Why not-for-profits should care about the rise of social enterprises

Posted on 17 Oct 2023

By Matthew Schulz with Kerryn Burgess, Institute of Community Directors Australia

Cathy ASRC catering
Cathy, 60, originally from the Democratic Republic of Congo, has been working with the Asylum Seeker Resource Centre's social enterprise catering arm since 2021. Source: ASRC website

What exactly is a social enterprise, and is it as great as it sounds?

More specifically, what’s the difference between a social enterprise and a not-for-profit?

The growth and success of the social enterprise sector across the country certainly gives not-for-profits plenty to think about in their own work.

At first glance, social enterprises and not-for-profits seem to have a lot in common. A social enterprise is a business that exists partly or wholly to advance or support a social mission or tackle a social problem – which might be providing jobs for people who are long-term unemployed or have a disability, or helping the environment.

A not-for-profit, similarly, is driven by its mission, whether that’s getting people into work or rescuing injured wildlife.

Both are potentially profit-making. For the social enterprise, profit is imperative for sustainability. For the not-for-profit, profit is not imperative, but a diversity of funding sources is, and if earned income is part of the mix, it can only help your financial resilience.

Scroll down for a quick snapshot of social enterprises in Australia and some handy FAQs.

What’s the accepted definition of a social enterprise?

While not-for-profits are clearly defined, with a range of different governance and legal forms, “social enterprise” is not a legal structure in its own right. In fact, there is no legal definition of “social enterprise” in Australia.

Social enterprise is an aim rather than a legal structure or a codified business model. And in their aims, many social enterprises are similar to traditional not-for-profits that exist to provide social services.

Leading proponents agree that social enterprises exist to create social impact through trade, and that they:

  • have a social, cultural or environmental purpose consistent with a public or community benefit
  • derive a substantial amount of income through trade
  • generate a public and community benefit that outweighs any private benefit, and
  • reinvest most of any profit or surplus in the fulfillment of their mission.

Many Australian governments recognise the above definition. Some recognise certification issued by certifier Social Traders. Others will recognise an organisation as a social enterprise if it can demonstrate its credentials via its constitution, a statutory declaration, or a statement from a third party.

ICDA’s parent company, Our Community, mandates its social enterprise purpose in its constitution, for example.

Some states draw on broader definitions of social enterprises that take in organisations working in childcare, aged care, disability support, employment services and affordable housing, as well as community art galleries, community banks, private schools and tertiary institutions, hospitals, insurers, clubs and superannuation funds.

A snapshot of social enterprises in Australia

Aus Social Enterprise Stats Oct2023 Source SEA
Figures from the Social Enterprise Australia report Business for Good, 2022

How about some examples of social enterprises?

Deadly Espresso
Deadly Espresso Time coffee is a product of the D-time social enteprise, powered by the SevGen Corporation.

D-Time Enterprises (powered by the SevGen Indigenous Corporation)

SevGen (seven generations) is a Queensland-based charity established in 2012. It runs several social enterprises under the holding group D-Time Enterprises to support its mission-related work.

Its biggest activities are Deadly Espresso Time (barista coffee and retail), Deadly Seasonings Time (salt and pepper), Deadly Bushtucker Time (native fruits, berries, nuts and aromatics) and Deadly Marketplace Time (online shopping). It operates in the Northern Territory as well as Queensland, and it has national ambitions.

SevGen Indigenous Corporation is certified by Social Traders and Supply Nation and is a member of Queensland Social Enterprise Council (QSEC).

Income from those enterprises supports programs such as “Lifta drifta”, which helps school-age youths facing suspension or expulsion; “Modern songlines” which connects permaculture and people; a youth development program dubbed HIPSTAs; and another justice program that helps offenders to tackle court debts.

Read more

ASRC Cleaning Services 66
The Asylum Seeker Resource Centre social enterprise ASRC Cleaning offers training, education and mentorship along with work for staff at the Melbourne-based business.

Asylum Seeker Resource Centre enterprises

The Asylum Seeker Resource Centre (ASRC) – Australia’s biggest asylum seeker charity – is based in Melbourne and runs both ASRC Catering and ASRC Cleaning to create employment for 80 people seeking asylum, as well as training, education and mentorship opportunities for participants.

The cleaning service now provides services to 800 customers, while the catering service feeds conferences, parties, workshops, weddings, corporate launches and more.

ASRC Catering also runs the Journeys Café at two Melbourne locations, and has won multiple awards, including the Good Food Guide’s Food for Good award.

The enterprises work with ASRC employment education programs to assess the skills, language ability and needs of employment candidates, before candidates are equipped with health and safety information and industry certificates and trained to become ready for work.

At the last count, social enterprises added $2.6 million to ASRC revenue. The funds help sustain those businesses, including covering the costs of staff development and operations. The businesses are accredited by Social Traders.

Read more

Youngster Co at Karingal Shopping Centre
Youngster.co at one of the many shopping centres where it has hosted tech problem solving sessions using young experts to help older Australians.

