Mapping the Australian Social Enterprise Sector in 2016

Mapping the Australian Social Enterprise Sector in 2016

Australia’s social enterprise sector is thriving, according to the recently released ‘Finding Australia’s Social Enterprise Sector (FASES)’ 2016 report. Currently, there are at least 20,000 Australian social enterprises in operation, and many of these are between two and five years old. This is in stark contrast to the FASES 2010 survey that found 68% of social enterprises had been operating for over ten years. Depending on whether you’re a glass-half-full or glass-half-empty kind of person, this statistic may seem a bit gloomy. On the contrary, it represents growth and innovation within a sector that was previously pretty stagnant. This refreshing change means that in the coming years we are likely to see the launch of many more exciting, transformative, and impactful purpose-driven businesses in Australia.

The FASES 2016, from Swinburne University’s Centre for Social Impact (CSI) in partnership with Social Traders, surveyed 370 social enterprise practitioners, social enterprise intermediaries, and policy makers. It’s the second time the FASES research has mapped the sector, the first time being in 2010.

Where do Australia’s social enterprises operate?

Australian social enterprises are operating in every sector of our economy. The FASES 2016 report survey found that greatest number of social enterprises are operating in Retail Trading (24.5%) and Health and Social Assistance (22.2%). This differs to the 2010 survey results, in which Education and Training (41.6%) and Arts and Recreation Services (31.7%) were the two most cited industry categories.

2016  FASES Survey Results – Where do social enterprises operate?

One the whole, the majority of social enterprises operate in the service economy (68%). While the social enterprise sector has room to develop more fully in other economic sectors, it is set to take advantage of the increasingly evident transfer of Australia  from a manufacturing economy to a service economy (Business Insider Australia). Social enterprises were found to be located right across Australia, in every state and territory. However, there was a greater concentration of them in urban centres, particularly in Melbourne, Sydney, and Brisbane.

The biggest challenges

Limited governmental policy support at both the national and state levels was cited as one of the main barriers to social enterprises growing and fulfilling their potential. According to lead researcher, Jo Barraket:

…there’s an absence of policy frameworks at all levels of Australian government to support social procurement, although there’s certainly examples of good practice happening. I think a more coherent policy commitment to social procurement would be an important first port of call for access for social enterprises.

Fortunately, social enterprise and innovation have gained national attention throughout the current federal election campaign. With luck, policy support for the social enterprise sector may be just over the horizon of the election.

Another identified challenge for the sector was a need to improve marketing and communications. For the profile of social enterprise to be raised in the public eye, the sector as a whole must get better at measuring and communicating the positive social impacts they are generating. This isn’t unexpected, given that social enterprises are generally more focused on doing rather than telling, but an exciting area for improvement!

To encourage increased consumer awareness and utilisation of social enterprise products and services, as well as to gain the insightful benefits of improved monitoring and reporting, the average social enterprise will need to alter their perception of the importance of impact measurement.

The final key barrier identified was organisational governance, and its ability to hinder the development of the social enterprise. This is of particular concern among not for profits with one or multiple business ventures. Many not for profit organisations are now considering social enterprise as an option for increasing their impacts or improving their financial viability. However, the report noted that organisations combining traditional social service delivery or charitable purpose with social enterprise models can have difficulty in trying to balance multiple purposes. In truth, the perfect leadership team of a not for profit may not be well suited at all to run a business venture.   

That is not to say that a not for profit board does not have a lot to offer its enterprise arm. In fact 65% of FASES 2016 survey respondents either agreed or strongly agreed that their boards play a substantial role in advancing their enterprise’s mission – the central component of all social enterprises.

The biggest potential

A major opportunity for social enterprise business development identified by participants included the opportunity to develop markets through increased social procurement. Big businesses and local, state, and national governments have the power to stimulate markets for purpose-driven enterprise by preferencing goods and services provided by social enterprises. Likewise, increases in trading between social enterprises will support the sector and ensure that positive social and environmental impacts are maximised, and ethical supply chains are developed.

While access to financial support was cited as a barrier in the social enterprise sector, there is a growing popularity of the impact model of investment. As a result, increased access to capital is on the near horizon and for our home-grown social enterprises.

Finally, the rise of ethical consciousness of Australian and international consumers correlates with a growing appetite for conscious consumerism. As the Australian social enterprise sector is diverse, mature and sustainable, it is ripe to grow along with this appetite.

Essentially, the future looks bright for the Australian social enterprise sector, and we’re pretty happy to be enabling this new way of doing business at One10.