Social Enterprise
Purpose-driven businesses we love
S ocial enterprise: it’s a term we hear more these days, reflecting a growing movement that focuses on changing the way business is done and emphasises consumers’ ability to do good with their purchasing power. According to Social Enterprise Auckland, “Social enterprises are hybrid organisations that trade goods and services to achieve social, environmental, economic and cultural outcomes.”
This global movement responds to what some see as the failure of the market-led economy, leading to burgeoning social and environmental issues that younger generations will inherit.
As a result, there’s more demand – especially from millennials – for financial models where business gives back to society as well as making a profit. Increasingly, millennials want to work for these kinds of organisations too.
NZ’s social enterprise juggernaut
Nearly three years ago, Lisa King realised children in this country were going to school hungry, and often lacked lunch as well. She couldn’t shake a sense of injustice. So, quitting her job as a food marketing specialist, she developed a bold vision, to ensure no Kiwi child at school goes hungry. Eat My Lunch (EML) was born.
The initiative is based on the buy-one, give-one model. When a donor buys a lunch from EML, they also purchase lunch for a child in need. Donors can choose which of the elected 48 low-decile schools the lunches go to, and volunteers make the lunches early each morning, ready for delivery to schools by lunchtime.
“We thought we’d make about 100 lunches a day, not thousands [at time of publishing, they’ve made approximately 630,000 lunches], and we never envisaged we’d create a vehicle that would bring people together. It takes all these people – our customers, volunteers, staff and supporters – to make Eat My Lunch what it is today.
“We set up as a business, not a charity, because we knew this had to be self-sustaining. We employ 27 people now; we pay rent and taxes,” says King. “Eat My Lunch has shown New Zealand a business that puts a social-purpose enterprise at its heart can be commercially successful.”
Starting young
One of New Zealand’s youngest entrepreneurs, Bonnie Howland created Indigo & Iris after two very different experiences nearly three years ago: spending time in Vanuatu, followed closely by a stint at New Zealand Fashion Week.
Aged 18 at the time, Howland became aware of the huge impact treatable blindness has on Pacific Island communities. Back at Fashion Week, understanding the phenomenal global spend on beauty and fashion inspired her business idea. Consumers purchase beauty products from Indigo & Iris, and 50 per cent of the profits go to projects throughout the Pacific Islands, including to cure treatable blindness.
Pressing pause on her studies, Howland began hunting for the most beautiful mascara she could find. “After years of searching for the perfect formula, we found it in Italy. We called it Levitate and launched a limited run of pre-sales in November, on Kickstarter.”
Howland heads to New York in February 2018 with CEO Hannah Duder, to officially launch Indigo & Iris. “Profit sharing is an amazing way to not just benefit a small group of people, but actually have a positive impact on the world with your profit. I think my generation has a growing demand for ethical business. This is absolutely the future.”
King of the good fizz
Social enterprise pioneer Chris Morrison is still going strong since he co-founded his first start-up, Phoenix Organics, back in 1985. He continues to innovate here and overseas, co-founding two more ethical companies: All Good Organics and Karma Cola (see case study pg 38).
Morrison sees opportunities for social enterprise everywhere, but offers a caveat. “It’s even more important for a socially focused business to have a sound business case with your product or enterprise on trend. Margins can be tighter and there’s nothing in it for anyone if a great business fails,” he says.
“We’re getting to the point that if your business isn’t socially or environmentally focused, you don’t have a future.”
“I think with my generation, soon to be leaders of NZ businesses and this nation, that there’s a growing demand for ethical business. This is absolutely the future.” Bonnie Howland, Indigo & Iris
People are demanding products that align with their values, and they’re sharing great stories and innovations via social media. “On the other side, there are businesses that aren’t doing so well, they’re a little shady and they’re being outed. I’m excited about that,” Morrison says.
But it’s not all fizz and fluff. “It’s harder doing business as a social enterprise because you can’t go past the economics of it – it’s always more expensive doing the right thing. Because you’re paying a fair price for manufacturing, your raw materials and paying the living wage, you’re usually paying more than your competitor. But the good thing about that is it forces you to communicate really clearly and drive extra value.”
Truly inspiring stories
When Guy Ryan set up Inspiring Stories, an incubator for young entrepreneurs, he was 24 years old. It was the serial entrepreneur’s fourth start-up; he was named Young New Zealander of the Year in 2015.
Ryan’s lightbulb moment was realising young people are pivotal to solving today’s big challenges. Every initiative he has created is designed to inspire and unleash the powerful creativity he recognises in some of New Zealand’s youngest and brightest.
More than 6000 of them have already taken part in Inspiring Stories’ programmes: Festival for the Future, Live the Dream, Future Leaders and Making a Difference. And when these entrepreneurs launch their start-ups, Inspiring Stories’ seed funder Future Fund will be there with support as well.
Although a charitable trust, the organisation’s goal is to be self-funding through its five revenue streams: commercial ventures, programme fees, grant funding, sponsorship, and donations. In 2016, Inspiring Stories’ operating revenue reached $850,000, and three commercial ventures have been established. All profits from the recruitment agency, speakers’ bureau and creative agency will support further programmes.
Ryan says while interest in social enterprise has grown in the last five or six years, he hasn’t yet seen that being matched by public investment here, in comparison to impact investment in Australia, Scotland and the UK.
Guiding the millennials
To create the right environment for social enterprises to flourish, build an ecosystem that generates its own momentum, according to Dr Jamie Newth, lecturer in social enterprise at the University of Auckland’s Business School and the co-founder of Soul Capital, an impact investment organisation.
“We’ve got a good idea on what helps develop investment markets because we’ve done it with angel investment and venture capital in NZ since 2000. We now have a thriving ecosystem for this type of capital and there’s no reason why we can’t do the same for impact investment,” he says.
“Government has a specific role too, much like it has with Callaghan Innovation and for traditional capital. There are also legislative changes government can make to ease the hesitation that big philanthropic organisations have about mobilising their investment capital into this space.”
Newth describes the mood of many millennials he teaches as “optimistic dissatisfaction”. “They can see they’ve grown up in a prosperous society, but one that has injustices. To their mind, gone are the days when a traditional business can be completely apathetic about its social and environmental impact.”
He agrees with Morrison: being a social entrepreneur involves an extra burden. “As well as needing all the capability of a traditional entrepreneur, you also need to do the hard work on building your social impact model.
“If you’re wanting to address an issue with social entrepreneurship, you really need to develop a deep understanding of the problem so you can genuinely make an impact. It’s about getting real versus just having a passion.”
Kiwi entrepreneur and speaker Derek Handley says New Zealand is often seen as a great testing ground for new developments, because of our small and well-integrated market. “We have a real opportunity to become leaders in creating and backing impact-oriented companies, and inspiring every entrepreneur to tackle a social challenge, not just a market problem.”
EML founder Lisa King is hopeful that soon, and quickly, people will start thinking about business in a very different way. “You need courage to step outside your comfort zone and do something different. If there’s one word I would tattoo on my body, it would be ‘courage’. I think it’s one of the most important attributes; moving beyond your fears, being brave enough to risk it.”
How to build a business for social impact
Derek Handley oversees Aera, a charitable trust he founded to invest in causes and companies addressing social issues. In 2016, the foundation formed Aera VC, a venture capital investment community for social-impact businesses around the world. Handley’s other enterprises include The Hyperfactory, Snakk Media, and with Sir Richard Branson, The B Team, an advocacy