Youngster.co puts old heads on young shoulders

Small social enterprise Youngster.co is a privately owned company that connects digital natives with seniors, allowing young people to share their tech knowledge, and get some life lessons in return. The enterprise, founded by a father-and-son team in Coffs Harbour, NSW, has expanded nationally, employing more young people to teach older Australians about Zoom, Skype, Facetime and other online tools, while the young gain essential life skills.

Youngster.co recently partnered with superannuation property owner ISPT to connect young people with seniors at five shopping centres across Australia. Eighty-eight young people conducted more than 1000 sessions to help seniors with their tech issues.

The organisation commits to diverting more than half of any revenue to initiatives “that create public value and benefit individuals and communities”. It has been accredited by Social Traders.

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Impact Sustainability team pic
Impact Sustainability helps businesses measure their environmental impact.

Environmental business aims to measure carbon impact

Impact Sustainability is a Melbourne-based social enterprise helping businesses measure their impact on the environment via a software platform.

The proprietary company is backed by a handful of angel investors prepared to wait for dividends in exchange for long-term growth and positive environmental impact.

It is one of Australia’s longest-standing firms in sustainability measurement and is pursuing B Corp (benefit corporation) accreditation and ESG credentials.

The company also supports the environmental not-for-profit Sustainable Table, partly by connecting other businesses with Sustainable Table’s “on the ground” regeneration projects.

Read more

What are governments and others doing to help social enterprises?

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What are governments and others doing to help social enterprises?

Key supporters of social enterprises include governments in Victoria, NSW, Queensland and South Australia.

Victoria was the first state to release a social enterprise strategy, in 2017, and its latest strategy runs until 2025. It was also the first to roll out a “social procurement framework” to encourage its agencies to use social enterprises to provide services. Queensland released a social enterprise strategy in 2019, with NSW in the process of developing one. Both also have social procurement policies.

More recently the federal government released the Working Future white paper which mentions social enterprises 29 times and promises to work with social enterprises as part of a jobs “roadmap”.

This includes an $11.6 million promise to “back the social enterprise sector to provide more employment and training opportunities for Australians facing disadvantage”. The white paper outlines a federal plan to “draw on the expertise of the social enterprise sector and build capacity to improve the labour market outcomes of people who experience entrenched disadvantage”.

“The government will investigate opportunities to work with social enterprises to address persistent labour market disadvantage, with a focus on the role social enterprises could play in creating jobs and career pathways,” the report says.

Alongside governments, there are also social enterprise peak bodies in every state and territory and an umbrella group, Social Enterprise Australia, which is pushing for a national social enterprise strategy.

A 2021 national strategy scoping paper by Griffith University’s Centre for Impact Innovation found that the sector remained “fragmented, under-served and not realising its latent potential”.

It argued that the sector should press on with its own strategy without waiting for the federal government to act. The paper proposed releasing a strategy in late 2023 and suggested there were “significant gains to be realised by improving coordination, connectivity and communication”. It said the strategy could complement existing work, better connect policies and social enterprises, and compensate for the lack of support for social enterprise in some sectors and locations.

What’s so good about social enterprises anyway?

Tara Anderson
Tara Anderson of Social Traders

Speaking after the recent launch of the Pace 23 report, Tara Anderson, Social Traders CEO, said social enterprises had made a big impact on some of the country’s most marginalised communities.

“Social enterprise is business at its best. It’s the business model of the future,” Ms Anderson said.

“Imagine an economy where every business was a social enterprise. Where instead of business only maximising dividends for shareholders, we had every business creating purposeful impact for communities and the planet at the same time.”

“While organisations everywhere are being challenged to build purpose into business, the social enterprise sector has been doing it for decades,” Ms Anderson said.

She said social enterprises were resilient too, with a close-down rate 2.5% lower than that of traditional businesses.

She said social enterprises were led by people with passion, innovative ideas and adaptability.

“That's the mindset of a social entrepreneur: they do what it takes to make their business work. They have huge passion for their social or environmental mission, and that really drives them to make their enterprise successful.”

She said Social Traders continued to push for businesses and governments to buy from social enterprises.

Jess Moore
Social Enterprise Australia CEO Jess Moore

Social Enterprises Australia CEO Jess Moore said the federal white paper on jobs was “a big deal”, given its focus on social enterprises.

Ms Moore said the white paper contained plans to remove barriers for those attempting to gain work, which “positions social enterprise as a key means to partner with communities to do this.”

The white paper said the government would build on work underway within the social enterprise sector – the Outcomes Fund and the Social Enterprise Development Initiative – to back social enterprise to provide more employment and training opportunities for Australians facing disadvantage.

Ms Moore said the task now was to “pair government goals with the operating reality of social enterprise”.

“It's an opportunity to put the big picture challenge of unemployment front and centre, and … to find practical ways to solve it.”

Social enterprise FAQs

Op Shop Clothing Shopping i Stock 874887774

Here are some questions we’ve had over the years from not-for-profits about social enterprises.


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