU has reformed its procurement rules to make them have a greater social focus, with some special exemptions for social enterprises and in the UK, Parliament passed a (Social Value) law to oblige public bodies to consider wider economic, social and environmental issues when putting services out to tender.

Governments cannot create social enterprises but they can create an enabling environment that makes it easier to start and grow social enterprises. And that is exactly what the government policies to support social enterprise in the UK and Europe have done. This could a happen in Australia with the right kind of leadership. Australia could actively develop an ecosystem to support the growth of social enterprise. So what are the ingredients? I believe these are the main ones:

  1. Awareness, recognition – boosting the visibility of social enterprise. Having government recognise social enterprise as a valid, mainstream business model and including it in a range of policies for business and innovation and in areas where social enterprises can make a significant contribution to employment, services, regional development etc is vital. This includes getting it into the curriculum for business studies in schools and universities and supporting research into social enterprise and fully understanding the contribution it makes to the economy and society.
  2. Capacity building and support– having access to the right kind of specialist support for the different models of social enterprises that meet their needs, at different stages of growth and supporting social enterprises to network and learn from each other.
  3. Access to Finance – ensuing that there is a spectrum of finance available, from start- up, to the growth of large and established enterprises. This means a range of financial instruments from non-repayable investments through different kinds of debt finance to equity, with a focus on patient capital, with rates of return that are applicable to social enterprises.
  4. Opening access to markets – for public bodies implementing social procurement strategies and ensuring that these are open to social enterprises to participate and deliver social value, and for private business opening up supply chains to align with progressive corporate strategies that linked to consumer demand and staff interest.
  5. Getting the legal and regulatory framework right. This could mean creating new legal models for social enterprises like the highly successful Community Interest Company in the UK or introducing tax reliefs like the new Social Investment Tax relief in the UK which incentivises private investment into social enterprise

In Australia there is a need for action at all level of government as the competences for different actions lie at Federal, State and local levels. The question is will there be the political leadership to move things forward?

I would put down two challenges for Australia.

For Government: be strategic – recognise the potential of social enterprise and put policies in place that can create an enabling environment. Support the growth of an ecosystem for social enterprise.

For social entrepreneurs: be bold – carry on the inspiring work you are doing and work together to do more and get the recognition and support you deserve.

I truly believe that with the right approach Australia could more than double its social enterprise sector over the next 5 years.