March 11, 2015
If we removed the revenue created through social enterprise from the not-for-profit sector in Australia we would be removing over 39% of the total turnover of the not-for-profit sector. (Source: ABS 2009).
To put this in context, government funding, the second biggest income source in the NFP sector is only responsible for 34% of income in the sector.
With the transition to NDIS and the shift from government funding of disability agencies to consumer choice where people with disabilities will purchase disability services from suppliers, we could potentially see over 50% of income earnt in the NFP sector generated through trade. That’s about 3% of GDP – which is actually more than agriculture at 2.4 %.
Research conducted by Social Traders and the Queensland University of Technology in 2010 (Finding Australia’s Social Enterprise Sector – FASES) estimated that there are over 20,000 social enterprises operating in Australia. According to the Giving Australia study, 29% of not-for-profit organisations operate a commercial venture or social enterprise. This is staggering to most people who immediately think government or philanthropy when they think of the NFP sector.
Where are all these businesses that are trading for social impact? They operate in all industries but are dominant in education and training, retail and childcare, aged care and social housing, the arts and recreation, to name a few.
What’s the social benefit of the billions being spent through social enterprises in Australia? The truth is that we don’t know. Social enterprises are so different in their motivations that it would be impossible to extrapolate. Some social enterprises exist to make profits which they reinvest into community programs run by their organisation or others, some social enterprises exist to create employment for marginalised groups, and others set up businesses to meet a community need where the commercial market does not operate. The fact that so many organisations are running social enterprises and the sheer quantum of turnover suggests that social enterprise is working and is delivering the social benefit that it was designed to deliver.
Despite reliable information on the public record about the contribution of trading activity and social enterprise in the NFP sector, there is limited and isolated support for these activities in the NFP sector. This seems odd given the potential benefits of increased social enterprise activity include greater NFP impact and reduced strain on government funded services.
We believe that the lack of awareness of the scale of social enterprise occurs largely because many of these organisations don’t call themselves social enterprises (some don’t know they are social enterprises) and the people running these extraordinary businesses don’t come together to discuss their needs and challenges and more importantly, the scale of opportunity that could be created by growing social enterprise in Australia.
Social Traders have developed the national Social Enterprise Awards to raise the profile of social enterprise in Australia and focus attention on the scale and contribution that these businesses make.
The annual awards are an opportunity for your organisation to be recognised for the social value generated through your trading activity. But more importantly it’s an opportunity for organisations that are earning much of their income through trade to band together, speak loudly about what they do and imagine what could be achieved if they were able to do more of it.
The awards are a time for the greatest untold story in the NFP sector to be told, celebrated and scaled. This begs the question, with a supportive policy and investment environment for social enterprise in Australia what more social impact could be achieved?
It also raises the need for NFP’s undertaking trading activity to recognise that they are social enterprises and for the sector to harness its weight of impact to create that supportive environment.
Entries for the 2015 Social Enterprise Awards close on Friday 27 March. Enter now.
Article by Mark Daniels, Head of Market and Sector Development at Social Traders.