Social enterprise is changing the way we consume. In a discussion with some of the most prominent players in the sector, The Spinoff asks: can we consume our way to a better society?
The rise of social enterprise has become an important signal for the direction of our economy. As the sector continues its rapid growth, its future looks as if it will have a much greater role in commerce, with the commercial sector leaning in to take a greater role in social and environmental issues. Consumers, potential employees, and clients are starting to demand businesses think carefully about the social impact they have and the potential for the company to make a greater contribution to their ecosystem. These businesses are now becoming key parts of solutions to things like poverty and climate change.
“The challenges that Aotearoa is facing today needs fresh thinking, innovation, and collaboration to solve them. We’re supporting the growth of the social enterprise sector in New Zealand as a way to help create a more resilient economy with flourishing, purpose-driven businesses that are creating a better tomorrow,’ says Julia Jackson, Kiwibank’s corporate social responsibility manager.
This week, the Social Enterprise World Forum (SEWF) was held in Christchurch. This is a big deal. Hosted across the city, the forum brought social entrepreneurs from around the world to New Zealand at a moment when our sector has momentum and traction, but is still young enough to learn and develop from the journeys of others. The forum has a powerful track record of launching significant growth for the social enterprise sector, and it’s a big deal for Christchurch as well. It’s one of the largest events held in the city since the 2011 earthquake, but it’s also a big deal because the forum is informed by Christchurch’s response, economically and socially, to the disaster that forever changed the city.
Read and watch The Spinoff’s full series on social enterprise here.
Ahead of the SEWF, in association with forum sponsor Kiwibank, The Spinoff, sat down for a conversation with a panel of some of New Zealand’s most influential social entrepreneurs to think carefully about the impact they can have on the world they move in. Chaired by Simon Wilson, the panel discussed the role social enterprise has in shaping the future of New Zealand’s economy and capitalism in general, the power of the Māori economy given its social values, the political role of the sector, and the massive demand for a more thoughtful consumerism.
Watch the discussion, or read on for a full transcript of the conversation.
Simon Wilson: Hi there, I’m Simon Wilson from The Spinoff and we are going to talk today about social enterprise. I’m joined by four people who are closely involved in social enterprise in different ways. Starting on my far left, Alex Hannant, who is the chief executive of Ākina, who are a social enterprise facilitator, entrepreneur, make it happen organisation. Next to him is Lisa King, the founder of Eat My Lunch, a social enterprise that operates on the BOGO principal, buy one, give one. On my right, Michelle Sharp is the CEO of Kilmarnock Enterprises in Christchurch. This is a social enterprise company that employs and supports people with intellectual disabilities. On my far right, Nick Wells, who is the Hoa Rangapū Whakarae, which you might know as chief executive partner at the law firm, Chapman Tripp. Kia ora.
We’re gonna talk about the different forms social enterprise. We’re gonna talk about what you guys do, the problems you face, the aspirations you have for the sector, the big political questions that surround it, all those things. We’ll run this as a conversation so do feel free to talk over each other at any stage and interrupt and disagree. Clap wildly if you think someone said something splendid.
Perhaps Michelle we could start with you. Kilmarnock, you’ve been going for a very long time, much longer than the term social enterprise has existed. Perhaps you could tell us how you operate.
Michelle Sharp: Yes, we have been running for 60 years. Quite a long time, in fact, this year is our 60th anniversary. In terms of what Kilmarnock does, we provide a real, exciting and tangible pathway for school leavers with disabilities, intellectual disabilities in particular. We do that through two ways. As an employer, we currently have 85 people with disabilities working at Kilmarnock, and we’re a part of their employment journey. They come to us from school, they gain the skills, the confidence they need, and then we help them pursue careers outside of Kilmarnock thereafter.
Very excitingly, this year we have just launched the Kilmarnock academy, which is a further option for school leavers if they want to actually go and do further education. Currently we have a cohort of about six employees who are doing the NZQA qualifications, which is very exciting for them given that a lot of them left school without any formal qualification.
SW: How big is the operation overall?
MS: In terms of people, we are probably about 100, with another 20 or so casual workers when we have high demand of work.
SW: There’s 100 people with intellectual disabilities working through Kilmarnock?
MS: Not everybody with an intellectual disability, probably about 85.
Michelle Sharpe, CEO of Kilmarnock Enterprises, at The Spinoff’s social enterprise panel. (Photo: Rebecca Zephyr Thomas)
SW: Okay, alright. Lisa that’s a very different kind of model from what you operate with Eat My Lunch. Of course you haven’t been going 60 years yet, very much younger. Perhaps you could tell us.
Lisa King: We just celebrated our second birthday a couple of months ago. Eat My Lunch is set up as a company. We’re a food delivery company where people order their lunches online to have fresh healthy lunches delivered to them at work. For every lunch they buy, a lunch is also given to a Kiwi kid in a decile school who would otherwise go without.
SW: We’re actually sitting in your centre of your operations here, it’s the middle of the day but this morning there were a lot of people here and a lot of lunches being made. How many lunches got made this morning?
LK: Every day we give around 1600, 1700 lunches to kids in 48 schools in Auckland, Hamilton and Wellington and that’s on the give side and then what people buy varies every day like today I think it was just under 1000 of those made as well.
