From charity to social enterprise: when making money is doing good

What do the Cancer Society Sunscreen range, YMCA gyms and Girl Guides biscuits have in common? They are all social enterprises run by charitable trusts.

They are all social enterprises run by charitable trusts.

Social enterprises trade goods and services to achieve social, environmental, economic, and cultural outcomes, and promise to do what ordinary businesses and charities cannot.

Tricia Fitzgerald has studied the emergence of social enterprise in not-for-profits for her PhD at the University of Auckland, and is chair of the emerging industry body, Social Enterprise Auckland.

“Social enterprise offers a tool to ease the dark time the world is currently in – particularly around the need to address climate change, distrust of business, and disillusionment that government and charity can effectively deal with the immense issues facing us,” she says. “They have the potential to transform not only society, but business itself.”

Charities, or not-for-profits, would seem well-placed to develop social enterprises, but previous research suggests not-for-profits often struggle because they are used to operating within a charitable, collaborative, values-based framework, she says.

“Not-for-profits tend to be pigeon-holed as ‘good charities’, when start-up social enterprises also need to be business-savvy, market-focussed and more hard-nosed.”

For her PhD, Fitzgerald examined three large, well-established not-for-profits who had developed a social enterprise: Lifewise (part of the Methodist Mission) and its public café with wrap-round services for homeless people; Playcentre, which ran a publishing arm; and Changeability, a corporate change readiness consultancy that came out of the Mental Health Service, and counts among its clients Fonterra and Westpac.

She interviewed people within the organisations at four points over 18 months to build a detailed picture of the skills, capacities and cultural shift needed for a smooth ride.

She found not-for-profits need the time and/or finance to undertake the development and bring in commercial expertise from people in the sector with a commitment to the cause, particularly skills in sales and marketing, costing and pricing. “Some organisations set up advisory groups, some have key hires, or board members from a commercial background.”

They also need to be able to resolve the “culture clashes” that can happen, which means buy-in from staff and members, and managing high levels of uncertainty and change.

“All or most of the people in the organisation have to come to terms with the development and agree it’s OK to operate differently in order to get more of their mission reached.”

Not only do members have to be comfortable with this shift, so does the public.

“In the US, the not-for-profit sector had a crisis: as more of them started earning income, people asked ‘why should we continue funding them?’”

Fitzgerald says the social enterprise movement is building momentum globally and locally. This week, New Zealand is hosting the Social Enterprise World Forum for the first time, in Christchurch. At a shoulder event in Auckland, Social Enterprise UK recognised the city as a hotspot, naming it a social enterprise city and becoming a mentor to the Auckland body. In the UK, there are an estimated 80,000 social enterprises which together contribute £24 billion (NZD50 billion) to the UK economy.

“New Zealand is lagging behind but there is enormous opportunity for social enterprise to provide an alternative business form that generates sustainable social or environmental good on one hand and ethical business on the other.

“Imagine a world where ordinary commercial businesses have to compete with those that also deliver some environmental or social value – the potential for societal and business transformation is huge.”

Fitzgerald has 20 years’ experience in management consultancy in the not-for-profit sector and government.

Source: Auckland

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