Social entrepreneurship: Solution to old problems?

By Bruce Munro

A new breed of entrepreneur is rising — young, savvy idealists who want to make a lifestyle of changing the world and with the independence to do it their way. Bruce Munro looks at the mainstreaming of social entrepreneurship and its promise of new solutions to old problems.

Susan Wardell at The Cuckoo's Nest in George St. Photo / Otago Daily Times
Susan Wardell at The Cuckoo's Nest in George St. Photo / Otago Daily Times

At first glance, Louis Brown looks every inch the young businessman focused on his first million. Smartly dressed and standing outside the Otago Polytechnic student centre in Dunedin, the 29-year-old's confident smile, steady patter into his smartphone, and shoulder-slung laptop all betray his commerce degree roots.

But closer inspection reveals an anomaly. His smartphone's screen is cracked. It is a battle scar from last February's devastating Christchurch earthquake, after which Brown played a lead role in organising the youth-led response of the Student Volunteer Army.

A few minutes' conversation deepens the incongruity. Dreams of fame and fortune were abandoned in an Australian epiphany seven years ago, he says.

"I was a New Zealand delegate to a United Nations conference in Sydney and they showed a graph of the state of the world," Brown recalls. "In that moment I thought 'what am I doing with my life? Not a lot to help that.' I came back to New Zealand with a different motivation."

Today he runs two fledgling social enterprises and is one of a rapidly growing number of social entrepreneurs, many with schoolyard memories still fresh, who are blurring and redefining the boundaries of charity and commerce.

It is a new and rapidly evolving phenomenon, says Dr Jodyanne Kirkwood, academic leader of the University of Otago Centre for Entrepreneurship which offers a popular postgraduate-level paper in social enterprise. Although researchers are just beginning to look at social entrepreneurs and their myriad enterprise hybrids, the notion of being a social entrepreneur is quickly becoming more widely recognised and accepted, she says.

The Government is also busy trying to get a handle on the topic. The Department of Internal Affairs (DIA) is collating and analysing the results of a nationwide online survey conducted between July and mid-September which aims to uncover the nature and extent of social enterprise in New Zealand. The results are due to be published early next year.

The Government defines a social enterprise as one that has an economic, social, cultural, or environmental mission; derives a substantial portion of its income from trade; and reinvests the majority of its profit/surplus in the fulfilment of its mission.

Australia, which went through this exercise a couple of years ago, is estimated to have 20,000 social enterprises spread throughout the economy but concentrated in the service sector. The turnover of the largest Australian social enterprises is believed to be $300 million a year.

One characteristic of the movement that is already clear in New Zealand is the youthfulness of those leading the charge, says Kirkwood.

In the past couple of years, the optional social enterprise paper has become a favourite among entrepreneurship master's degree students at Otago University.

"The issues being addressed by social entrepreneurs are now more mainstream. They are not seen as being on the fringes of society anymore. Young people are seeing it as a career option."

This change is also evidenced in a "huge increase" in the number of students joining the New Zealand branch of Enactus - a worldwide youth business competition with a social enterprise focus.

"Young people's goals seem to be broader today," says Kirkwood. "Ten years ago entrepreneurs wanted independence and money.

Now there is a lot more talk about lifestyle and helping ... Young entrepreneurs are not as focused on making lots of money."

They run their businesses with just as much business acumen as other entrepreneurs, says Kirkwood, "but they have strong values in the front of their minds in making decisions".

Such as 23-year-old Susan Wardell and Annika Metua, 22.

This month, Wardell, a social anthropology PhD student, and Metua, a medical student, will celebrate the first anniversary of their Dunedin "ethical boutique" Cuckoo's Nest.

With little business experience, but a strong desire to promote and support fair trade, environmental sustainability and local producers, they opened the George St store selling new and vintage clothing, jewellery and accessories a few weeks before Christmas last year.

"We invested all we had in the business," says Wardell. "Winter has been tough but we've had a lot of strong support and business is picking up."