SW: Those are two different models, there’s a model there buy one give one and then there’s the employed staff so that the actual employment itself is the purpose of the social enterprise. Yours is the what you give free, that’s the purpose of that that and enabling people to come through that. Alex, those are two different models, are there other models of social enterprise?
Alex Hannant: Yeah. We largely see three or four core models and there’s variations on all of them. The first one would be that you have a business which creates profit which then enables you to then fund the delivery of other services or products.
SW: That’s Eat My Lunch.
AH: Yeah and the buy one give one is a kind of sophisticated model there where it’s not making money over here to maybe give something which is quite unrelated over there. It’s actually, there’s an integrity between the product and service. The second model would be where the impact is as a result of the people working within the enterprise very much like Kilmarnock. Another example would be something like Pomegranate Kitchen a start up in Wellington who also are catering social enterprise but in that case, it’s around providing employment integration, language training, livelihoods to former refugees who use their strengths to create food of middle eastern cuisine and then that’s sold. Then the third bucket is where the impact is actually as a result of the direct service so there’s an innovation which is actually overcoming a market failure or just simply doing something different in a better way.
SW: An example of that would be?
AH: Would be Thought-Wired, a tech company which actually developed software to enable people with profound disabilities, locked in syndrome, to actually use computers with their thoughts. They’re also developing that in a way where that technology would be accessible to many rather than be something which is elite or exclusive, very much driven about trying to solve that problem rather than maximise the profit.
SW: Does that take us to part of our core definition of what social enterprise is driven to solve that problem rather than to maximise profit, is that what it is?
AH: Yeah. I would say it’s exactly what it says on the can. It’s an enterprise, so it has to be commercial, it has to be viable, it has to stand on its own two feet, but that is in service to a social environmental mission. It’s as simple as that. The thing is there’s a huge amount of diversity and in some ways rather than a thing, it’s better to understand social enterprise as an approach. Charities use social enterprise models, businesses might focus all their commercial expertise on changing something around an environmental or social agenda. It’s not so much a core identity, it’s more an approach which any number of organisations can do to sustain themselves and deliver a change in the world.
SW: The question of the relationship between charity and social enterprises is quite an important one but to be able to distinguish the two … or am I seeing that wrong?
AH: I think the main is mission first, so charities exist to deliver a social mission for charitable purpose, social enterprises exist to deliver a social mission. The key thing about social enterprise is that it delivers that through a commercial model, generally the trading of goods and services but as I said , charities can also be social enterprises. It’s not really about this identity, it’s more about how do you get your resource in order to deliver your mission.
Alex Hannat, CEO of Akina Foundation. (Photo: Rebecca Zephyr Thomas)
SW: Kilmarnock started life as a charity, am I getting that right?
MS: Very much so and our changing point was really about seven years ago when we lost the ANZAC poppy contract, so before that we operated very much with a charity mentality. We had one contract which was a commercial contract, we had one contract which was government funding and the rest was donation and grants and things like that. When we lost that commercial contract, it really made us think about how could we become more self-sustainable, how could we ensure our future, how could we put that into our own hands.
SW: Does that effectively mean how do we operate as a business?
MS: That’s right, correct. We came in, we basically applied really stringent really strong business practises, we diversified significantly and the really exciting thing that I love is through the fact that our commercial business has grown and has become very commercially focused, the social impact of what we do has become equally, the curves follow each other which is fantastic and that’s what you want. So it’s not “or”, it’s “and”. Commercial and social.
SW: Lisa, your story is quite well known. You and your partner had an epiphany, “what are we doing with our lives” and decided on Eat My Lunch. But you didn’t decide to set up a charity, you decided to set up a business. Tell us about why you made that decision?
LK: It came back to sustainability and also scalability. The problem of kids going hungry, we estimate there’s probably around 25,000 kids in New Zealand a day. To be able to get to our mission of making sure none of them are going hungry, we knew it always had to be scalable and self-sustaining. Setting it up as a charity, relying on donations and funding, as Michelle said, once they stop your good work has to stop as well. We came from corporate backgrounds and so we took business skills, business models and tools and applied it to this problem. That’s how we started with a business but at the heart of it is our social mission. What we found is really amazing that even though we are a business, we still get volunteers. This morning there was at least 25 volunteers in here making lunches for the kids, we’ve had over 4,000 people come and do that even though we’re a commercial enterprise.
SW: You actually run like a roster, don’t you?
LK: People just sign up online to come and volunteer and we have a two month waiting list at the moment for volunteering and I think it goes back to, Alex says it’s the mission that comes first. People buy why we do what we do not necessarily the lunches and people would just want to get involved, regardless of whether we’re a business or a charity.
SW: In fact there are two ways that you can get involved by buying lunch or you can get involved by helping.
LK: Yeah.
Nick Wells: The other thing I find quite interesting about Eat My Lunch, if you don’t mind me talking about your debt programme for a minute, is to actually have a social enterprise, go out and seek to raise expansion money through debt, that’s actually quite a powerful tool.
SW: Can you explain that?
NW: Knowing that they were expanding to Wellington in particular and into Hamilton there were a number of lunches that were going on, I watched from the side, in relatively close quarters, seeking to raise debt capital for the expansion. Part of the debt capital, you were raising money through debt, that was a successful raising, so that’s positive and then the bond holders had an option, you could either take one level of interest and there was free lunches with it or another level and you got one free lunch or no interest at all in which case all lunches were supplied. There was a nice social edge to the debt raising as well.
