Victorian State Policy and Social Enterprise 2017 – Part 1

This post is part one of a two part post about the recently released Victorian Social Enterprise Strategy, 2017.

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Social enterprise is perceived as an innovative response to funding challenges that non-profit organisations increasingly face as they attempt to solicit private donations, and government and foundation grants. The concept is used to emphasise the innovative dimensions of projects and the risks that they are taking. A wide variety of organisations are engaged in social enterprise activities: ‘from for-profit businesses engaged in socially beneficial activities (corporate philanthropy) to non-profit organisations engaged in mission-supporting commercial activity’ (Defourny and Nyssens, 2006: 4).

Social enterprises ‘main purpose is not the maximisaton of profit but the attainment of certain economic and social goals’  (Muñoz and Tinsley, 2008: 44).

Introduction

In Australia in recent years, social enterprises have been positioned in many goverrnement, community and business discussions as significant sites for youth engagement, training, and social inclusion. In 2017 the Labour State Government of Victoria released their Social Enterprise Strategy. The policy, in part, states that rates of employment and community engagement among marginalised groups of young people in Australia will be a key indicator used to evaluate social enterprise benefit/outcomes.

The Victorian Government Social Enterprise Strategy (SES) is framed by a concern for the employment opportunities provided to young people entering the workforce. The Minister for Industry and Employment Wade Noonan notes that ‘jobseekers’ are ‘at risk of being left behind’ with young people facing declining opportunities for meaningful participation in the workforce. Noonan suggests that the that the Victorian social enterprise sector has a substantial role to play as government alone can not solve: 

Our most pressing social challenges – including unemployment, homelessness and disadvantage …

Many of our brightest and most innovative people are working tirelessly every day to find new ways to solve these problems. Through the extraordinary efforts of Victoria’s thriving social enterprise sector, we are drawing maximum dividend from our economy and applying business skills to a social mission (SES, 2017: 1).

The new Strategy understands social enterprise aims and goals as mostly financial:

While social entrepreneurs often require financial support or assistance to get their business off the ground, the goal of social enterprises is to become commercially self-sustaining. Sustainable operations are vital to the social enterprise model and international experience demonstrates the ongoing dividend, which is gained from well-targeted policy to assist sustainability (SES, 2017: 2).

 

Social procurement

The State Government supports social enterprise activity by: supporting social enterprise intermediaries, through social procurement initiatives, and through investment in social enterprises.

  • Social enterprise intermediaries

The Victorian Government states that social enterprise intermediaries provide support and guidance to social enterprises in identifying and adopting:

workable business models and legal structures, accessing appropriately experienced mentors, and successfully demonstrating economic and social impact (SES, 2017: 7). 

The majority of Australian social enterprise intermediaries are located in Victoria, and include: Social Ventures Australia (SVA) (which supports SecondBite, Ganbina and STREAT); the Difference Incubator; the Social Enterprise Academy (SEA); and the Australian Centre for Rural Entrepreneurship (ACRE).

Social Traders: Established in 2008, jointly funded by the Dara Foundation and the Victorian State Government, Social Traders has established itself as the leading organisation supporting social enterprise in Australia, providing a diverse range of services to develop and grow the sector.

LaunchVic: A Victorian Government initiative, LaunchVic supports Victoria’s globally recognised, thriving start-up culture, and supports entrepreneurs to develop and grow businesses, including social enterprises.

Problems arise as social intermediaries are now the recipients of more funding than social enterprises themselves and are over-represented in the sector. Most intermediaries don’t provide pro bono support here – but charge social enterprises for this kind of consultancy. As a result they receive funding at both ends, from government and from social enterprises.

  • Social procurement

The Victorian Government social procurement initiative aims to leverage the purchasing power of the state government. It claims that the initiative

adds value by intentionally generating a social outcome when goods or services are purchased, and ensures that wider government goals can be aligned with procurement’ (SES, 2017: 7). 

The social procurement approach has been used by the Victorian Government’s Level Crossing Removal Authority to create New Employment and Exchange Training Centre (NEXT). The Strategy cklaims that NEXT operates as:

a hub for a range of social procurement services, including career and transition advice services. The project is estimated to create 2000 new jobs, with at least 200 being apprentices or graduate engineers. The NEXT centre will provide opportunities to re-skill people from transitioning industries, such as automotive workers, and students from diverse and disadvantaged backgrounds, including indigenous Victorians and migrants (SES, 2017: 7).

Major Victorian government infrastructure delivery agencies, such as the Level Crossing Removal Authority and the Western Distributor Project require a Social Procurement Plan from project delivery partners.

