Social enterprise, still a fairly new concept in South Africa, is steadily gaining international momentum. A panel discussion at Trialogue’s 2017 Business in Society Conference explored the potential and challenges, as well as the type of support and partnerships needed for social enterprises.
Cathy Duff, session facilitator and Trialogue Director, proposed the definition of a social enterprise as an organisation that is impact-driven, addresses social issues using sustainable business models, and which creates some profits for reinvestment into the business, usually with both a social and a profit mission, in order to create social value.
Panellists offered encouragement, but also cautioned those working in or considering entering the social enterprise space. Kerryn Krige of the Network for Social Entrepreneurs at the Gordon Institute of Business Science (GIBS) said that, if social entrepreneurship is understood as falling on the spectrum between for-profit and NPO organisational structures, this positioning brings new opportunities outside of traditional funding models; ultimately facilitating fast-tracked social and economic change.
Innovations for sustainability
From the perspective of a social enterprise or an NPO considering transitioning into a social enterprise, the model offers innovative opportunities regarding both impact and funding sustainability. The ability to generate revenue, which is then reinvested into the business, can support programming towards increased social value. This diversified income approach at least partially reduces reliance on traditional funding models and generates some unrestricted funding which the entity can strategically reinvest.
However this relatively new approach in South Africa brings added complexity. Social enterprises do not fit into the traditional organisational definition of for-profit or NPO. Nor are they all structured in an identical fashion. In fact, during different stages of social enterprise evolution or of NPOs transitioning into a social enterprise, organisations will experience varying structures, governance requirements and funding needs.
Millicent Maroga, Head of Old Mutual Foundation, argued that for the opportunities in this ‘new space’ of business models to be fully harnessed, companies will be required to re-envision traditional funding approaches which tend to struggle to accommodate emerging hybrid structures.
Gabrielle Habberton, Impact Assessment Advisory Manager at Greater Impact, agreed that structural challenges exist. She suggested that companies and other funding partners consider how their funding mandates are structured and where opportunities can be created to facilitate increased impact through supporting a less binary definition of organisations as either ‘for-profit’ or ‘NPO’.
Beth Richardson, Executive Director of B Lab South Africa, supported these opinions. She described B Lab’s experiences globally, in which they have seen that such shifts in organisational approaches and funding create and support opportunities for business to generate increased, and more broadly-shared, social and environmental value.
However, Krige cautioned that the social enterprise approach is not necessarily the correct route for all NPOs. Habberton added that an organisation must carefully evaluate how it would approach the profit component in such a hybrid model. Does a tangible market exist? What shifts in structures, such as governance, will subsequently be required?
Growing body of knowledge
The encouraging trend is that whether an organisation is an emerging social enterprise, an NPO currently in transition, or an entity positioned somewhere on the spectrum, there is a growing body of knowledge and resources. For example, the International Labour Organisation has established a guide for finance for social enterprise and B Lab provides an impact assessment tool, which is being implemented globally.
In South Africa, resources include social enterprise training at GIBS while the Social Enterprise Academy offers short practical programmes. The second edition of the book The Disruptors – social entrepreneurs reinventing business and society, co-authored by Krige, also speaks to the growing conversation on, and opportunities in, social enterprising in the country. The panel also celebrated the Department of Economic Development’s recent commitment to developing a policy framework for the social economy, which will provide necessary clarity on governance issues and shows recognition of the value of social enterprises to the economy.
This session was presented in partnership with
- Beth Richardson, B Lab SA
- Gabrielle Habberton, Greater Impact
- Kerryn Krige, Gordon Institute of Business Science
- Millicent Maroga, Old Mutual Foundation
- Thato Kgatlhanye, Rethaka Repurpose Schoolbags
- Cathy Duff, Trialogue (facilitator)