You could invest in the company and get expansion capital, because that’s the trouble that some charities face for example, a pure charity, because they haven’t got an economic return to fund debt or things like that so it limits so it was quite a lot. That was quite an ingenious way for a New Zealand social enterprise to raise capital and expand.
SW: Nick, are you seeing a lot of this?
NW: No, not actually a lot. That’s actually why Lisa, and Eat My Lunch, was bit of a pace setter out there in raising capital and it can get a little bit tricky because you need debt governance as well as the things that come with it. It does require a bit of care. There is quite a lot of this of course in the Māori economy because on the Māori economy side we say that we are by our very nature social enterprises because we take our profits that we earn, and we reinvest them back into social outcomes be that te reo, be that health, be that housing and education in particular.
Often it’s got a bit of a charitable arm and they will raise debt to secure that. In their case they tend to have a very land based portfolio that’s easier to raise debt against. Again, for Māori and hapu, it’s also a natural tension because you want to invest your money to earn money but also there’s a tension there because your social enterprise, you’re responsible for sometimes 60,000 people who could actually take all the money right now. You got an intergenerational balance, what you earn for the future versus what you pay up now so it’s often really viable now.
SW: Which is quite considerable in the Māori economy.
NW: It’s huge and I do have to balance that day in day out. The nice thing, I suppose, if I think about a model like Eat My Lunch or a model in the iwi environment, you can say the success of Ngai Tahu in the south, or Tainui in the Waikato, has actually being to provide models that others can follow. Then you actually get a nice bit of competition as between iwi and how we should be going. And you’ve got models that are proven, because you can fit it into any context, try to completely reinvent the wheel and that can distract you quite a lot. They have proven models out there in any of these Māori social business context that are well understood, which is quite important so you don’t have to invent everything from scratch.
SW: You’re a head of a corporate law firm, you’ve got an engagement particularly through the Māori economy is pretty strong in the area at least but you’re not the only ones. Is this way of doing business, you said it was small, but is this way of doing business something that is growing fast? Something on the side?
NW: In Aotearoa, I think we’re extremely lucky that we’ve got a growing Māori economy because it’s at the core of that economy that you give back and you’re actually doing that work growing an economy for a social purpose and I think that leads us to being much more tolerant and understanding as to social businesses in particular. I think those that do well in a social business environment are those that get it. As a corporate law firm, we could partner with such businesses and charge them a fee like any other client but if we actually connect with a purpose the chances of us growing that practise and then being a trusted partner are much higher.
You’ll actually see and I think a lot of New Zealand businesses not just us engaging with social business, engaging with them trying to get a social purpose as well I think that’s great because that actually leads to better societal outcomes. We not only have to think about our own profits but actually how we work in a sustainable way whether it’s with the environment with our own people or whatever. I think it makes us a healthy place.
Muhammad Yunus and Nick Wells talk social enterprise with iwi at Waipapa marae in April. (Photo: Aera Foundation)
SW: Alex, what do you think about that, the social enterprise where does it sit in the mainstream economy, is it on this side, is it on modifying the mainstream economy? What’s its role?
AH: I think simplistically it complements the mainstream economy, it’s a hybrid. But I think it’s more interesting to think about where this is going. The future is already here but it’s not evenly distributed. Rather than thinking about where it sits in the current economy, I think this is the signal of actually where the economy is going in the future. I would say if you’re looking at some of the drivers of social enterprise you’ve got to a certain degree the social sector leaning into taking a more enterprising approach, and the commercial sector leaning in to understand that society and the environment matters, not just to them as humans who are generally good people working in organisations, but just for the sustainability of business in itself.
I see this as a convergence agenda and what we’re seeing often with these of great stories, but we are still finding our way in terms of how visible it is, is the sharp end of the curve.
Also we make a lot of play around why this is great because we can find a financial model to deliver social goods. The other thing about the financing piece is not just the sustainability. If you’re not dependent on the generosity of your funders you’re more likely to be able to innovate into the problem.
I’ve come from working in the background of NGOs and charities and you spend too much of your time worrying about what your funders think, not looking at the people your serve. The other thing is there’s an empowerment agenda here and I think this is really relevant to the Māori economy and also to community enterprises across the country in terms of rather than being the recipients of services and generosity it’s about ownership of assets, it’s about design and delivery of their own services and community has actually taken development into their own hands. So sustainability but also innovation and empowerment.
SW: How do those things apply to you would you say, not having to answer to your funders in the same way, that must make life easier?
MS: Yes, in fact we now see government as an example, we now see government as a keystone customer rather than as a funder. We’re delivering a service and that changed the relationship which was fantastic. I think what Alex is saying is absolutely right, that by no longer being reliant or dependable on one income stream through good business practise regardless, it drives innovation. It has literally changed our whole landscape. The future of Kilmarnock is so exciting now, because it’s sustainable, it’s replicable, it’s scalable those things it wasn’t before.
SW: Are you scaling? That’s the big plan.
MS: We’ve already scaled to some degree I don’t know if you’re aware but we’re at the end of a three year project where we’ve just built a brand new designed new bespoke designed building it’s called Basecamp so we’ve relocated from our old site which we’re on 40 years which had grown iteratively to a brand new design purpose built site and the opportunities there are huge for us now. The next challenge for us now is what does growth look like beyond Basecamp, is it a model where we start on operating in other cities, is it bigger in Christchurch, is it diversifying further into the education space?
