Victorian State Policy and Social Enterprise 2017 – Part 2

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The Victorian Social Enterprise Strategy, 2017

In our last post we discussed the Victorian Social Enterprise Strategy (SES) and its focus on social finance options, specialist intermediaries and social procurement. In this second post we take a look at how international social enterprise strategies have inspired Victoria’s SES and what the strategies ‘next steps’ involve.

But before we delve into these issues it might be useful to remind you what the Victorian SES is all about. The strategy frames social enterprises (SEs) as a way of promoting innovation, entrepreneurialism and productivity:

‘The growth of the social enterprise sector improves productivity through innovation, by adapting old business models to meet the needs of Victoria’s changing economy. Social enterprise helps maximise the productive use of our human capital through increased workforce participation’ (SES, 2017: 2).

Between 2011 and 2016 the Federal Government allocated $20 million in Social Enterprise Development and Investment Funds (SEDIF). Recently, this initiative was evaluated and it was recommended that social finance options (grant finance, patient capital and early-stage risk capital) were provided to SEs along with business capability development for social enterprises. The evaluation also recommended supporting ‘specialist intermediaries’ and ‘social procurement’. While this kind of support has a role to play in developing Australia’s social enterprise sector, in our last post we discussed how supporting intermediaries rather than SEs runs the risk of undercutting funding to SEs.

In the SES there was also a recommendation that the impact of social enterprises be measured. We questioned how the impact of SEs would be measured, because impact in the social context is not always quantifiable or easy to measure. Funding and impact were listed as key elements of growing the social enterprise ecosystem in Victoria (SES, 2017: 9).

Now lets turn our attention to the international policies and strategies influencing Victoria’s SES.

Drawing inspiration from international social enterprise strategy

Victoria’s Social Enterprise Strategy takes direction from Canada, the UK and the Scottish Government’s recently released (2016) social enterprise strategy. The Victorian SES states that:

‘The Scottish Government has been a leader for many years in establishing a supportive environment and eco-system for social enterprises. They have made small, targeted investments for huge dividends and are currently in the consultation phase of developing a new 10-year social enterprise strategy for Scotland to build on their successes. With a comparable population Scotland’s social enterprise sector employs over 112,000 people, compared to Victoria’s estimated 75,000’ (SES, 2017: 11).

The Victorian strategy presents Scotland as a leader in creating the right conditions for social enterprises to emerge and thrive through small targeted investments. They draw comparisons between the populations of  Scotland and Australia as well as how many people the social enterprise sectors employ. For instance, in terms of gender balance in the social enterprise workforce Scotland is said to lead the way. It is interesting that compared with the corporate sector, social enterprise sectors in Scotland and in Victoria show a more equitable pay scale and involvement of both men and women in different leadership roles.

’60 per cent of chief executive roles in Scottish social enterprises are occupied by women compared to just 17 per cent of women in chief executive roles in Australian companies’ (SES, 2017: 11).

Scotland’s targeted investments have been paired with a 10-year investment plan which includes:

  1. The Social Entrepreneurs Fund – From Ideas to Action. £1 million – to provide capital and business support for new social enterprise ideas
  2. Just Enterprise program – £3 million for business support and £4 million enterprise investment fund – both managed by consortia of Scottish intermediaries
  3. 2015 First census of Scotland’s social enterprises
  4. Support for Social Enterprise Networks – there are now 20 across Scotland (SES, 2017: 11)

Scotland’s social enterprise policy can be found here. We’ll take a closer look at this in upcoming posts…

The Victorian Government also looks to Canada and the UK to support their investment in the business capabilities of social enterprises. However, it is a little concerning that this type of investment emphasises profit and gears funding towards organisations that work with social enterprises, and not primarily the social enterprises themselves.

In Canada, state jurisdictions look to foster the business capabilities of social enterprise through better access to training for proponents, business support and services, facilitation of access to government services, awareness building of the sector and improving access to finance to enable businesses to both start-up and grow.

Victorian Social Enterprise Strategy Key Action Areas

As we’ve said, the Victorian SES seems to be pushing for the development of social enterprise business practice and broader policy frameworks with economic profit and growth in mind. Alongside this, the Government is keen to formalise partnerships between the sector and the State.

