Social enterprise – a new way to deliver impact?

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For a few years now, a new type of business model has evolved in the not-for-profit (NFP) sector called social enterprise. Melbourne-based social enterprise development organization, Social Traders, describes these businesses as having three defining characteristics:

- They are driven by a public or community cause – social, environmental, cultural or economic.

- They derive most of their income from trade, not donations.

- And they use the majority of their profits to work towards their social mission.

These three purposes can be achieved by businesses that do one or any of three activities:

  1. Provide employment training and support for marginalised groups.
  2. Provide services in direct response to social or economic community need.
  3. Generate income for charitable purposes.

These categories open the door for a wide range of industries that social enterprise businesses can be involved in. Some examples in Melbourne include; Good Cycles, Heat, Love Luvo, T2M and St Kilda Community Housing.

Good Cylces provides bicycle maintenance services direct to your office and trains long-term unemployed people as mechanics.

St Kilda-based business, Heat, is a catering organisation that trains and employs young people who have dropped out of the education system. Love Luvo, based in Yarraville, sells environmental cleaning and beauty products.

Local housing organisation St Kilda Community Housing operates T2M, a property maintenance business, and skysdesign, a graphic design business. While these organisations operate in different sectors they are bound by two common threads – changing the narrative for people who haven’t had the lucky breaks that many of us have had in our lives and providing professional services to deliver this change.

Social enterprise differs from business with a social conscience or corporate social responsibility because the return for our ‘shareholder’ is social impact not financial profit. You might ask who is our shareholder? It is society and the clients that buy our services. They are choosing to contribute to our organisation’s ability to affect change.

There is, however, a similarity between social enterprises and for profit businesses that should be noted. In both types of companies, if the product is not equal to the price paid then clients will ultimately vote with their feet. The result being no social impact or no profit.

To address this for social enterprises, organisations such as, Social Traders, are focused on the growth of the sector and there are more impact investors and financial intermediaries helping social enterprise to scale and take on debt to drive their ambition.

If you want to help local social enterprise you can do this by contacting skysdesign on hello@skysdesign.org.au or T2M on maintenance@stkch.org.au . If you’re interested in social enterprise generally, Social Traders has a wealth of information on www.socialtraders.com.au

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