SW: Are there corresponding organisations to yours in other cities as social enterprises or are there charities?
MS: A real mixture, the spectrum is huge. There are probably four or five examples of organisations similar to us who are trying to take a similar path at different stages of that journey.
SW: The point that Alex raised before about empowering communities is that an issue for you? Are you working in a community that can be empowered, or how can it be empowered?
MS: I would say that interestingly, if we go back to our charity model that we were operating in about six years ago we did it and our operation was entirely dependent on the community yet somehow transitioning into a social enterprise model we’re doing this with the community. It’s been amazing how that transition has allowed us to get the community…
SW: You’re talking about families…
MS: Every aspect of community, every single stakeholder in the community whether it’s families, whether it’s schools, whether it’s local businesses, the philanthropic sectors. It’s been quite amazing the change, we were operating very much in a silo before now we’re doing so amongst a community that is very willing to get involved which is fantastic.
SW: Lisa, you’re expanding to take over the world really, is that the way it’s going to go?
LK: Just New Zealand at the moment.
SW: Is that easy to do?
LK: Yeah, if you look at us purely like a startup and we’re two years in it’s always really difficult, funding, and having enough capital for expansion. We go through the same pains as growing a business but I think as Michelle says when you’ve got this big social mission people are incredibly generous and they do come on board. A lot of our suppliers give us favourable costs on some of the things we buy, we got a lot of help that I think if we were purely a business we wouldn’t get.
SW: If you’re getting favourable costs those sorts of things that’s great for you but it also suggests that it’s not necessarily a model you could roll up right through the economy because somebody has to pay somewhere. Would that be fair?
LK: Yeah and we have 99% of our relationships with our suppliers are commercial but because people love what we do they do come on board and they’re a lot more generous with our relationship.
SW: This is one of the big questions I think and it really does interest me, is the extent to which social enterprise either reinforces or modifies the mainstream economy. Is capitalism stronger or weaker or better or worse or what is it?
NW: I think it’s absolutely stronger and it’s not just in New Zealand, so one of the things that really surprised me I was lucky enough to go to Colorado on a leadership course with 11 people around the globe. This is going to sound like a bad joke, one was an admiral, and one was a general, there was a guy that ran a power company in Jamaica.
AH: Is there a punchline?
NW: The punch line is actually they were really interested in what we were doing in New Zealand around the Māori economy and the social side and then they equated to the social enterprise. When you look overseas you can see large corporates actually starting to lean in and I think as they lean in and as social enterprise leans in you actually will get a convergence. In a funny kind of way that has to be the idea of the contract with the state. We actually give back to our community because that’s the most important thing. Businesses that don’t connect and look after the environment and the people in the community around them. If we get to the state where that is the exception as opposed to the rule, I think that’s a powerful place to be.
While overseas are trending that way, I think because we’ve actually got a strong Māori base here, 15-16% of the population, large volumes of wealth in Māori economy, they’re now talking about $50 billion we’ve got a strong base that leans that way, as well as social enterprise in its own right, as well as charities that move that way. We’re a small transparent country with very low levels of corruption so we’re actually at a good place to be a bit of a Petri dish for the social enterprise.
SW: To stay on that big question, if there are a few things that are now widely accepted and one of them is probably that we are in a stage of history around the world where there is an economic system and it is capitalism and it’s enlightened or less depending on where you are, but the competition to overthrow it doesn’t exist anymore in a way that it did during the cold war. Another one is that we have climate change rushing at us. And then the third one is that there’s an enormous will in society where we have a developed economy with resources we want to make sure that there’s a degree of fairness and opportunity that is shared our. I think those things seem to me to be givens now, that’s where we are. Is social enterprise in the forefront of that? Is it rushing along behind, is it going to change to change the way in which the economy goes around?
AH: I think if you’re going to be really hard nosed you could look at this from the lens of risk. The whole idea that we know we’re on a ball of rock in the middle of nowhere, and there are systems that are very benign but if we influence or tip them over life gets a lot harder for everyone. If you’ve got more business activity which isn’t externalises costs into the environment, you’re managing that risk. So again social enterprise is social and environmental enterprise. It’s about not externalising costs it’s about externalising benefits, the same thing you can say from a social point of view. We’re living in a time of extreme inequality and I wouldn’t want to be trite around why all of a sudden we see all these political risks arise.
You would have to say inequality is somewhere in that mix and having organisations which are thinking about vision of creating the conditions for more people to thrive, thinking about inequality as a major driver of managing social risk, these things are important. I think with social enterprise again what it represents is an approach to creating value which is not externalising costs and is redistributing more value for more people. In that economic argument that’s the way I see social enterprise. Because in practise you still want innovation, you want diversity and you want it to be a chaotic messy competitive world. That’s in the practise of it, but from a strategic point of view that’s what we’re seeing social enterprise doing.
SW: Others agree with that?
NW: I take a bit of comfort that it evolves in consumers, and that consumerism rather being a negative actually demands it, so that’s where you can interface with Kilmarnock and interface with Eat My Lunch because you can say look, compared to other options even an individual consumer or business, I prefer to interface with a social enterprise because I’m giving a social good as well. And it allows me to tell a story when I go back home, or I tell my own customers. Actually increasingly for a law firm our size, we actually are getting our clients saying well how do you look after the food chain, so they’re demanding our story of us. We’ve got to be mindful of that and actually even if we didn’t do it because we wanted to, we’ve actually got to do it because you’ve got to. And that actually becomes an important part of the landscape. That’s where you get a quite powerful dynamic.
