Social Enterprise:  Innovation for Good #62 #cong17

By Pearse O’Reilly.

A Fairer Share of Innovation

The world’s most innovative companies continue to grow, and channel vast amounts of wealth into the control of a very small number of people. Despite unprecedented levels of innovation in the world today, poverty, pollution and inequality continue to increase.

Are these innovative companies – by focussing on a commercial bottom line – actually making the world a worse place through overuse of resources while paying relatively few social and environmental dividends? Is calling for ‘innovation re-distribution’ as radical, and as futile, as calling for wealth redistribution?

Great innovation (or, one could argue, simple common sense!) is needed to tackle the great problems our world currently faces. Fortunately, innovation does not have to be re-distributed; great ideas and inventions are not the preserve of the few or the mighty.  More attention does however need to be paid to supporting the kind of innovation that considers the ‘triple bottom line’ i.e. accounting for social and environmental as well as financial impact.

Are Social Enterprises the True Innovators?

Social enterprises, typically, are businesses whose success is measured as much on the positive social (and environmental) impact they set to achieve, as on their profitability. Many provide vital services and tackle social problems that neither governments nor private enterprises are willing or able to manage. 

Like every other business, they must be competitive. They supply products and services and compete for customers and market share. They must also compete on quality and market rate prices since social credentials or intangible assets on their own are rarely sufficient to maintain a stable customer base. They must also compete for resources such as talent, investor funds, grant aid, advertising space and public attention.

To be competitive social enterprises must therefore be entrepreneurial. They must be flexible and provide creative and innovative solutions to running their businesses, fulfilling their mission and achieving their goals.

Social Enterprise in Ireland

The number of social enterprises in Ireland appears to be growing. However, there is an absence of concrete data on the sector. A Forfas Report into social enterprise in 2013 identified 1,420 social enterprises employing 25,000 people with a total income of €1.4b amounting to approximately 3% GDP. This compares with a figure of 4-7% of GDP for social enterprises across the EU.

The sector is now being recognised for the value it provides; a National Policy on Social Enterprise was announced by the Minister for Rural and Community Development in September of this year. A steering group comprising experienced social enterprise practitioners and representatives of a variety of government departments has also been established. One of the goals of the Steering Committee is to map the sector in order to gain more data and a clearer picture of activity. 

A cross-section of Irish social enterprise successes includes FoodCloud (who take food that would otherwise be dumped from over 2,500 supermarkets across Ireland and the UK for distribution to people in need), Speedpak Contract Services (who provide real work experience and certified, industry-relevant training for long-term unemployed people), Irish Seed Savers Association (dedicated to the preservation of traditional native varieties of fruit and vegetables and providing a range of educational programmes on sustainability and agronomy), Clann Credo and the Social Finance Foundation (who provide community loan financing).

The Challenges for Social Enterprises

Running a commercial business while addressing a social and/or environmental problem is challenging. Financial support is often required from, and provided by, government and private donors, but it is hard won (notwithstanding the significant and proven value provided to a wide range of stakeholders). 

The value and necessity of innovation in social enterprise is unquestioned but supporting its ongoing development in order to create sustainable and scalable systems often takes the kind of commitment, time and resources that can be costly in the short term, making it less politically palatable. Large organisations set aside large R&D budgets for this purpose.

Operating as a ‘private company limited by guarantee with charitable status’ – as many do – is not just a mouthful, it places significant, and in many cases prohibitive, restrictions and reporting demands on a small organisation. Angel investment and venture capital funding, traditionally used in helping businesses scale, are not an open to them.

This ‘non-standard’ formation also means that social enterprises do not fit into the traditional moulds often required by lenders or government support agencies. A more appropriate business formation category would facilitate better acceptance and wider understanding of what social enterprises are, how they operate and what they are designed to achieve.

Examples of Social Enterprise Policy from Scotland and Australia

Scotland and Victoria (Australia) provide examples of social enterprise sectors that have been embraced by their respective governments as important partners in the economy, in civic society and as providers of public services. 

Scotland has long been recognised as a world leader in socially-progressive business structures. The sector comprises 5000 social enterprises employing 110,000 people. Over 40% of Scotland’s social enterprises have been established in the past ten years. 

Victoria is the centre of social enterprise in Australia with over a quarter of the country’s 20,000 social enterprises. The government is recognising the key role played by social enterprise in improving workforce participation and social cohesion. Through its ‘whole-of-government’ social procurement framework, the State is providing guidance on opening tender and procurement opportunities to social enterprises.

Support Social Enterprise

In social enterprises I see people who are passionate about creating positive social, environmental and economic impact. I see the enormous value that is created with minimal investment. 

Social enterprises provide an example of true innovation for the greater good. They deserve greater recognition, support and reward.

CongRegation © Eoin Kennedy 2017 eoin at congregation dot ie