  • Social Impact Investment for Sustainability

Launched in 2016, this Sustainability Victoria initiative provides a combination of grants and low interest loans to investment-ready social enterprises working in the environment space. Investments are designed to create new jobs and training opportunities, respond to climate change, avoid and recover waste and improve resource efficiency in Victorian communities (SES, 2017: 6).

Increasingly government funding is shifting toward this kind of investment, or debt finance, rather than actual funding, which can put further financial stress on nonprofits.  This type of investment is paired here with a Sustainability focus which may exclude a range of social enterprises from applying for funding.

 

The limitations of the Social Enterprise Strategy

In terms of the track record that we bring to this project (see for example, Working in Jamie’s Kitchen: Salvation, Passion and Young Workers), and the significant research undertaken on/with social enterprises (see for example, Art as Enterprise: Social and Economic Engagement in Contemporary Art), we want to suggest that the framing of social enterprise in this Strategy should raise a number of concerns. In the first instance, the Strategy takes a profit-focused approach to social enterprise and does not fully account for hybrid models of social enterprise. This approach runs counter to the reality of the social enterprise sector worldwide, as only 30% of all social enterprises run at a profit. This has the effect of diminishing the value of non-profit yielding social enterprises and increasing the pressure on all social enterprises to turn a profit. The downstream effects of this pressure will be felt by the very participants social enterprises aim to support. Ironically, the strategy begins with a concern for the employment prospects of young people, but in reality may undermine the chances of young people, the quality of social enterprise programs and the functionality of the social enterprise sector. There are further negative implications for those social enterprises working with greater levels of marginalisation and disadvantage who bring together funding as well as self-generated revenues.

Finally, and perhaps most worryingly, the strategy places significant emphasis on supporting intermediaries and business development training (often run through intermediaries) with almost no government funding for social enterprises themselves. The small amount of funding being provided seems to be geared toward debt finance or ‘investment’ rather than actual funding. This continues a pattern of policy-making and funding decisions in the sector that has led to an explosion of intermediaries while social enterprises themselves struggle.

We will take up these and other issues in subsequent posts.

 

Image by Alex Proimos from Sydney, Australia – Recession Hits, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=25652544

 

 

 

 

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What is Social Enterprise?

Social Enterprise

Social entrepreneurship, social enterprise and social innovation are concepts that continue to create debate and definitional controversy. In recent years, these debates have been discussed in various monographs (e.g. Mair et al. 2006; Nyssens 2006; Nicholls 2008; Robinson et al. 2009; Ziegler 2009), and in journals such as the Social Entrepreneurship Journal (e.g. Thompson 2006; Peattie & Morley 2008) and Stanford Social Innovation Review (e.g. Martin & Osberg 2007). In spite of this continuing debate, no one set of definitions suffice to describe the multitude of processes and structural forms that characterise social entrepreneurial activity (Paulsen and McDonald, 2010: 109).

Social enterprises are hybrid organisations that sit between the public and private sector. They integrate business principles with social justice objectives and purposes to produce a community benefit (Campbell et al, 2011). Social enterprises develop a social ‘mission’ which often includes a focus on community and belonging and, as such, have been identified as a way of engaging marginalised young people and supporting their transition into the workforce through ethical, socially aware frameworks (Humphery, 2010; Kelly et al, 2015).

Defourny (2009: 8) argue that social enterprises emerged in Europe in the 1990s. During this time one major type of social enterprise was dominant across Europe: ‘work integration social enterprises’ (WISEs). The objective of WISEs is to ‘help low qualified unemployed people, who are at risk of permanent exclusion from the labour market’ by integrating these people into ‘work and society through a productive activity’. This trend towards work integration has been strengthened by the many social enterprises involved in employment creation initiatives.

Defourny and Nyssens (2006: 4) argue that understandings of social enterprise in the United States are broad and occasionally vague: ‘referring primarily to market oriented economic activities serving a social goal’. Loose definitions of social enterprise can be helpful because they account for the various forms these hybrid organisations take. However, definitions are necessary, particularly for funding bodies looking to invest in organisations with a social impact. As such, ‘it is their reasons for existence and the way profits are distributed that is of importance in defining them as social enterprises’ (DPCD, 2011: 13).