LK: We have a lot of big corporates that are partnering with us now.
SW: What does that mean, you’re doing their lunches?
LK: Yeah, they’ve made us a preferred internal caterer supplier. For example, the Air New Zealand’s of the world. And in a year they have given 20,000 lunches as an organisation and that’s something they can go back to their staff, to their board and to their consumers and customers and say this is what we’re doing. Doesn’t cost them anymore, in fact our lunch is probably cheaper than what they can get from other caterers but there’s a story behind that and they’re actually doing good at the same time and there’s more and more. Every week we’re signing up a new customer to be their preferred supplier of that.
AH: Again, if you wanted to be hard nosed about it, it is not just about doing something which is nice and good it’s about getting more value. I was going to buy my lunch anyway so why wouldn’t I want to actually provide an opportunity for someone else to have one. There’s an Aussie social enterprise called Who Gives a Crap toilet paper and so they divert some of their profits into sanitation projects in developing countries. Now you think like why wouldn’t our ministry of foreign affairs and trade buy all their toilet roll from Who Gives a Crap because it’s basically subsidising or supplementing our development budget.
SW: The particular beauty of that project is the purpose of it is actually transformative? It’s sanitization projects change people’s lives, make everything else possible and they have clean water in a clean glass.
AH: This myth that we’ve had trade offs, like commercials over here and social environments over there. I think a lot about this movement is about saying actually this is about adding value. Be it in investment, getting more return and also getting other value be it about procurement or purchasing decisions or be it in just in the way that we are as organisations.
SW: Does this mean that consumerism is the new politics? Consumerism and politics used to be posited as opposites that you, you either consume, or you get out there and change the world. But actually the way in which you consume, the choices you make as a consumer have political ramifications and they don’t have to be bad ramifications, obviously. Is that what’s happening here?
AH: I’ll put it in another way, if you think about where you have agency in your life, you can influence how you are to people, you can influence where you work, you can influence what’s said in society and you can influence things you buy. Absolutely, I won’t say this replaces and I think that would be a lazy thing to think, we still have to be active members of civil society, but absolutely, we can also have a change in influence of where we spend our dollars.
MS: Just to support that, it’s interesting I feel that a lot of our customers who engage with us do so because they’ve realised that in order for them to retain their really good employees, the new generation, they actually have to do things like engage with social enterprise because they demand it. Yes, I support that entirely. And just going back to the previous point it’s very interesting one of our biggest quests that we’re enjoying almost proving to the business community is by outsourcing with Kilmarnock, you’re absolutely not jeopardising any quality or any of those things that you would expect from a purely commercial organisation. In fact I would say that in many cases social enterprises do it better because we’ve had to be innovative, we’ve had to try really hard to get to where we’ve got to and so it definitely is a value add rather than [a compromise].
SW: I can imagine a world where your operation and your customers will tell a whole lot of other companies and corporates, actually we need to keep up. We need to develop a more ethical approach to what we do because customers are, consumers are demanding it. Do you see that happening?
NW: What I was seeing, was there was not only the customer side but thinking of professional service, our biggest need, because it’s one thing to service our clients but the other market we’ve seen is the recruitment market and when you’re looking at millennials, so young lawyers out of law school, there’s an expectation that: “I want to work in a place that yeah, will further my career and I will learn fantastic skills but actually that is actually doing good as well so I want to earn them a living. I want to improve my skills but I want to work in a place that makes me feel good”.
That also fits into the social enterprise side of things as well and that’s why you see not only social enterprise but the rise of the CSR programmes, amongst most professional service as well. Then you’ve now got a competition basis, they’re competing with each other for doing the greatest good but that’s actually not a bad place either because actually everybody is focused on lifting the community and social environment. It’s actually quite a good place to be.
LK: We recently advertised for a role and had like 60, 70 applicants in a few days and so it speaks to the power of what we do and a lot of them were in corporate companies saying, I actually want to get out of that and do something good.
SW: Yeah, good because part of the aim must be eventually that corporates themselves, there aren’t so many people who want to escape corporate life because corporate life gets better. Nick?
NW: You often hear people complaining from my generation in particular, complaining about millennials and that they are all in it for themselves. But actually that’s not true at all, they want to see a purpose that is bigger than themselves. They want to engage with it. The corporates that are going to attract the best talent, maintain relationships with clients as well, they have to get their head around it. It’s much easier to embrace social enterprise as a law firm, as bank, because you want to and it’s a positive engagement. Because if you feel you have to, you give off that vibe.
SW: One of the difficulties of working in the area of politics and consumerism and private enterprise and all the rest of is that , every now and then the situation can become fraught with political risk. Lisa, I wonder if you could talk a little about the letter you wrote recently and just what happened there.
LK: The Tuesday that’s just gone we hit our half a millionth lunch that we’ve given to kids and we took the opportunity, we wrote an open letter to all members of parliament to put their money where their mouth is and we’ve demonstrated that there obviously is a problem.
SW: That phrase means something particularly to you, doesn’t it?
