Social enterprises have a transformative influence on the lives of individuals, families and communities across Australia. A social enterprise is a business that has a social mission which it pursues using mainstream business models. As well as their social impact, they contribute 2-3% of Australian GDP. Rather than small businesses on the fringes of the economy, or social movements, social enterprise, in fact, represent a major part of our efforts to address social problems in economically sustainable ways.
Social enterprises have become increasingly relevant to policymakers as well as communities in the past three years. At local and state government levels, in particular, we have seen deeper recognition of this, with major developments supporting strategic social enterprise capacity development, and social procurement.
Alongside the growth of social enterprise has been a shift towards different forms of quasi-markets. Developed under New Public Management, quasi-markets use business principles in the delivery of public services. Most notably, we have seen these in employment services and now the National Disability Insurance Scheme (NDIS).
One would think that quasi-markets and social enterprise are a match made in heaven, and the growth of social enterprise into quasi-market spaces is something that should be encouraged. However, they have been curiously absent from some key policy discussions. When it comes to the NDIS, the scheme represents the most significant opportunity for social enterprise development we have seen in Australia.
Yet, the blueprint for the economic sustainability of the scheme put forth by the Productivity Commission makes no mention of social enterprise. In fact, social enterprises have not featured in discussions of market development or sustainability.
As the NDIS has radically shifted the operational landscape for many disability service providers, it has created challenges and tensions for those providers, as well as service users and administrators alike. However, the scheme also aims to encourage innovations in how services are provided, stimulating new ideas and approaches to the benefit of individuals.
It is this interface between innovation, managing tensions and delivering social outcomes that means that social enterprise has great potential. Since they often combine a non-profit ethos with an entrepreneurial mindset to overcome operational challenges, social enterprises routinely manage operational tensions in the course of business. We know that social enterprises are adept at sustaining their ventures in resource-scarce environments, and they are accustomed to finding and servicing market gaps, especially those gaps where other providers can’t (or won’t) go. International evidence indicates they would fare well in quasi-markets, with social enterprises performing better than for-profit and state-run providers delivering the same services. That said, social enterprises also complement, rather than compete with the work undertaken by existing providers.
Given the potential value of social enterprise within the NDIS, we need to ensure that the NDIS provides the conditions under which social enterprises can grow. This will require:
- Assessing whether the NDIS supports social enterprises already operating in it. We don’t have this data, but routine data collection about social enterprise participation would create a baseline to help policy makers and administrators to understand how, and also where social enterprises are active in the Scheme. This would help other providers looking at converting to social enterprise models to understand where they appear to be most successful. This would be especially useful knowledge for service development practices in regional and rural areas which are often reliant on a small number of providers, risking service interruption or discontinuity should their models prove unviable.
This knowledge will also demonstrate how the market encourages collaboration, as well as competition, to deliver better quality outcomes for individuals and the system alike.
- Assess whether the NDIS is set up to encourage new social enterprises in. From the demand-side, administrators need to demonstrate enough knowledge of the ‘value-add’ of social enterprises to recognise them as viable service providers. Also, service users need to have confidence that social enterprises can deliver on individual needs, as well as the added community benefits that these models bring.
From the supply-side, more social enterprises entering the Scheme would require close collaboration between the NDIS and the wider social enterprise ecosystem. The latter provides the resources and programs for start-up business support, as well as advocacy for their wider growth. This would help to encourage social enterprises in to the Scheme while clearly communicating the importance of accountability to service quality standards and safeguards.
Overall, we argue that social enterprise growth in disability service provision would be highly beneficial to the Scheme. However, to realise these benefits, their absence in the wider discussions around the Scheme’s present and future needs to be addressed frankly and fully.
You can read our detailed article on social enterprise and quasi-markets here.