Growing Australian Social Enterprise Sector and its Impact on Communities

Growing Australian Social Enterprise Sector and its Impact on Communities

Social Enterprise Australia

The Australian social enterprise sector is growing rapidly. Today there are strong, professional networks in every state/territory and a national network to provide advocacy, collaboration and resource sharing.

Social enterprises trade products and services and reinvest profits in social outcomes. They are also employment intensive, generating around 9 jobs for every $1 million in turnover.

1. Business Model

A business that offers social and/or environmental as well as financial benefit to the community.

A social enterprise may use different business models. For example, it could sell business support services to local entrepreneurs through a marketplace. It can also add value to beneficiary-made products and then connect them with markets. This type of model is often referred to as the ‘multisided market model’.

Another way a social enterprise can make money is by charging a premium for its services. The Dragonfly Collective is a for-purpose business that provides training and consultancy in Australia and the UK. It has created a toolkit for social enterprises to blend purpose and profit.

Many social enterprises are registered as charities and can receive tax concessions such as income tax exemption, GST exemption or rebate, deductible gift recipient status, and refunds on franking credits. They can also get grants to start their business. This can help them attract investors and raise the capital they need to grow their social enterprise.

2. Finances

Social enterprises generate their own financial sustainability through trading and reinvesting profit or surplus into their social mission. Typically they are structured as either a limited company or a not-for-profit organisation (although this is not always the case). This allows them greater freedom than traditional charitable grants but also places increased responsibility on them to deliver financial results and demonstrate their value to the community.

In Australia, social enterprises have been able to access debt and equity investment from the private sector. The Victorian and NSW governments have also recently launched new funding streams to support growth of these businesses including a ‘patient capital’ fund for jobs-focused social enterprises.

The Queensland government has also committed to a new funding stream for social enterprise, to support the development of business plans and capability. This will help increase the number of investment ready social enterprises in the state and provide a pathway to social impact investing.

3. Partnerships

Social enterprises are businesses that trade for a primary social, cultural or environmental purpose. They operate across all industry sectors and invest a significant proportion of their income into their purpose so that public benefit outweighs private benefit.

These organisations can be found all over the country – from a graphic design company creating jobs for ex-offenders to a business that delivers affordable wellbeing services to disadvantaged communities. They are changing the way we do business.

The networks that these organisations form are a powerful source of collaborative ingenuity. Together they can drive sustainable solutions to complex global problems and generate lasting system-level impact.

As part of this, the state networks have teamed up to create the Alliance of Social Enterprise Networks Australia (ASENA). This provides a national voice for the sector and facilitates collaboration, sharing and resource-sharing across the emerging community of networks.

4. Location

Social enterprises are often located in disadvantaged areas of Australia. Their growth and impact could help develop a more diverse economy with greater participation for disadvantaged Australians.

They have been known to make a significant economic contribution to our communities (see the Map for Impact report), yet they receive limited Federal Government recognition or support. State-based practitioner networks are forming to bring this sector into national dialogue and to develop local, regional and state policies that can help nurture and grow it.

They have a primary social, cultural or environmental purpose and generate a substantial proportion of their income through trade. They invest a significant proportion of their resources in their purpose so that public benefit outweighs private profit. They are independent businesses and may include cooperatives, B Corps, charities and for-purpose companies. They are located in a wide range of industries. This definition is being used by SEWF for global verification, by government for grant applications and as the language of the new social enterprise sector marketing playbook.

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