Broccoli bonds
Social enterprise gets canny,
Finding funding to do good is no picnic, but Christchurch’s Cultivate urban farm has come up with an imaginative way to create an electric peddle-powered garbage fleet.
Each week its electric bike and trailer unit picks up 2.5 tonnes of organic waste and biodegradable plastic from central city eateries, which is then turned into compost for a commercial vegetable growing operation that has trained hundreds of young people.
Now it is offering investors part payment in vegetables or ‘‘broccoli bonds,’’ as well as cash, to finance five more bike trailers and a marketing campaign.
Cultivate co-founder Bailey Peryman reckons they could make a decent dent in the 40 tonnes per week currently going into landfill, but achieving that hinges on raising up to $200,000 through crowd funding website PledgeMe.
Cultivate is just part of a fastgrowing sector dedicated to making money and a difference.
According to a report from the Responsible Investment Association of Australasia, $100 million worth of impact investing occurred in New Zealand last year – targeted investments aimed at addressing social or environmental issues while also providing a financial return.
However, John McLeod of JBWere Philanthropic Services told a recent World Social Enterprise Forum in Christchurch he expected that to increase 50-fold over the next decade.
The forum attracted 1600 delegates from 35 countries and provided a convenient launch pad for the Impact Enterprise Fund, a fund put together by the A¯ kina Foundation, New Ground Capital and Impact Ventures with the aim of raising $10m to $15m for a dozen or so businesses.
A¯ kina chief executive Alex Hannant says social enterprises are often nervous about having their aims ‘‘diluted or subverted’’ by purely commercial investors only interested in financial returns, so the fund is a way of matchmaking like-minded parties.
It offers a return of at least 10 per cent, but because the money will be locked in for close to 10 years, New Ground Capital managing director Roy Thompson says it is limited to wholesale investors able to afford $100,000 minimum.
‘‘We don’t expect there will be any difference between what this fund will achieve and what a normal private equity fund will achieve.’’
Soul Capital’s Awhi fund, Ma¯ori for ‘‘embrace,’’ has a more modest target of raising $1m, with minimum investments of $50,000 for social enterprise businesses and start-ups.
Chief executive Jamie Newth says that like any other venture capital fund, ‘‘it’s longer term and higher risk’’.
‘‘Where we’re different is that we won’t force an exit if it would undermine the social and environmental impact, whereas typical venture capital will force an exit to hit certain time horizons for their investors.’’
Potential recipients include Thought-Wired, a start-up using brain sensing technology to help severely physically disabled people to communicate, and Ooooby, which connects local food producers with buyers.
Soul is also planning a $10m fund focussing on Maori and Pacific businesses, and Newth is keen to cater for millennials wanting to put money into causes or businesses they feel strongly about.
‘‘At the moment they’re kind of locked out because you need to be a qualified or wholesale investor, or be able to write a big cheque.
‘‘We’re looking to use a model where young people with small amounts of capital can access our expertise, and have the benefit of a fund which spreads the risk over a number of ventures.
‘‘Crowd funding doesn’t do that, you’re are just taking a punt based on limited information, and then you’re at arms length and only in one venture.’’
Between them central and local government wield considerable purchasing power and Social Enterprise Auckland chair Tricia Fitzgerald would like to see them adopting socially responsible procurement policies.
‘‘It’s really important because they are huge parts of our economy.’’
Auckland City Council’s new procurement policy takes into account social, environmental, economic and community benefits.
By way of example general manager procurement Jazz Singh says that when it came to buying plants for a large stormwater project, the council specified they had to come from a nursery run as a social enterprise.
Similar procurement guidelines are being prepared for council commercial organisations such as Auckland Transport and Watercare, but Singh concedes, scale can be an issue.
‘‘Generally when we’re procuring, mostly it is large scale and a lot of these social enterprises are small or operating around the margins.’’
Scale is on Peryman’s mind too, and Cultivate’s organic waste collection expansion is a carefully calculated move to ensure it is ready to tender for a city council contract, should one become available.
Long term he would love to ditch the bikes and use small electric garbage collection trailers to service about 200 inner city food outlets.
Getting corporates on board has already paid off and another arm of the business, Urbundance, has a contract with a property developer to create and maintain a community garden for a Christchurch residential subdivision.
Most Cultivate trainees are high risk youth who might otherwise end up costing the country a bundle through the justice or welfare systems, but the bottom line is important too.
‘‘[Ventures] have to stack up commercially and we set that standard for ourselves,’’ Peryman says.
Winning corporate custom has also worked well for Can Do Catering, owned by the Laura Ferguson Trust, which is carving out a niche in the Christchurch market with clients who appreciate that the business employs adults with significant physical impairments.
Manager Vicky Harris says demand for their catering has grown steadily since they started out three years ago, as has the skill level of staff like wheel-chair bound Ron Neill.
‘‘He’s really come out of his shell and he’s really good at what he’s doing.’’
Hannant says bigger organisations are starting to realise they can add social value through purchasing decisions they will be making anyway, but it can be difficult finding the right social enterprises to provide goods and services ranging from uniforms to stationery.
To remove that hurdle A¯ kina and NZ Post have set up Market Connect, a webpage linking corporates and central and local government agencies with accredited social enterprises that deliver on their promises to do good.
‘‘It mitigates the risk of organisations that are claiming one thing, but are effectively trying to hoodwink consumers or buyers of a service,’’ says Hannant.