Who invests in the investors?
Social enterprise is a new way of doing business that’s taking hold in communities all over the world. Social enterprises are basically businesses, but instead of exclusively focusing on profit, they focus on investing in communities and causes. Just like an early-stage startup may invest in its own growth rather than take a profit, social enterprises invest in the growth of their community or cause.
But social enterprise in New Zealand has the same issue that all businesses in New Zealand have: lack of access to investment. This is bigger than just capital. It’s also about expertise - an investor is often a source of connections and expert advice in addition to being a source of capital.
The Ākina Foundation is a not-for-profit that aims to fill this gap for the social enterprise community. It focuses on 3 different ‘levers’ to help improve social enterprise: capability, investment and procurement.
Building capability and connections
Ākina has found that they can have a significant impact by improving the capability of lots of social enterprises, rather than getting into the details of just a few social enterprises. So, rather than actually “do the doing, “ Ākina focuses on helping the people in social enterprises improve their ability to deliver.
This is a much more efficient way to have an impact because there’s a leverage effect. In the same amount of time it takes to work day-to-day on one social enterprise, Ākina can train the leaders of ten social enterprises. Ākina does this by giving access to tools and best practices, and providing training and consulting.
One example of this is in the reporting space. A standard business has fairly straightforward reporting requirements - it spends some money, it sells some products and services, and at the end, hopefully has more money left over than it started with. Social enterprise delivers more than just profit, though, and social enterprises need to report on this in a way that shows their impact in an accurate way.
Ākina also indirectly builds capability by facilitating connections. By connecting two social enterprises that can work together, Ākina can create an impact that’s greater than the sum of the two parts.
The other lever Ākina pulls is a classic one - investment. Or, in other words, money. Social enterprises often struggle to find the capital they need to expand, which in turn limits the social impact they can make. Ākina works with a couple of other firms to run the Impact Investment Fund.
It’s not like a VC firm, or angel investor, though - Ākina looks beyond just profit. Rather, it chooses investments based on a combination of business fundamentals and social impact. Ākina isn’t trying to 10x its investment the way a venture capital firm would - rather, it’s trying to increase social impact by giving social enterprises the resources they need to build their capability and increase their impact.
The Impact Investment Fund’s first investment was into a social enterprise called Melon Health, which provides digital tools to help people manage various health conditions. Since then, Melon Health has since grown from strength to strength -it’s partnered with a major US insurer to roll out a diabetes prevention programme, and is rolling out a proof of concept in a few DHBs to help deliver better mental health services.
The other side of all this is around the way larger organisations spend their money. In many cases, a corporation, large not-for-profit or government organisation will partner with a supplier based on traditional metrics like cost and reliability. However, Ākina has found that these organisations often have social impact goals - and they can achieve these goals through their procurement strategy. In some cases, an organisation can partner with a supplier who is just as reliable and cost-effective as other suppliers, but also helps to deliver a social impact - so for no additional cost, an organisation can further meet its impact goals.
For example, it’s not uncommon for organisations to partner with leading social enterprise Eat My Lunch to cater events such as meetings and training sessions. The staff get to eat either way, but by working with Eat My Lunch, the organisations gets to also fund a lunch for an underprivileged child.
But here’s the problem for these big organisations: while they may be conceptually on board with the idea of using social enterprises as their suppliers, it’s not always immediately obvious where they are, what they’re capable of, and how they deliver social impact.
To solve this, Ākina is putting together a list of accredited suppliers on a new platform. Large organisations can use this list to find suppliers with the capability to meet their needs, while also delivering social impact.
Mutually exclusive no more
Business and charity don’t have to be mutually exclusive. Businesses can make a profit while also delivering a social impact. Ākina is helping more social enterprises grow, connect with one another, and make a positive impact on their communities.