LK: Yeah and that we asked all the members of parliament to sign up and to buy an Eat My Lunch. As an organisation we have stayed away from politics. We don’t get involved but this was a bit of a challenge to the people who can make a actually make difference to kind of say, “Well let’s do something.”
SW: Of course when you go to parliament and you go to MPs, you are getting involved in those politics.
LK: Yes, it is.
SW: You made a disparaging reference to the process of legislation.
LK: I think we chose some words unwisely and we referred to the fact that they didn’t even have to pass any bills or –
SW: Any pesky bills.
LK: Any pesky bills or lift a fork that all they had to do was order a lunch. And obviously, we believe bills and policies and legislation are essential to solving the problem, it was a light hearted note to them to just say, but this is one thing you can do as an individual.
SW: What do you take out of that? What’s the lesson there for a social enterprise?
LK: For us, Eat My Lunch is all about doing good and it’s about staying true to our values and so very much it’s about inclusiveness, getting the whole community on board. I think the lesson for us there was the way that was messaged in the letter wasn’t true to who we were and I think when you are doing something good, there is a lot of scrutiny and transparency is absolutely key. We have to be absolutely honest and genuine about what we do. I think there’s a very fine line between this and we were trying to be a little bit cheeky and challenging and we kind of overstated that a little bit.
SW: Presumably the part of the messaging always has to be that what you’re doing is complementary to, you’re not solving poverty, you’re giving out lunches, but there are people trying to solve poverty and you’re not intending to step in their way.
LK: No, absolutely not we are a small part of it. Eat My Lunch came about because I saw on TV there are kids going hungry and I just wanted to make sure they are getting fed well at school so they could learn but it’s pretty much as far as it goes. We’re not about solving the root causes of poverty. We’re just a very small part of that puzzle.
Lisa King, founder of Eat My Lunch. (Photo: Rebecca Zephyr Thomas)
SW: Alex, do you have a comment on that.
AH: The first thing I’d say is, no one organisation is going to solve a systematic problem but if you have a whole movement of organisations taking off small parts of the system working together collaboratively in different places and different cultural backgrounds with different passions and different networks then you will start to shift the dial. I take Lisa’s point, there’s always that risk of when you stick your neck out, the axe might come down on it a lot of it. I think there’s courage needed in terms of not just doing the work and the hours and the stress and the strain that goes into doing that but also sort of leading a story and beginning something that people are still trying to get their heads around and understand better.
SW: And when I asked before whether consumerism is the new politics. The upside of that is consumers can change the economy because they can buy things that are produced ethically, and the downside can be, if it’s only what I buy as opposed to what I say to my MP to get them to change a law then less progressive laws get enacted.
AH: We seem to have come very divided about this idea of capitalism in the economy in recent years. I tend to think that if you look at trade, trade is the primary human technology, it enabled us to survive by exchanging resources in the ice ages so it’s always been a thing which has defined us. It’s just I think, in more recent years it’s become dysfunctional. But trade is still our primary means of exchanging value and evolving and innovating so yes, consumerism or trade or commerce is something that is our tool we can use it how we want. But we’re also a civic society and so I don’t think you can rely on just the economic path. You also have to be political, we also live in communities and those things all have to go hand in hand
SW: If trade is at the heart of who we are as a community, that is the real essence of what’s good about what you do, isn’t it? that you involve people in the trading economy who a generation or two ago would have been thought not able to be part of it.
MS: Entirely, that’s what we demonstrate not just to individuals but to society. That everyone who comes through the doors of Kilmarnock absolutely should be participating in the trading economy. One in five New Zealanders I think, is said to have a disability; and in a poll of what people with intellectual disabilities want from life, they want the same as the rest of us. They want to work; they just didn’t have the options to work.
SW: The strength of what you do [Lisa] is that in a trading economy, you offer people the opportunity to make an ethical purchasing decision that will not so much empower people, but actually feed a need.
NW: I quite like the thought, so to pick up on that, if I think back to the New Zealand of my childhood where the “Treaty gravy train” and a lot of what Māori were doing was viewed negatively by a large part of the population. They’ve actually grown and made a success of their social enterprises. You might not have political self-determination but you will have economic self-determination and they look after not only their own people but because they are successful in a trading economy and they’ve a social purpose that gives them political clout at a whole bunch of levels. I think if you then look through to social enterprises generally, the the fact that Eat My Lunch will actually make a political statement and they’re being successful and actually that’s the same with Kilmarnock as well, that actually resonates more powerfully because they have the economic strength to do it.
I think the odd pure charities struggle to make political comments because they are always charities, but social enterprises can actually say, the very fact that you need 500,000 free lunches actually points to the fact that things are perfect there. The very fact that iwi can say we are actually profitable, we’re delivering a whole bunch of social services but we can’t match demands either points to the fact that things are wrong, so it actually gets to the commentary.
AH: We’ve spoken a lot about what happens on the outside of a social enterprise but also it’s important what happens on the inside in terms of what are these like as places to work? To what degree actually are they providing respect and dignity? The point about empowerment. We haven’t talked a lot about co-operatives, but particularly in Spain and Italy if you talk about social enterprise you are talking about mutuals and cooperatives and this is where the people of a community actually own the thing. So it changes the relationship between labour and capital and there’s something quite powerful in that in terms of not just working for something but having ownership of the thing that you’re working in and actually being committed to the community that you’re in.