In Australia, social enterprises are commonly understood as hybrid organisations which embrace ‘values of entrepreneurship over specific trading functions (Barraket, 2006: 3). As Jo Barraket (2010: 7) – Associate Professor of Social Enterprise at the Queensland University of Technology – argues, social enterprises are:

organisations that exist for a public or community benefit and trade to fulfill their mission…Although social enterprises are diverse in their structure, purpose and business activities, they are variously engaged in: creating or replacing needed services in response to government and market failures; creating opportunities for people in their communities; modeling alternative business structures through democratic ownership; and generating new approaches in areas of contemporary need, such as alternative energy production and waste minimalisation (Barraket, 2010: 7).

Social enterprise operates on a spectrum, from those that are highly commercialised through to very grassroots initiatives that seek to model different approaches (Barraket, 2010: 9).

Agostinelli (2010: 19) offers a similar definition with examples of social enterprises in Australia:

A Social Enterprise is an enterprise or business that brings about social change through market-focussed business activities. Profit is understood to be a means to an end and is put back into the business, community or charitable organisation. Some local social enterprises include Lentil as Anything, The Big Issue, and the Hunter-Gatherer retail chain. Social enterprise is not a new phenomenon and can be traced back to worker and consumer cooperatives such as Friendly Societies and Credit Unions.

Social enterprise is perceived as an innovative response to funding challenges that non-profit organisations increasingly face as they attempt to solicit private donations, and government and foundation grants. The concept is used to emphasise the innovative dimensions of projects and the risks that they are taking. A wide variety of organisations are engaged in social enterprise activities: ‘from for-profit businesses engaged in socially beneficial activities (corporate philanthropy) to non-profit organisations engaged in mission-supporting commercial activity’ (Defourny and Nyssens, 2006: 4).

 

Arts Based Social Enterprise

(Above: The Social Studio, socks from the recent ‘Soxhibition’: a collaboration between the Scoial Studio a Melbourne based social enterprise and Melbourne artists)

The majority of Social Enterprises target marginalised young people and operate in the education and training and art and recreation industries (Barraket 2010). Arts Based Social Enterprises (ASEs) are considered to be highly effective at engaging marginalised young people for a number of reasons, including accessibility with a relatively low entry skill level, the youth appeal of the creative industries and the range of personal rewards that come from developing, creating and exhibiting creative works (McQuilten, 2015). ASE models encompass a range of art media from visual art, textiles and performance to media production and graphic design.

ASEs are further associated with diminishing government arts funding, prompting calls to consider Social Enterprise models as alternative sources for funding and organisational practice (ENCATC 2013; McRobbie 2012). ASEs offer complex settings for considering the way competing economic and social goals may be managed because they combine additional objectives of generating creative outputs from participants.

Artistic creation can transform the lives of individuals and communities, and is a powerful form of communication that bridges geographic, cultural and language barriers while sustaining the most enriching aspects of community and culture (Van der Pol, 2007; Papastergiadis, 2012). ASE’s are particularly effective at targeting marginalised young people as they can accommodate widely divergent levels of technical ability, prior experience, literacy, numeracy and computer skills. At the same time, creative practice is highly engaging, personally rewarding and can develop a range of work and life skills that support transitions into further education and research (McQuilten 2015).

For more on arts based social enterprises see: Impact and sustainability in art based social enterprises by Grace McQuilten and Antony White

References

Agostinelli, J. (2010) ‘The Proof is in the Pudding – Social Enterprise in Australia’, Fine Print, Vol. 32, No. 2, pp. 19-23.

Barraket, J. (2006) ‘Community and Social Enterprise: What Role for Government?’, Department for Victorian Communities, Department of Planning and Community Development.

Barraket, J. (2010) Time for Informed Debate on Pros and Cons of Social Enterprise [online]. Impact, Spring 2010, pp. 7-9. Availability: http://search.informit.com.au/documentSummary;dn=632068632634681;r
es=IELHSS [cited 02 Jun 11].

Campbell, P., Kelly, P. and Harrison, L. (2011) Social enterprise: challenges and opportunities, Alfred Deakin Research Institute, Geelong, Vic.

Defourny, J. (2009) Foreword, in J. A. Kerlin, Social Enterprise: A Global Comparison, University Press of New England, London, pp. xi-xix.

Defourny, J. & Nyssens, M. (2006) ‘Defining Social Enterprise’, in M. Nyssens, S. Adam, & T. Johnson (eds.) Social Enterprise: At the crossroads of market, public policy and civil society, Routledge, London, pp. 1-26.

Department of Education, Employment and Workplace Relations (2011) ‘Social Enterprise Development and Investment Funds Grant Program Guidelines’, Published by the Department of Education, Employment and Workplace Relations, Victoria.