In order to achieve these goals the strategy outlines three key action areas:

  • Key area 1: ‘Increasing impact and innovation’

This  involves: supporting innovation, promoting and connecting social enterprises and raising awareness, and growing the social enterprise eco-system. The idea here is to make government programs more readily available and relevant to social enterprises. This approach is to be supported by a research program aimed at understanding how social impact is valued. The SES states that:

‘This will include an indepth study and mapping of Victorian social enterprises to better understand their demographics and impact, including representation of women in the workplace and in management roles, and exploration of appropriate economic modelling’ (SES, 2017: 15).

A study of how social impact can be valued could be useful, especially one which considers the meaning of social impact and how ‘value’ is attached to things, events, people and programs would be best. This would be a critical engagement with social impact. It is unclear at this stage precisely what form the program of research will take. The strategy indicates that it will be formative and look to influence future policy and economic models which social enterprises may then be encouraged to adopt.

  • Key area 2: ‘Building business capacity and skills’

This key area focuses on encouraging self-sufficiency, strengthening intermediary services, building the skills and capacities of social enterprises, and enhancing the enabling role of the government. The SES states that:

‘The government will facilitate the creation of a skills development program for social enterprise SME founders and managers – supporting the viability, sustainability and growth of the SME’ (SES, 2017: 16).

The concern here for us, is that many social enterprises are over-workshopped and over-trained and need actual funding rather than these types of programs. Again, funding goes to the intermediaries, as the strategy says:

The government will provide pilot funding to test new initiatives supporting the development of the intermediary sector to provide specialist business support, advice, mentoring and signposting to social enterprise networks, investors and buyers’ (SES, 2017: 16).

  • Key area 3:  ‘Improving market access’

This means that attempts will be made by the State to decrease the financing barriers social enterprises in Victoria face by boosting investment opportunities and creating opportunities for competitive social enterprises to deliver goods and services. The word competitive indicates that SEs will be encouraged to compete with fellow SE organisations. This may have its benefits, however it may also go against the grain of basic social enterprise ideas and philosophy to work with and not against others orgs in creating social value and impact.

This third key area involves a number of steps, like developing a Social Procurement Framework:

‘The government will develop a whole of government social procurement framework to leverage public investment in supporting social outcomes. The project aims to provide whole of government purchasing guidance to departments and agencies regarding opening more accessible tender and procurement opportunities to social enterprise SMEs. It will also work on the creation of a broader framework for considering the economic and social value from working with social enterprises’ (SES, 2017: 16).

And other services and structures will be developed to help identify SEs, such as a ‘recognition scheme’ and an ‘online matching service’: 

‘Social Enterprise Recognition: The government will support the development of a recognition scheme to help identify social enterprises and build the confidence of buyers, creating a directory-like information source identifying Victorian social enterprises’.

‘Marketplace Partnering – On-line Matching Platform and On-ground Events Calendar. The government will facilitate the development of an on-line partnering platform to link government and corporate buyers with social enterprise and support a calendar of metropolitan and regional market place events to link buyers with social enterprise’ (SES, 2017: 17).

While these will be useful in providing SEs with potential financial partners, backers or donations this does risk commercialising the sector, especially if SEs are increasingly pushed to compete, to turn a profit and develop business models hatched in the corporate world.

It may also be the case, as in any market, that some social enterprises will benefit from being supported and included in a ‘network’, while others who do not meet the requirements may be excluded. Some social enterprise missions will be valued over others. Different forms of social value may not be recognised through the research evaluation program, particularly if value is tied intrinsically to profit.

Concerns and Questions

The Victorian Strategy states that social enterprises support workforce participation of marginalised groups and improve social cohesion. In many ways social enterprises do address these issues, however the strategy indicates a shift towards the formalisation of the responsibility for these issues resting with SEs. The concern here is that:

  • such a strategic move displaces Victorian State government responsibility to address these issues onto the community and the individuals involved in running social enterprises. The strategy mobilises a neo-liberal political approach to significant social and economic problems by responsibilising individuals and the community.
  • While the State looks to take on a measure of responsibility itself, the way in which is does so in concerning: it indicates a shift toward profit-driven welfare, which can actually entrench poverty and exacerbate inequalities between those who manage and run social enterprises and those who are supposed to benefit.
  • Government support for the sector may have its benefits and its downfalls. Particular ways of doing social enterprise will be encouraged, this includes being a competitive social enterprise. The risk is that increased competition in the social enterprise sector, like any other business sector, may affect performance and quality, and may impact on the experience of participants involved in the programs that social enterprises support.

How can social enterprises be best supported to fulfill their social mission?

Is the value and social good of social enterprise something that should be tied to economic profit? If so, then how?

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