CED Bulletin – November 2011

On November 11, 2011

Hello CED practitioners and supporters

A recent visit from US social financier, Clara Miller, helped us to understand why it is so challenging to gain investment for change and development in our sector. The points that she made and the conversations that ensued were very relevant for us right now. Thanks to Philanthropy New Zealand for bringing Clara to talk to us. It will be very interesting to hear how our funders respond to what she has to say…

Clara Miller Event in Auckland emphasises importance of Change Capital

The CED Network recently hosted Clara Miller, a leading international expert in social finance, in Auckland. Named among the NonProfit Times “Power and Influence Top 50” for four years running, Clara Miller is President of the F B Heron Foundation in New York City – a grant making institution dedicated to building wealth in low income communities. The Auckland event was collaboration between CEDNZ Trust, BNZ and Philanthropy New Zealand.

Clara provided us with some useful reframing. The points she made that resonated for me were:
• It is much tougher to be a manager in the community sector than private sector – because we have to run two businesses – our mission business and the business that provides the means to finance it

• NFPs embrace a “market flaw” – that is, providing services to people who cannot pay

• There are two roles for funders- Buyers and Builders
o Buyers provide income for services. It is short term funding – and, if successful, funders will buy again (sometimes!).
o Builders provide the capital needed for development. Builder capital is episodic and long term. Clara calls these builder funds – Change Capital or Philanthropic Equity. As we know, it is far sexier for funders to provide funds for tangible services than to build the infrastructure that helps organisations to deliver services in new and innovative ways.
This distinction felt very relevant in terms of the challenge facing community organisations that want to move to social enterprise to fund some of their services. Unless we emphasise the importance of these builder funds, the innovative change is unlikely to happen.

• Clara says that we need to change the conversation and tell our programme stories in enterprise terms, i.e. in a way that includes our overheads and development costs. She called this “redefining our market proposition”.

• We will see an increasing shift from government funded programmes to multiple players providing the investment and funds

• The conditions that we all operate in are rapidly changing from predictable and fixed to changing and volatile. We need to be able to adapt in order to survive

• Real estate is not the only kind of capital investment to consider. In terms of executing our mission, investing in human capital and/or technology may be a better investment than buildings. There was lively debate about the pros and cons of owning buildings

• Clara says that corporate philanthropy is going global and that recession and failing industries has lead to “place” being less important. Participants felt that in NZ we have a growing emphasis on place in response to the ill effects of globalisation – and that place and localism are a very important part of building a sustainable future.

Social Impact Bonds – inviting the rich to make money from the poor?

Clara also talked about Social Impact Bonds http://www.socialfinance.org.uk/sites/default/files/SF_CriminalJustice.pdf which are a relatively new, results-based funding mechanism. Effectively, the bonds enable investors in successful programmes to receive a share of cost savings from government. Social Impact Bonds are being lead by Social Finance UK and are starting to gain traction in the US. Early application is around the rehabilitation of prisoners.
There is much debate around Social Impact Bonds. Some of the debate suggests that Social Impact Bonds could open up possibilities to fund social enterprise. But where results are hard to demonstrate, the bonds could leave the most marginalised out in the cold. Social and political commentator, Polly Toynbee from the Guardian, is rather scathing. “It’s a novel solution to extreme inequality” she says “inviting the rich to make money out of the poor!” There is no doubt that it is early days and the jury will be out for some time to come. I suspect we would be smart to wait and see how Social Impact Bonds pan out overseas before jumping too quickly on the bandwagon.

Wellington CED Network gains traction

It has been a tough time for the CED NZ Network recently, so it was very encouraging hearing that at least one local network is emerging and gaining traction. The Wellington CED network recently held an event with special guest, Mark Daniels from Social Traders, Victoria, Australia. (www.socialtraders.com.au)The guest speaker was followed by a question and answer panel that included Charles Brass, Future of Work Foundation, Melbourne and Sam Rye from Enspiral, Wellington. I hear that around 60 people attended the event and that the discussion was lively. Mark Daniels also met with government officials while he was here. Good to hear that the conversation around CED and social enterprise is building in both community and government circles. .
It’s great to see a local CED Network getting it together – good on you Roger Tweedy and Sam Rye for making this happen. For more information about the Wellington CED Network, contact Roger Tweedy on 0221088140

School of Social Enterprise heads to Auckland

Enrolments are now open for the 2012 Social Enterprise Business Development courses to be run in both Auckland and Christchurch starting in February. The School of Social Enterprise offers active learning that enables a not-for-profit organisation to assess profit-making social, environmental, community economic development and cultural initiatives that can assist the organisation become more financially independent and sustainable.
The Social Enterprise Business Development course has been designed by people experienced in operating social enterprises in the New Zealand environment and runs one day per week over 20 weeks. Participants will be people currently working in a not-for-profit organization which is looking to:
• Diversify funding income
• Establish sustainable income streams
• Become less grant dependent
• Avoid funder capture
• Find new sources of funds and/or establish a profit-making training division
.

