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Social enterprises – the new frontier?

David Downs is in Boston, Massachusetts - and takes some time to share some of the wisdom he's learned from attending a two-day conference on Social Enterprises at Harvard.

Investing for purposes other than profit can seem like a strange concept, but the growing trend of ‘Impact Investing’ would suggest that looking at motives other than purely financial is a trend that is only going to grow. That’s my key takeaway (to use the American business school parlance) after attending a two-day conference on Social Enterprises in Boston.

I’m over here for a couple of months, and happened to notice there was a conference being hosted by Harvard Business School and the Harvard Kennedy School of Government which was focussing on social enterprises. Being involved in a couple of these myself, albeit in a small capacity, I was curious to learn more and get some tips I could apply myself or pass on from SECON 2018.

For the uninitiated, a ‘social enterprise’ is a type of organisation that has a social purpose but may also be making money. In the distant past, you were either a ‘for profit’, or a ‘not for profit’ – these socially-oriented businesses sit in the middle, having a social purpose (eg providing medical services to poor communities in Africa) but who also have a business model which derives not only revenue, but often profit. Profit that may be ploughed back into the enterprise itself, or which further supports its social objectives, or it may be returned to shareholders.

The concept of triple bottom lines has been around a while, and it appears to be gathering some pace. ‘Profit, Planet, Purpose’ is the way this triple-bottom-line was framed up, and many of the examples showcased at the conference, as well as a number of the attendees, had this triple purpose - such as CERO, an organisation which runs a service composting unused food from restaurants in co-operatives owned by the employees.

The prevailing feeling around the conference I was at is that this way of marrying together a commercial business model with a social agenda can result in organisations that have long-term sustainability, attract and develop talent that NFPs might not be able to, and have increased impact.

David Downs at Harvard. Image: David Downs.

Impact. That word again. ‘Impact Investing’, as a phrase, must have come up numerous times in each session I attended. Indeed, there was an entire stream around the financial and investment models in this sector. A rough definition of Impact Investing would be investments made to derive a measurable social or environmental impact, as well as a financial return. A number of large funds were represented at the conference, as well as some sovereign wealth organisations and banks, so clearly this is an area becoming more mainstream. Cynically, one might say it’s because financial institutes are trying to ingratiate themselves with a public who is increasingly hostile to venture capital and private equity, but I think they’ve also woken up to the fact that there exist other forms of capitalism which might be more sustainable, and unlock new talent.

One session I attended showcased a virtuous cycle of grass-roots organisations helping workers buy the firms they worked for, financed by funds who sourced their capital from a wide pool of investors who wanted both return and a ‘feel good’ factor, supporting their local communities.

At the other end of the scale, the Chan Zuckerberg Institute (founded by Facebook founder husband and wife Mark Zuckerberg and Priscilla Chan) outlined their plan to invest 99 percent of all their Facebook stock value (some US$45 billion) using the principles of Impact Investing. That sort of money can really make a huge difference, and with the 80-year timetable they have outlined for the fund, they are in this for the long game. They also are attracting a talent pool of young, smart motivated business school graduates who are simultaneously inspiring with their idealism, and daunting with their book-smarts.

Another session I attended managed to increase the buzzword count even more, by showcasing uses of Blockchain technology for social purposes. Yes, the blockchain isn’t all about buying drugs on the internet or making instant millionaires through dodgy Initial Coin Offerings, it’s also being used to track sustainable fished tuna in the Atlantic, and by the World Food Programme to fairly allocate food rations in refugee camps in Jordan. Surely that’s a quadruple bottom line, adding humanitarian outcomes.

I’m involved with a technology-based social enterprise here in New Zealand called Support Crew which has a web platform that aims to help people ask for help when they are in need. It’s a startup, but one with a lot of promise, and it was great to be able to take the lessons of so many smart people here at the conference and think about how to apply them to our model.

More inclusive and multipurpose. Image: David Downs.

A very quick search of ‘impact investing’ in New Zealand seems to suggest we may be late to the game here (or perhaps our buzzwords haven’t caught up), but I hope that this new mental model for thinking about business will gain some traction. New Zealand could be a leader in this space – particularly when it comes to utilising technology for social benefit. Alibaba chairman Jack Ma has commented that NZ is not only good IN the world, we are good FOR the world, and upcoming events like TechWeek (coming in May) will give us the opportunity to showcase our work here.

In the meantime I know organisations like the Ākina Foundation are championing the social enterprise space in New Zealand, and if you’d like more depth and idea you can implement yourself, I’d also recommend the book ‘Social Startup Success’, by Kathleen Janus, who spoke at the conference.

With so much negativity and cynicism in the press, and accusations of ‘fake news’ dominating headlines, it’s heartening to have spent a couple of days in the presence of 1,000 people who are not only dreaming up new ways to improve the world, but are coming up with sustainable models to do it. May they all have the Impact they are striving for.

David Downs is co-author of No. 8 Recharged, the follow-up to the successful No. 8 Rewired.

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