Humphery, K. (2010) Excess: Anti-consumerism in the West, Cambridge: Polity, 264pp. (Softback, ISBN: 978-0-7456-4541-4 & Hardback, ISBN: 978-0-7456-450-7).

McQuilten, G [in press, accepted 01/10/2015] ‘Art as Enterprise’ in E.M.
Grierson (ed), Transformations: Art and the City, Intellect Publishers, Bristol, UK.

Kelly, P., Harrison, L. &Campbell, P. (2015). ‘”Don’t be a smart arse”: Social Enterprise Based Transitional Labour Market Programs as Neo-liberal Technologies of the Self’. British Journal of Sociology of Education, 36(4), 558-576.

McRobbie, A., ‘Re-thinking Creative Economy as Radical Social Enterprise’, Variant, Issue 4 (Spring 2011) p. 33 Mission Australia (2016) Social Enterprise, https://www.missionaustralia.com.au/what-we-do/employment-skills-training/socialenterprise#sthash.KkN20IbX.dpuf

Papastergiadis, N. Cosmopolitanism and Culture (Cambridge, UK; Malden, USA: Polity Press, 2012)

Paulsen, Neil & McDonald, Alex (2010) ‘Doing social enterprise: a reflection and view from the field’, Paper in special issue: Social Enterprise and Social Innovation.

Van der Pol, H., ‘Key role of cultural and creative industries in the economy,’ (Canada: UNESCO Institute for Statistics, 2007)

Our research project

Greetings from the project team!

This is a blog for our Australian Research Council Discovery Project titled: ‘Arts Based Social Enterprises and Marginalised Young People’s Transitions’.

We will use this blog to post updates and information about the project. We are keen to hear your feedback so please post a comment if you wish to do so.

The project team consists of:

Professor Peter Kelly, Director Centre for Education, Training and Work in the Asian Century, School of Education, RMIT University, peter.kelly@rmit.edu.au

Dr Grace McQuilten, Vice Chancellor’s Research Fellow, Centre for Art, Society and Transformation, School of Art, RMIT University, grace.mcquilten@rmit.edu.au

Associate Professor Kim Humphery, Design and Social Context, Centre for Applied Social Research, School of Global Urban and Social Studies, RMIT University, kim.humphery@rmit.edu.au

Dr Deborah Warr, Associate Professor and Australian Research Coucil Future Fellow, Centre for Health Equity, Melbourne School of Population and Global Health, The University of Melbourne,  djwarr@unimelb.edu.au

Dr Perri Campbell, ARC Discovery Project Research Fellow, Centre for Education, Training and Work in the Asian Century, School of Education, RMIT University, perri.campbell@rmit.edu.au

If you have a question about our project or would like to get in contact with the team you can email us at: artsocialenterprise@rmit.edu.au

We will also be posting updates via Twitter, you can follow us @YouthASE

What do we want to Research…and Why?

In the aftermath of the Global Financial Crisis young people have been disproportionately affected by unemployment and precarious employment. The most marginalised young people make up more than 55% of those unemployed for more than a year.

The project will analyse how art-based social enterprise (ASE) organisations manage education, training and work transitions, and develop the health and well-being of marginalised young people.

We will study the specific education and employment outcomes achieved for young people situated in these alternative learning settings. Social enterprises (SE) are a rapidly expanding sector of the Australian economy with 20,000 programs currently operating. Using a longitudinal, critical case methodology the project will provide sector stakeholders with a strong evidence base to develop long-term strategy for innovative policy and engagement practice.

Why does the research matter?

This study aims to deliver outcomes that will inform industry policy (at State and Federal levels) in relation to social enterprises. It aims also to inform, how engagement in art based social enterprise programs can promote the social and economic participation, education, training and work pathways, and physical and mental health and well-being of marginalised young Australians. The project will make innovative and significant contributions to the development and deployment of Social Enterprise based interventions that target the education, training, employment and health and well-being issues of marginalised young Australians. The project will importantly contribute to building ‘healthy and resilient communities throughout Australia’ by developing ‘preventative strategies’ to improve the physical and mental health and well-being of young people.

You can find some our previous research on Social Enterprises and Transitional Labour Market Programs by clicking on the titles of the following working papers:

Social Enterprise: challenges and opportunities

Transitional Labour Market Programs: challenges and opportunities

The problem of Aboriginal marginalisation : education, labour markets and social and emotional well-being

And our 2014 ARC Linkage Project Report:

Capacity Building and Social Enterprise: Individual and Organisational Transformation in Transitional Labour Market Programs