The Rise of Social Enterprises

We have written this article with four audiences in mind:

• For ambitious impact businesses and social enterprises, tired of ‘sacrifice’ or feeling ‘burnout’.
• For social enterprise bodies to consider welcoming new sectors to grow the social enterprise space.
• For impact businesses/organisations functioning as invisible social enterprises.
• For governments (local, state, & federal) to appreciate the wider landscape of social investment beyond social services to include innovation, economic development, and sustainability.

Humanity is driving towards extinction by exhausting six of our nine planetary boundaries.

Inequality is rising in high-GDP countries and causing social tension and disharmony.

Only 4% of mammals on earth are wildlife. A whopping 96% of the mammals are humans and animals raised for human enjoyment.

Can you imagine a different world?

A world where businesses prioritise people and the planet alongside profit.

We can!

This shared vision is driving the rise of social enterprises today.

This article explores what social enterprises are, why they are growing, and how Purpose With Profit is market building, market enabling and participating in this transformative movement.

Our journey into social enterprise started after the global financial crisis in 2008 when many realised that measuring money alone was insufficient—infinite growth on a finite planet cannot be sustained.

We have been researching alternative business models ever since, creating many social enterprise endeavours.

Purpose With Profit methodology and approach has been about measuring Purpose, People, and Planet strategies, as well as Profit. We call this ‘Organisational Wellbeing’ and have been guiding our clients with these strategies since 2017.

For mainstream businesses, these principles translate to environmental, social and governance (ESG) reporting. However, ESG is generally considered a supplement to profit-led financial reporting.

We are seeing the growing momentum in the social enterprise space, from the Social Enterprise World Forum in 2022 Australia to the formation of Social Enterprise Australia.

After the Federal Treasurer’s message about measuring what matters, we published an article about expanding social justice through business (Feb 2023), showcasing how Australia can develop differently from the US or UK models.

If this topic is new, let’s simplify things and start with the basics.

This article is in three parts:

• What is a social enterprise? History, definition and types.
• Who is supporting the growth of social enterprises?
• Purpose With Profit’s Insight & Approach to grow social enterprise & the movement

The Federal Government recently released the guidelines for the Social Enterprise Development Initiative (grant). The grant offers up to $120,000 to help capacity-build social enterprises that help vulnerable communities. Purpose With Profit can help social enterprises develop strategic growth plans. We’ll cover this in detail in the next article, but we need to start with the basics.

So, what are social enterprises? Let’s find out!

Humans have traded since the beginning of time. For the most part, we did so without exploiting humankind and the planet, like traditional indigenous trade, which would be considered a social enterprise today.
 

Then, we fell into kingdoms, where the majority served in some form, whether as farmers, tradespeople, warriors, or ordinary workers. Life was difficult, and life expectancy was low.
 

Since the modern corporation and capitalism were harnessed, our longevity and living standards have increased beyond our wildest imagination.

Today, we can travel across the city, country, or world. With modern phones, we can also see the world in the palm of our hand. Many diseases have been eradicated, and billions have been lifted from extreme poverty.

And yet, corporations are now increasingly seen as exploiting humankind and planetary resources for profit, from slavery to colonialism to the exhaustion of six of the nine planetary boundaries from the Stockholm Resilience Centre, leading to the humanitarian and planetary crises described in our article. 

Due to these reasons, there is growing momentum around the world for people wanting to do business and live differently—hence the rise of social enterprises.
 

Social enterprises are not new.

Organisations like not-for-profits, co-operatives, and mutuals can be described as early-stage social enterprises. They care for humanity and the sustainability of the business.

And yet, planetary boundaries and for-profit business models were missing.

Until now…

From a cottage industry in Australia, the social enterprise movement started with state chapters and eventually formed the peak national body called Social Enterprise Australia.

Recently, all the Australian state and territory chapters and Social Enterprise Australia agreed on a standard definition.

To quote directly from Social Enterprise Australia and Queensland Social Enterprise Council:

“A social enterprise is a business that puts people and planet first. They trade like any other business but exist specifically to make the world a better place.

Social enterprises do three things:

- Have a social, cultural or environmental purpose

- Generate a substantial portion of their income from trade, and

- Invest profit & resources into their purpose so that public/community benefit outweighs private benefit”

Social enterprises can be any legal structure, from sole trader to private company, listed company, not-for-profit company limited by guarantee, cooperative and more.

In 2022, Social Enterprise Australia commissioned an independent report assessing the number of social enterprises in Australia. The estimate was 12,000 social enterprises, with an economic impact of $21 Billion and providing over 200,000 livelihoods.

And yet, many of these social enterprises are hidden.

If you are still hidden, it’s time to come out!

Broadly, there are three types of social enterprises. Social Enterprise Council NSW & ACT (SECNA) describes them as follows:

1. “Work Integrated Social Enterprises (WISE), which train, support and employ people who might otherwise be locked out of the labour market”, such as The Freedom Hub, Plate it Forward, Community Construction, Mates On the Move, and Oz Harvest.
    
