+ Should we all be social enterprises now?
Social enterprises are the buzz word now, but what exactly is a social enterprise and how accountable are they for development impact?
For an international NGO (INGO), it can be a struggle to draw a line from project or programme to development impact and to prove you made a difference. Social enterprises can sometimes claim development impact without having to prove it.
Meanwhile, INGOs watch on in envy as self-sustaining social enterprises appear to bring about social change while avoiding fundraising events, complicated grant and reporting processes, visits to the government for funding and expensive public fundraising campaigns.
But INGOs have a lot to learn from social enterprises.
Research indicates millennials are driven by a global social conscience, with many choosing their career by issues they care about
According to a study by Victoria University’s Institute for Governance and Policy Studies (March 2018), trust in charities and (large) businesses are trending in opposite directions - moving down and up respectively, at almost the same rate (charities down 3% with business up 2%). While trust in charities remains higher overall than businesses (76% to 60%), the net decline is significant at 5%. There is also a lower proportion of no trust in businesses - 9% in 2018 versus 13% in 2016. The incoming generation (aged 18-29 in 2018) is also less trusting overall than those aged 30 and up, almost 10% below the national trust average of 47%.
Even without reputational and trust issues, donating to charity in the traditional sense simply doesn’t make financial sense.
But social enterprises in New Zealand also have challenges. The definition is one of them, a bit like trying to define what is 'organic' until a legal definition was introduced, defining what is a social enterprise is still a challenge:
Some of this difficulty comes from the tendency to think of “businesses” and “charities” in binary terms, whereas they really sit on a spectrum. Most businesses have some form of commitment to the social world, and, based on returns to the Charities Commission, 38% of income received by registered charities in NZ is earned through the provision of services and trade.
The age of the NGO isn't over. We have a lot to learn from each other, but we need to get better at collaborating.
Read the full CID Brief on Social Enterprises and INGOs here