Budget 2018 is coming out tomorrow, and we are pretty excited to see what the Government is putting the taxpayer’s money into.
We’ve talked about what founders would like to see with Budget 2018 in our previous article, but we are changing the gears for this article and focusing on social enterprises.
They have the same struggles too
Social enterprises are very much part of our startup/small business community as well, while they may not shine as brightly as the massively scalable tech startups, they are ones with massive impact socially and culturally.
It is definitely important to know that social enterprises also face the same issues as other startups, concerns regarding funding and growth.
Also to be noted is that they have a very different business model which is not situated around making profit but instead it is outcome driven, and as social enterprises, they are not exactly considered a not-for-profit and still a private limited business instead.
With that, you can already see the problems that social enterprises might face. Not being a profit-driven will affect the way they get funding, and most VCs do hope for better monetary ROI.
Social enterprises’ ROI is usually the impact of their investment on either the society or the environment. And that is quite hard to put a monetary value on it.
Because social enterprises are here to benefit the society and environment, it is natural to assume that the Government should be supportive of them.
Government’s support can be seen
This is not saying that the Government is not doing anything for social enterprises, money has been pumped into supporting the growth of social enterprises.
Most recently in Victoria, the State Government set up the Social Procurement Framework (SPF) which will reevaluate the value of money in procurement. Social value will be added, which means the benefits created for all Victorians when the social and sustainable outcomes in the SPF are achieved.
A wonderful step to change the idea of what value of money is, and this could potentially open up doors for social enterprises and focusing on outcomes more than just profits.
A recent article on governmentnew.com.au, it analysed social enterprises as an untapped partner for councils. The report highlighted the barriers preventing the partnership between the Government and social enterprises. Reasons include lack of awareness from the councils and the concerns about the Government from the social enterprises.
“A key challenge for social enterprises is to effectively convey how they can support local governments’ core operational objectives while also bringing about positive social outcomes.”
And with the Budget 2018 coming out tomorrow the hope is that maybe there’s a focus on social enterprises and their potential outcome for society.
Room for improvement
CEO and co-founder of Impact Ventures, Max Lynam gave us an insight that might give you a better perspective on how the Government can support the social enterprises.
Impact Ventures is a social enterprise themselves, and they believe they can transform the social and public purpose sectors into a thriving, innovative and data-driven sphere that drives more positive impact at scale. And how they do it is by utilising technology to implement and operate the data-driven, actionable intelligence tactics and systems required, enabling you to achieve more for your stakeholders and beneficiaries.
Lynam feels Government funding should fund in the same way VCs fund startups according to their specialisation.
“The government’s specialisation is serving the public good, so they should have a program where they can put ‘these are our problems, and this is where we will like assistance’ or ‘these are areas where we will like to see innovation in the public good.’”
Also, working with the startups will help them save millions of dollars because the startups will accelerate quickly on what they are achieving and benefitting the Government and public.
Hence government spending in these areas is a good investment because it will help them solve issues that they are clearly not succeeding at.
This is not just like a grant, this can be like a normal VC investment, except instead of being focused on profit, it can be focused on cost savings and improvements for the public good.”
Government’s support is can definitely make or break a social enterprise because they do not get as much funding as a Scalable startup would. And as the startup community, we know how vital funding or grants can be for survival.
With that communication between the social enterprises and the Government needs to be improved, or at least exist. This not saying that the Government is not listening at all, there has been effort put into understanding the startup community, and maybe now it is the time for the Government to broaden their scope.
Mutual understanding needed
Lynam also mentions that he would like the Government to get a better understanding of the social enterprise and social innovation landscape through an open democracy type of stakeholder engagement consultation.
“Previous consultations have only been with Unicorns and consulting with Unicorns about how you can accelerate innovation in startups, is not a way get a clear view of growth from the grassroots level,” he said.
A very fair statement, because just like all that leadership training we’ve been to, it highlights listening to your employees no matter how small they are.
“It is great that they are talking to bigger companies that are well established, but they should also speak to the grassroots social enterprises about the innovation movement among social enterprises.
Because helping them is where they are going to get the greatest growth, with minimal investment for the greater change for them in that area. So small investments in those with a larger number of social innovators will help accelerate many social enterprises/products to have a much more meaningful positive societal impact.”
There’s definitely hope for what the Budget 2018 might bring, the Government is slowly stepping up their involvement in social enterprises, but there is definitely room for improvement.
Local councils have stepped up, and State Government has stepped up too, we shall see if the Federal Government is going to say anything about this sector.
We just have to wait and see tomorrow when the Budget 2018 comes out, but right now we can pop our champagne for the Victoria Government’s Social Procurement Framework because we feel like that’s definitely the right step to take.