Each participant will also receive on-line support during the training plus six months post course mentoring and coaching support. The emphasis of the course is on the enterprise rather than the individual and the participating not-for-profit organisation will be asked to sign an agreement with the School of Social Enterprise agreeing to support the person taking part in the programme and to seriously consider any business opportunities developed by the student.
The course fee is $2500 per student with some scholarships being available. Each class will have a maximum of 18 participants. Potential students are encouraged to contact Lindsay Jeffs, via email lindsay@csbec.org.nz or by phone 03 3669978.

The blurring of sectoral boundaries and the emerging fourth sector

Over the past few decades, the boundaries between the public (government), private (business), and social (non-profit) sectors have been blurring as many pioneering organizations have been blending social and environmental aims with business approaches.
There are many expressions of this trend, including corporate social responsibility, microfinance, venture philanthropy, sustainable businesses, social enterprise, privatisation, community development and others. As this activity matures, it is becoming formalised as a ‘Fourth Sector’ of the economy. To better understand the emergence of the Fourth Sector, it is helpful to study recent shifts in organisational behaviour across the three traditional sectors.
Interesting reading here http://www.fourthsector.net/

“Is social enterprise really changing the world – or is it being changed by it?”

Laurence deMarco’s recent speech at a Senscot Seminar has much for us to chew over as we consider where this movement is heading in New Zealand.
Senscot was established 12 years ago and has been largely responsible for growing awareness throughout Scotland around social enterprise, advocating for financial investment, developing a pipeline of support to grow social enterprises at all stages of development. In many ways, in New Zealand we are currently in a similar place to where Scotland was in 2002 – so let’s not reinvent the wheel, but learn from the Scottish journey. Relevant points from Laurence’s speech are:
• There was much resistance to social enterprise in the early days
• As the dominant global economy fails, social enterprise is part of the transition to a new economics –shared values, protecting the ecology and habitat for future generations and reducing the gap between rich and poorThe new economics will involve a whole different set of production and ownership relationships which enable and motivate wider participation and will include more co-operative business models and mutualised banking services

• Traditional commerce is inherently expansionist and centralist. The new economics has a fundamental belief that society works better on a local collective basis rather than driven by global shareholders and private equity. This is where social enterprise and the localism agendas come together.

• The movement is currently under threat from private sector encroachment and it is imperative to maintain the integrity of the asset lock – that profits and assets are retained for community benefit, not for private shareholders.

This very brief synopsis does not do the speech justice and I highly recommend a thorough read of Laurence’s speech http://www.senscot.net/view_art.php?viewid=11558

Zeitgeist 2011 and the “Occupy” movement

It is also worth spending some time viewing the 2011 Zeitgeist movie.http://www.youtube.com/watch?v=4Z9WVZddH9w It weaves many threads together that have lead to such widespread economic, societal and environmental dysfunction – and points to the end of the current “free market” and monetary systems to a whole new paradigm – a brave new world where the 99% stop the 1% in their tracks and resources are shared according to need not greed. I have been watching the “Occupy” movement with much interest and I think this where it is heading. I have always been of the view that it is more powerful to be for something than against something. Of course I share the extreme frustration with unethical speculation, toxic debt and political corruption that is bringing the world as we know it to its knees. What I love about the views expressed in Laurence deMarco’s speech above, is that the new economics, that includes social enterprise and localism, is a positive response to all that – it provides us with a picture of what a more workable and equitable world could look like. Let’s give voice to the new economics. There is an alternative!
That’s it from me for now

Wishing you all the best in your various adventures
Di Jennings
Convenor, CED Network
di@ced.org.nz

Jobs

Enterprising Communities Coordinator, Community Economic Development – West Auckland.
The Waitakere WEA is looking for someone who understands how sustainable community economic development (CED) practices can improve community wellbeing. Closing date is 18 November 2011.
For a copy of the job specification and application form please emails waitakere.wea@xtra.co.nz or phone: 09 837 1471.

Resources

The Social enterprise builder from Social Traders Australia is a step-by-step guide on how to build a social enterprise. This guide is written for anyone wishing to understand more about social enterprise and how to start one. The Builder guides you through a rigorous business planning process, which underpins the future success.

 

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