2. “Organisations that sell goods & services that fundamentally make the world a better place” such as Reverse Garbage, Green Connect, and The Reconnect Project.
    
3. “Profit Distribution Companies that donate a significant amount of their profits to charities or operate a buy-one-give-one model”, such as Humanitix, Moode Tea, and Who Gives a Crap.

All the social enterprises that grow share a common thread: determination, expert guidance, funding, and a great team behind them.

Australia’s leading certification standard, Social Traders, can certify these models.

Indigenous social enterprises can also fall into these categories. Examples include the Foundation for Indigenous Sustainable Health, We Are Warriors, and Sobah Beverages (a non-alcoholic drinking culture).

Case Study

Shaun Christie-David founded Colombo Social and Plate-It Forward. Being Tamil and coming from Sri Lanka, Shaun realised how lucky he was to escape and have an opportunity. He wanted to showcase his culture and allow new refugees to find employment. From one restaurant to now having four and a catering business, they have distributed over 500,000 meals for free while also employing 100 staff!

Pretty impressive, right?

Apart from sheer determination, Shaun has experts, advice, and funding to grow his social enterprise.
 

ABC shared Shaun’s story on Australian Story.

So, who can help you? And how?

If your business identifies with these principles, we encourage you to connect to a peak body in your local state. These bodies provide significant support to local social enterprises in their network.
 

If you are more mature and established, consider joining Social Traders.

What are the benefits of joining a State chapter?
Advocacy – State industry bodies represent and showcase social enterprises to governments, corporations and institutions. This is crucial to growing the social enterprise space.

Capacity building support – With growing membership, the effective support can be determined per category.

Connection & Community – Creating a social enterprise can be a lonely journey. The ancient proverb says, ‘It takes a village to raise a child’. A community network uplifts a business – it’s no different in the social enterprise space.

Are you ready to join the movement and make a bigger difference?

Here are the representative bodies:

Social Enterprise Australia – Australian peak body

Queensland Social Enterprise Council – QLD peak body

Social Enterprise Network Victoria – Victoria peak body

Western Australia Social Enterprise Council – WA peak body

Impact North – Northern Territory peak body

Social Enterprise Network Tasmania – Tasmania peak body

South Australia Social Enterprise Council – SA peak body

Social Enterprise Council NSW & ACT – NSW peak body
 

And certifications…

People and Planet First certification – is a global certification supported by the state chapters and Social Enterprise Australia.

Social Traders – The official Australian certification body to show that a business is mission-locked to be a social enterprise. When you are Social Traders certified, you are automatically People and Planet First certified.

So what does Purpose With Profit do for social enterprise space?

While we are an advisory and consulting business, some of our activities are closer to a Think Tank, effectively lobbying for good – we live by our mantra, being Greedy For Good™.

At PwP, we observed that social enterprises have largely been about humanities until recently.

We welcome the standardised definition of social enterprises to include people and planet.

We have identified several broad groupings in the purpose-led economy, and humanities is just one of these.

Some of the new sectors include:

Whole Food Meat & Plant-based Foods— Factory farming and junk foods have devastating public health and environmental consequences. Reverence for real food and eating mainly plant-based foods can prevent the suffering of our loved ones and reduce our carbon footprint, water usage, and biodiversity loss. If this is not enough, we’ll also save billions of dollars in our health budget.

Indigenous Businesses—Traditional Indigenous businesses were created to serve the community and the individual and care for the planet. Indigenous businesses that continue to practice this way are social enterprises.

Service Professionals & Consultants – Like PwP, many service professionals and consultants now actively follow a ‘Purpose With Profit’ approach. We have an extensive network of experts aligned with our vision. Circularity economy consultants come to mind.

Finance, Capital & Banking - Finance and capital are the lubricants of an economy in the form of money. So, it’s important to acknowledge the disrupters in these sectors as well. Bank Australia and Beyond Bank come to mind, as do new platforms like Lend For Good, which connect the conscious community of investors and early-stage impact businesses. Then you have Australian Ethical, Future Super and Cruelty-Free Super for pension funds.
 

Health Sector - Another sector ripe for disruption is our health sector. Some clinics focus on treating the disadvantaged and vulnerable, while others use integrative models combining lifestyle factors with modern medicine. When the ‘purpose’ is locked, combined with the right model, these can become social enterprises.

Climate & Sustainable Technology—This is a fascinating topic. Many businesses are being created to reduce carbon or change materials to reduce carbon, water usage, or biodiversity loss. Due to the demand, these fast-growing industries attract venture capital. The global taxonomy from the Global Climate Landscape (Section 26) gives you the breadth of industries.

Some of these founders, who live by the ‘Purpose with Profit’ approach, may also qualify as social enterprises.

As you can see, there is an ever-growing list of social enterprises in a variety of sectors that prioritise People, Planet, and Profit.

