As iwi organisations grow, Chapman Tripp’s Nick Wells argues they should be establishing themselves as social enterprises to unlock their wealth for the greater good.
The Māori economy is a significant part of New Zealand’s past, present and future. While I’m not Māori, my children are, so every time I work with iwi, and their iwi in particular, I think of them. Together, we are working towards iwi developing a better future not only for Māori but all Aotearoa – and all our children.
When we first started our Māori legal practice, Te Waka Ture, we were predominantly advising government, including the Office of Treaty Settlements. In 2009, we changed our focus to concentrate on iwi, and we now believe our team makes the biggest contribution to te ao Māori of any large New Zealand law firm.
We are seeing iwi move towards greater economic autonomy, as the Māori economy pushes over $50bn. This growth is a result of the creation of large, asset-rich Māori corporates from Treaty of Waitangi settlements, and the development of partnerships and joint ventures with Māori and non-Māori partners.
The growth in the Māori asset base will, over time, lead to better outcomes in the health, education and housing sectors, as well as a culturally-richer economy. It would also see te reo and tikanga continue to increase in the daily life of all New Zealanders – businesses included.
Te Waka Ture’s key driver is assisting iwi to unlock value in investments and prosper financially. A significant focus at the moment is how we can assist iwi in making financial gains at a whanau-level. It’s about translating overall economic growth into making a real difference for people at an individual level.
One of the best things about iwi investment is that it does not centre on purely profit-driven decisions. Our clients don’t just invest for return – most have cultural, sustainability and social objectives as well. These include principles of kaitiakitanga (guardianship, stewardship), manaakitanga (supporting people) and taonga tuku iho mō ngā uri whakatipu (guardianship of resources for future generations).
Social enterprise is naturally where we see iwi investment heading. While Māori businesses demonstrate many of the values of social enterprise, we are yet to see investment in businesses that are solely created for a public or environmental good. But, we expect to see it pretty soon.
Currently, iwi are faced with balancing the real tension between the long-term growth of assets for future whakapapa, or paying dividends for the current generation. That also presents a decision between how much money is spent on cultural revival and wellbeing, versus how much is reinvested for financial growth. For example, Post Settlement Governance Entities (PSGE) have to balance their commercial arm – which includes management and administration of assets and commercial activities of subsidiaries – with the needs of their people or their community arm, which might include charitable purposes, tikanga, reo, kawa and korero, and community facilities. Other factors that are taken into account include appetite for risk and expectations of –and accountability to – iwi and hapu members.
As established PSGEs have grown their asset bases, they are increasingly focused on how they can provide social and affordable housing in a heated market, how they can make the best use of underutilised and/or landlocked Māori land, whether or not to make cash distributions, and – if so – how to structure them. I anticipate seeing iwi investment venture into investing in social enterprises in the very near future. I also expect iwi to start looking at how they can marry financial and cultural objectives into a single business idea.
I’ve watched first hand as Kiwi companies have used their social values to inspire investors and expand the reach of their mission.
Many of our staff have volunteered at the well known social enterprise Eat My Lunch. We also advise the Aera Foundation (one of our corporate social responsibility partners and an investor in Eat My Lunch) on the issuing of what’s called a “lunch bond”, which provides both financial and social returns to lenders. This helped inspire Eat My Lunch to launch PledgeMe’s first crowdfunding debt campaign, which smashed its initial threshold of $500,000 to raise more than $815,000 within a month. The funds have helped the for-profit company with social goals expand to Wellington.
When investing in the bonds, investors could choose between two combinations of interest rates and giving; lending their money at 6% interest, with a lunch given to a Kiwi kid each month for every $1,000 loaned, or forgoing interest payments altogether, to give to monthly lunches to kids.
Earlier this year, I met Nobel Laureate and the trailblazer of social enterprise, Professor Muhammad Yunus, at Waipapa Marae. Yunus pioneered micro financing of his country’s poorest and most vulnerable citizens, especially women. He found by fertilising their entrepreneurial desire, marginalised communities were empowered and generational cycles of poverty could be broken.
Iwi leaders from all around New Zealand came to watch the Bangladeshi social entrepreneur discuss the concept of holistic business, and they heard similar tones to the goals of Iwi investment and business.
Most economies seek to drive economic development from the top down, starting at a governmental or tribal level, but the success of initiatives working from the bottom up is truly impressive.
Personally I believe there is increasing space and need for more New Zealand businesses establish themselves as social enterprises. This is particularly true for Māori-owned business, where business dedicated to solving social problems at the same time as investing in the success of iwi, aligns so perfectly with their cultural mandate.
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