SW: One more point I wanted to ask about, and Alex, there’s something that you said recently: “a culture shift has to happen so we can consider the tensions in a way that’s not simply ideological.” And you went on to say, “We need some quality assurances that are self-declared mission first business is what it says it is.” In other words, transparency, we can see that this company that sets itself up to do good in the world actually is doing good in the world and we can have confidence in it and we haven’t really talked about that transparency side but you’re saying there that that’s so critical to this. Private companies of course don’t have to be transparent, normally.
AH: No, we don’t expect them to be and that there was part of my point so if a mainstream company does some good on the side we tend to think quite well of them. But we’ve seen actually a lot of challenge around entrepreneurs that say I’m in it for the mission but I’m not taking a charitable legal form so therefore we can make a profit. I think that’s still something that we’re working our way through so I think there is that cultural shift and we’ve got to get over the idea that the only way that we can actually develop some good is by having something that is completely locked down. Not least because, if you want to scale, if you can’t sell ownership, you can only take on debt and that’s a lousy growth instrument.
I know it worked for you but on the whole you need to raise capital but more than that it’s more of what is important here. The importance is the integrity of the organisation and the impact it’s creating. As long as organisations are accountable in terms of demonstrating, or there’s evidence in the change they’re making, so we can see that they’re not just saying this is what we’re all about but this is actually what they’re achieving. And also that we can see that it’s in their governance and their business model and their investment strategies, so there’s other ways to manage that risk rather than just saying let’s lock it down with a kind of charitable trust.
SW: How do you address that [Lisa]?
LK: I think we are probably one of the most transparent manufacturing businesses that the fact that we allow 4,000 people to walk through and see how we make the lunches and be part of it. There aren’t many other businesses that do that and I think that there’s a lot of transparency and we’ve actually got people coming in and making lunches and delivering them to the kids. They see it from, the whole process from start to finish. There’s obviously things measuring the impact that we have. We get a lot of feedback from the schools. But one of our next challenges is how do we measure that and a measurable way that, this is what we are doing for those kids. Anyone can walk in here as you guys did this morning and see what we actually do.
SW: Michelle, transparency?
MS: We would be the most visited manufacturing plant.
SW: Apart from the ice cream factory I bet.
MS: Yeah, so we have a mixture of externally audited, for example, ISO accreditation as an example, a food safety programme so those are externally-audited systems. We also invite the community in regular tours for example so I think in any year, probably two or three thousand people walk through doors of Kilmarnock and engage with employees. So parents, caregivers as well and also our customers. A lot of our customers as well, Air New Zealand, Fonterra, Foodstuffs, they all audit us as part of that relationship so we have to be entirely transparent. Something that we’re also working on as a whole impact measurement side of things. I’m bit of a closet Excel geek and I’ve created a system that works for us now but that’s something we want to really ramp up. In terms of being able to talk to actually this is the impact of what we’re doing. It’s not just what we think it is, this is genuine and tangible.
SW: Anybody want to say, in 10 years’ time, we’re going to be here? Who’s got a vision?
MS: In 10 years’ time I actually hope that Kilmarnock doesn’t need to exist in the form it exists today. That would be my statement. If we could exist more as a training academy and somebody who helps employers become disability confident employers, rather than as an employer, I would be very happy. That means the business community has realised and woken up to the fact that diversity as a work force is absolutely critical.
AH: I love the story in Scotland now. If you’re 12 or 13, you learn about business through the medium of social enterprise. You’re learning all skills around entrepreneurship and commerce but through a lens of care. And so you kind of think that if you start to build that kind of practise into our learning systems, what does that mean in terms of the next generation of entrepreneurs? There is this old cliché about putting yourself out of business but taking the word social away from the word enterprise. That’s just the way it’s going.
SW: Does that resonate for the iwi economy?
NW: I think it does. I think if we think where iwi will naturally go is they will funnel their funding back into education and health. It wouldn’t surprise me if in 10 years would see, out of probably frustration with the government systems, an iwi run school and they will feed the kids, they will have nurses available, the sort of thing Dr. Lance Sullivan has been talking about for a while. I think you’ll seeing an increase in social business, moving into almost what would be considered a governmental space at the moment and expecting that to continue. You’ll probably see a lot more interface between business and they will continue with that leaning in, and I think we will be stronger for it.
I expect an exponential increase, because there’s a large rump of, a large volume probably of Treaty settlements still to come and once those are complete, because some of them the hardest ones have been in the poorest areas. Once they go through, the impact of those on the social enterprises around them and their expectation of businesses they see alongside. Another example was we saw 30 Iwi come together and combine their fishing quota. They said, “Look, if you want our fishing quota, you’re going to have to tender for it.” One of the requirements of tender were very close social enterprise with a whole bunch of social outcomes; how you maintain a fishing quota, how you educate your own people, how you choose to educate our people. We will just see the prevalence of that sort of filtering through the whole economy.
It will continue to rise and expect to see more of us in the pure corporates sphere, and I think that’s a good thing and I think that will be a particularly good thing for New Zealand because of our small size and strong base there we’ll be stronger than other countries. I’ve also practised law in Australia, it’s not quite as prevalent over there because there isn’t such a strong, they’ve got some fantastic social enterprises, and those that touch base with the Aboriginal communities get exposed to them, but in New Zealand because of the strong Māori economy, the strong Māori base the exposure of social enterprise ideas, is just much higher.