This is nice. So, how can Purpose With Profit help?

We bring the best of both worlds by combining business growth indicators (Profit) with a purpose lens, reviewing the Purpose, People, and Planet strategies. We have a hidden pillar we call Precision, which looks at the founder's well-being, support, and planning.

We invested over $80,000 in cutting-edge business and productivity growth programs, so we share these with our clients.

For the first five years, we focused on the plant-based food sector, and in 2023, we applied our approach with impact consultants and social enterprises.
 

Our proprietary Ready For Growth Diagnostic has been applied to over 60 SME organisations, from consumer-packaged goods to services, social enterprises, and even not-for-profit intermediary!
 

After the Diagnostic, around ~ 90% change their priorities to find new ways to fund, position, and grow their business.

Our methodology works!

We follow this with a deeper three-month strategic business growth plan and then guidance for implementation.

We carefully select who we work with.

If you want to find out more, reach us here.

Our superpower is pragmatic empathy.

Thanks to our last seven years in the impact space, we started seeing patterns and a ‘purpose ceiling’.

Many founders ‘sacrifice’ to get a business off the ground, but some remain there for years and, for some, over a decade!?!

Others pause their growth when they hit a ‘livelihood’ stage, with a few staff, and then lack the will or expertise to grow further.

Some even burn out or sabotage their businesses, so they fail.

This is where Purpose With Profit can help.

Having worked from SME => Large businesses and building budget books up to $500m, we can guide any business for growth.

We have many strategies and models to grow an impact business without sacrifice.

We have experts and funding to help as well.
 

If you want to find out more, reach us here.
 

Do you want more? Does PwP have a Theory of Change?

A Theory of Change (ToC) explains why you exist and how you plan to create a better world through your inputs, activities, outputs, and impact.

Governments, institutions, and not-for-profits largely use this, and it’s now being applied to the social enterprise landscape.

We share our ToC in full in this article, but the summary is below.

We are sharing this again here so you can see how we can help you create your Theory of Change.

A ToC provides clarity and focus, supports better decision-making, improves communication, makes monitoring impact easier, and gives your stakeholders greater confidence.

We divide our ToC into core, noncore and civic duties.

Core

To serve three select social enterprises with 30+ staff to be the ideal case studies to feature in a book!

We are also open to working with one intermediary to help increase engagement, build a revenue model, and scale their impact network. We build tribes!

To create greater awareness, we are committing to launching a podcast and writing a book!

Non-Core

These are supportive services to wrap around our core offering.

We have values-aligned consultants and service professionals aligned to the PwP approach.

PwP is an intermediary for Lend For Good, a pioneering, innovative approach to attracting capital for early-stage impact founders without diluting equity at fair rates and financially rewarding your tribe for being supporters.

Don’t you deserve the best experts around you and better access to capital?

Civic Duties

Apart from contributing to the impact scene, we dedicate over 20% of the CEO’s time to further growing the sector through discussions with the community, governments, stakeholders, and industry groups.

We plan to formalise a community group of over 2500 members into a movement called Plant-Forward.

Impact

By 2030, we foresee over 2,000,000 livelihoods (jobs) being created in Australia thanks to businesses applying ‘Purpose With Profit’ principles.

With the new definition of social enterprise, we are on our way to achieving this.

We foresee a better, universal standard for measuring ‘purpose with profit’ to address planetary boundaries and the SDGs.

We foresee capital being mobilised to support ‘purpose with profit’ businesses.

We foresee many people moving to a four-day workweek to practice civic duties.

Is this bold enough for you?

We are living in one of the most challenging & yet exciting times.

A global shift is happening to differentiate businesses as usual from businesses that are truly built to serve people and the planet first and make a profit.

A confluence of factors, such as inequality and the exhaustion of planetary boundaries, is accelerating the shift to new sustainable and equitable business models.

Social enterprises are a growing phenomenon, providing an alternative path to help us live more sustainably.

There are hidden organisations functioning effectively as social enterprises and doing so much good. We invite them to join this movement.

Social Enterprise Australia, the state chapters, and Social Traders champion social enterprise growth and provide advocacy, capacity building, and a supportive network.

At Purpose With Profit, we see a wider catchment of social enterprises and welcome a conversation about this.

Governments at all levels have a crucial role in weaving the thread between verticals like innovation, sustainability, economic development, and human services.

Governments can provide the fertile ground for social enterprises to flourish.

With the right support, impact businesses and social enterprises can break through their ‘purpose ceiling’ to grow significantly.

To grow, social enterprises will need values-aligned experts, a network, and access to various forms of financial capital.

If you are an ambitious founder or CEO looking to grow your impact business, do get in touch.

We’ll do our best to help you. And if we can’t, we’ll point you in the right direction.

Many quality intermediaries, incubators and experts around the country are ready to help.

Let’s do this Australia!
 

Book a call with us here