A social enterprise intermediary perspective

CHALLENGES AND PRACTICES IN SOCIAL IMPACT MEASUREMENT IN AUSTRALIA

Katherine Kennedy, Strategy Manager , Social Traders Ltd

June 2016

© Social Traders 2016

Topics

• Who is Social Traders ?

• Social enterprise definition and company forms in Australia

• Impact measurement challenges in Australia

• Emerging priorities and practices in impact measurement at 3 levels • Sector • Intermediary • Social enterprise

• Measurement innovation example

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Who is Social Traders ?

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PwC© Social Traders 2016 28

What is social enterprise?

Social enterprises are organisations that:

1. Are driven by a public or community cause – be it social, environmental, cultural or economic

2. Derive most of their income from trade, not donations

3. Use the majority of their profits (>50%) to work towards their social mission

This definition is derived from the Finding Australia’s Social Enterprise Sector (FASES) research, which is the first CENSUS of social enterprise in Australia (2010).

FASES 2010

Point 3 is the most contentious !

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Non-profit model is strong but for-profit increasing ….

Social enterprise company form (N = 256)

Other

Pty Ltd

Company Limited by Gaurantee

Incorporate Association

0% 25% 50% 75% 100%

Note : small sample - inconclusive

FASES 2016

Government funding reforms such as the new disability insurance scheme is likely to significantly disrupt the number of non-profit social enterprises over the next 3 to 5 years

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Australian for-profit social enterprises models ….an emerging issue in Australia ……

✓ Australian social enterprises are exploring ways of protecting their mission in for-profit structures

✓ Golden Shareholding by non-profit

✓Domestic non-profit with for-profit in off-shore market

✓ Social Benefit Company – new

✓New company models are being explored ie CIC, Benefit Corporation

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What are social enterprises saying about impact measurement ?

Latest research (2016) indicates impact measurement is a lower order issue behind :

✓ Unrealised social procurement opportunities

✓ Gaps in governance, skills, capabilities and staff

✓ Access to appropriate capital

✓ Coordinated advocacy

…BUT….FASES 2016 34

Standardised impact measurement…

The lack of affordable approaches to social impact measurement is a barrier to its implementation in our

organisation (N = 98)

Strongly Disagree

Disagree

Neutral

Agree

Strongly Agree

0% 25% 50% 75% 100%

26.5%

37.8%

23.5%

7.1%

5.1%

Note : small sample - inconclusive

FASES 2016 35

Key impact measurement challenges for social enterprise in

Australia?

Key impact measurement challenges in Australia

• Not consistently demanded by main funders/investors ie government, philanthropy

• Cost - who should fund it ?

• Limited capability and capacity

• Reasonable accuracy - how to keep measurement simple especially for small organisations ?

• ROI – the story of change and creating value is bigger than one number

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Impact measurement priorities and practices in Australia – three levels

1. Sector

2. Intermediary

3. Social enterprise

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What we* are doing in Australia ?

Social Enterprise

IntermediarySector

39*Social Traders perspective

Sector Perspective

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Social Enterprise Sector – impact measurement priorities ?

Social Enterprise Sector Mapping • Finding Australia’s Social Enterprise Sector (FASES)

• case studies are very important

• data is low quality currently

Beyond FASES - Governments want more evidence • Proposing a sector-wide database od social enterprises and a bi-annual

census to monitor and value the social enterprise sector

• Eco-system mapping and tracking

• Costs and impact of social procurement

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Sector

An intermediary perspective [Social Traders]

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Intermediary – how we measured our impact [more details in breakout session]

• Retrospective assessment of the social and economic impacts of Social Traders in Victoria between 2009 and 2014

• Key audience is the Victorian Government and other funders

• SROI methodology and assessment undertaken by PwC ~ low bono

• Very conservative approach

• Key questions: • Are our programs making a difference ? • Which programs are having the greatest and least impact ? • Are they being delivered efficiently ? • How should our strategy and monitoring framework evolve ?

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Inter-mediary

Intermediary – key insights from the evaluation

• Results showed minimum return of $3.65 for every $1 invested in Victoria! • Is this a good result ? Is it believable ?

• Capacity building is costly and barely breaks-even, even when high success rates

• Real returns come from the social outcomes generated by the trading enterprises supported

• Measuring the impact of social procurement is a key missing piece

• Too hard and costly to measure the catalytic value created by sector building activities

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Inter-mediary

Social Enterprises – impact measurement practices and priorities

• Social Traders’ Portfolio – investment of $1,6 million in 12 startup and early-stage non-profit social enterprises – trading for 3 years

• Missions and business models are diverse

• Mission focus and ‘theory of change’ framework is embedded as part of the business plan – separate customers and beneficiaries

• Very simple - no more than 2 to 3 output/outcome measures

• Investment agreement specifies financial and outcomes targets

• Financial data collected twice per year • Outcomes data collected annually

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Social Enter-prises

Social Enterprises – impact measurement key insights for early stage enterprises

• Measurement approach must be simple and low cost – ideally the outcomes are tracked as part of normal business e.g. • Kgs of fresh food sold to target community • % of income from trade

• For early-stage enterprises – building their capability is also part of the impact – it dos’nt often get measured

• The enterprise and human story is as important as the quantification of outcomes – social media is a key part of showcasing impact

• Impact investors have a responsibility to tell the investee story

• Higher capability enterprises have been SROIed – but tentative about sharing results – it’s a steep learning curve!

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Social Enter-prises

An Australian example of innovation in impact

measurement

Non-profit social enterprise - innovation in impact measurement – scaling since 2013

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100% of profits go to ending world poverty $3.7 m of profits redistributed as at Jan 2016

Social enterprise – innovation in measurement

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Mobile App - GPS Tracker

Puts the power of impact measurement in the hands of the consumer

Social enterprise – innovation in capital raising

Thankyou Baby & expand to NZ – target $1.2 million in a couple of months

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Thank You

Website – www.socialtraders.com.au Twitter - @socialtradersAU Facebook - SocialTradersAustralia

FASES 2016 - www.socialtraders.com.au/FASES2016 ThankYou - https://thankyou.co/

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