New study: New Zealand behind the social enterprise times

A University of Auckland researcher says innovation in the world of social enterprise is being hampered by a lack of knowledge, out-dated laws and under-developed capital markets. He wants to change that.

Social enterprise is a grey area between business and charity, and some are for-profit while others are just as likely to be non-profit organisations. What sets them apart from pure business ventures is their driving purpose to effect positive social, cultural or environmental change.

University of Auckland innovation and entrepreneurship lecturer Jamie Newth has been researching innovation and social entrepreneurship in a largest NGO and has found innovations are not solely shaped by the visions of social entrepreneurs, but the expectations and beliefs of all stakeholders.

“Social entrepreneurship is far more contested because it needs to be commercially viable and make a positive impact, and this requires input from a greater range of stakeholders,” he says.

The number of potential innovative ideas is limitless, and if it was made easier to start and grow social enterprises, they have the potential to make a significant difference, he says.

Australia has about 20,000 social enterprises contributing about 2 percent of GDP, and there is an estimated 70,000 in the United Kingdom contributing more than $100 million to the economy.

But New Zealand lags behind in the maturity of the sector, Newth says.

“Our government financially supports the private sector to enhance economic development, and the charitable sector because of its social impact. Social enterprises that achieve both are unable to access such support.”

Eat My Lunch, which gives a free lunch to a child in a low-income area for every lunch bought, is an example of a for-profit social enterprise, while fair trade store Trade Aid is a non-profit example. But Newth says more investment is needed before New Zealand can achieve similar numbers as across the ditch.

“Investors are increasingly looking for investment opportunities that allow them to do good as well as generate a financial return.”

Newth’s own startup, Soul Capital, is an impact investment fund that will make growth capital available to social enterprises and sustainable businesses.

He flagged the issue of funding at the official launch of Social Enterprise Auckland at the business school earlier this month. Other barriers include a lack of understand of what social enterprise is and a lack of a specialised legal from to make it easier for funders and investors to support social change.

Management and international business associate Professor Christine Woods says more students are engaging in social entrepreneurship.

“We see it in the Velocity entrepreneurship programme and in our classrooms. Students want to make a different and meaning is important, not just accumulation and money.

Woods says the University of Auckland business school is working to support and foster social enterprise through teaching and research.

“Students are looking to use business to solve problems, and businesses and non-profits are increasingly blending the type of value they create. This requires different skill sets than we traditional teach.”

Social Enterprise Auckland is working to develop the sector. Members include North Shore-based Pallet Kingdom, which trains disadvantaged youth to make furniture from discarded pallets, and Conscious Consumers, whose app guides consumers to more than 300 businesses accredited as sustainable.