Twenty-six-year-old Anna Guenther is also finding success. The recent graduate of Otago University's entrepreneurship masters degree is the founder of Wellington-based PledgeMe, an online crowd-funding platform for creative projects, including other social enterprise start-ups. Individuals or groups list their project on the site in hopes of attracting enough donated funding to make it happen. A success fee is deducted if the target is reached.

"Anna is unapologetic about PledgeMe being a limited liability company, but one that is motivated by wanting to be of benefit to others," says Kirkwood.

In the eight months since it was launched, PledgeMe has raised a combined $600,000 for 135 projects.

One of the beneficiaries was Brown's people-powered social change organisation, ActionStation. Earlier this year, he used PledgeMe and similar site Givealittle to raise $11,000 to employ a staff member.

He describes ActionStation as being "in that awkward start-up phase" but hopes in a few years it will be this country's equivalent of US-based Avaaz or Australia's Get Up - online grassroots organisations which co-ordinate and raise funds for large-scale, real-world campaigns to bring about social, environmental and political change.

His other social enterprise is Social Innovation, co-founded with Inspiring Stories Trust's young change-maker, Guy Ryan.

Social Innovation, which Brown describes as "an independent community development agency", was recently contracted by Otago Polytechnic to trial student volunteering programme Scarfie Army. He hopes the polytechnic and university will contract it to run a scaled-up Scarfie Army across the two campuses next year.

It has been a long road getting to this point. For the past seven years Brown has dreamt up, raised funds for and run a host of different events and programmes in order to "put food on the table" while also "making a difference".

And there is still a good-sized gap between where he is and the realisation of his dreams. But he wouldn't have it any other way.

"I can't think of a more exciting job to have," he says.

"Young people want to be seen and they want to make a difference. They want a challenge, they want autonomy and they want to get better at what they do. Social enterprise gives endless opportunities to do all that."

Social enterprises are not a new phenomenon.

A classic example is Plunket, founded in Dunedin in 1907 by Sir Truby King. In tandem with his work to lower infant mortality rates, King started a baby food supplements business while living at Seacliff, north of Dunedin. From 1927 the Karitane Products Society (KPS), as it became known, was run by a group of businessmen who returned the profits to Plunket. This continued until the mid-1980s when KPS went out of business.

And many other not-for-profits have a trading element: think op shops, street-appeal flower sales, red noses ...

But what is changing is the increasing number looking to put their funding on a more secure footing by developing the commercial wing of their operations.

Noela Vallis is founder of the Spinal Cord Society which has its research laboratory in the University of Otago Centre for Innovation.

Matamata-based Vallis says a combination of the global recession, Christchurch earthquake and competition from other charities is forcing her organisation, which has depended on donations and grants, to find new ways to fund its work.

The society's research scientist, Dr Paul Turner, will shortly have a second round of meetings with some of the university's Centre for Entrepreneurship students, who are suggesting the society set up a company to market and sell a product which could provide a steady income stream.

Malcolm Cameron, one of New Zealand's elder statesmen of social enterprise, believes developing commercial sources of income is good for charitable organisations and those they seek to help.

Cameron established the youth development Malcam Charitable Trust and the
4 Trades apprenticeship training trust, both with strong enterprise elements. He was also instrumental in setting up the Bargain Barn Dunedin Charitable Trust, whose Restore secondhand store directs profits to Malcam and Habitat for Humanity.

"It's about having some independence," Cameron says. "Society has created a lot of dependants, especially on the Government. If you're not careful, those seeking to help them can become equally dependent.

"As funding streams change we still have some independence to make decisions about what we believe is best for the community."

It is not an easy course to pursue.

"You have to open yourself up to the possibility of failure," he says. "You have to take some giant leaps to make it work."

But he is excited by what he sees young social entrepreneurs accomplishing.

"I have so much faith in this generation coming through. They are getting to do things I didn't do until I was 50."

- Otago Daily Times

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