SW: For Eat My Lunch, the buy one get one model right just through the entire economy in every sector, is this the idea?
LK: Maybe.
SW: It doesn’t have to be just food, does it?
LK: No, absolutely not.
SW: In fact, didn’t start with just food.
LK: Yeah, I think the concept and the big idea can be applied to anything.
More Reading
SW: Okay. Nick Wells, Michelle Sharp, Lisa King and Alex Hannant, thank you all so much.
BusinessSeptember 29, 2017
Social enterprise: the future of capitalism?
Social enterprise is changing the way we consume. In a discussion with some of the most prominent players in the sector, The Spinoff asks: can we consume our way to a better society?
The rise of social enterprise has become an important signal for the direction of our economy. As the sector continues its rapid growth, its future looks as if it will have a much greater role in commerce, with the commercial sector leaning in to take a greater role in social and environmental issues. Consumers, potential employees, and clients are starting to demand businesses think carefully about the social impact they have and the potential for the company to make a greater contribution to their ecosystem. These businesses are now becoming key parts of solutions to things like poverty and climate change.
“The challenges that Aotearoa is facing today needs fresh thinking, innovation, and collaboration to solve them. We’re supporting the growth of the social enterprise sector in New Zealand as a way to help create a more resilient economy with flourishing, purpose-driven businesses that are creating a better tomorrow,’ says Julia Jackson, Kiwibank’s corporate social responsibility manager.
This week, the Social Enterprise World Forum (SEWF) was held in Christchurch. This is a big deal. Hosted across the city, the forum brought social entrepreneurs from around the world to New Zealand at a moment when our sector has momentum and traction, but is still young enough to learn and develop from the journeys of others. The forum has a powerful track record of launching significant growth for the social enterprise sector, and it’s a big deal for Christchurch as well. It’s one of the largest events held in the city since the 2011 earthquake, but it’s also a big deal because the forum is informed by Christchurch’s response, economically and socially, to the disaster that forever changed the city.
Read and watch The Spinoff’s full series on social enterprise here.
Ahead of the SEWF, in association with forum sponsor Kiwibank, The Spinoff, sat down for a conversation with a panel of some of New Zealand’s most influential social entrepreneurs to think carefully about the impact they can have on the world they move in. Chaired by Simon Wilson, the panel discussed the role social enterprise has in shaping the future of New Zealand’s economy and capitalism in general, the power of the Māori economy given its social values, the political role of the sector, and the massive demand for a more thoughtful consumerism.
Watch the discussion, or read on for a full transcript of the conversation.
Simon Wilson: Hi there, I’m Simon Wilson from The Spinoff and we are going to talk today about social enterprise. I’m joined by four people who are closely involved in social enterprise in different ways. Starting on my far left, Alex Hannant, who is the chief executive of Ākina, who are a social enterprise facilitator, entrepreneur, make it happen organisation. Next to him is Lisa King, the founder of Eat My Lunch, a social enterprise that operates on the BOGO principal, buy one, give one. On my right, Michelle Sharp is the CEO of Kilmarnock Enterprises in Christchurch. This is a social enterprise company that employs and supports people with intellectual disabilities. On my far right, Nick Wells, who is the Hoa Rangapū Whakarae, which you might know as chief executive partner at the law firm, Chapman Tripp. Kia ora.
We’re gonna talk about the different forms social enterprise. We’re gonna talk about what you guys do, the problems you face, the aspirations you have for the sector, the big political questions that surround it, all those things. We’ll run this as a conversation so do feel free to talk over each other at any stage and interrupt and disagree. Clap wildly if you think someone said something splendid.
Perhaps Michelle we could start with you. Kilmarnock, you’ve been going for a very long time, much longer than the term social enterprise has existed. Perhaps you could tell us how you operate.
Michelle Sharp: Yes, we have been running for 60 years. Quite a long time, in fact, this year is our 60th anniversary. In terms of what Kilmarnock does, we provide a real, exciting and tangible pathway for school leavers with disabilities, intellectual disabilities in particular. We do that through two ways. As an employer, we currently have 85 people with disabilities working at Kilmarnock, and we’re a part of their employment journey. They come to us from school, they gain the skills, the confidence they need, and then we help them pursue careers outside of Kilmarnock thereafter.
Very excitingly, this year we have just launched the Kilmarnock academy, which is a further option for school leavers if they want to actually go and do further education. Currently we have a cohort of about six employees who are doing the NZQA qualifications, which is very exciting for them given that a lot of them left school without any formal qualification.
SW: How big is the operation overall?
MS: In terms of people, we are probably about 100, with another 20 or so casual workers when we have high demand of work.
SW: There’s 100 people with intellectual disabilities working through Kilmarnock?
MS: Not everybody with an intellectual disability, probably about 85.
SW: Okay, alright. Lisa that’s a very different kind of model from what you operate with Eat My Lunch. Of course you haven’t been going 60 years yet, very much younger. Perhaps you could tell us.
Lisa King: We just celebrated our second birthday a couple of months ago. Eat My Lunch is set up as a company. We’re a food delivery company where people order their lunches online to have fresh healthy lunches delivered to them at work. For every lunch they buy, a lunch is also given to a Kiwi kid in a decile school who would otherwise go without.
SW: We’re actually sitting in your centre of your operations here, it’s the middle of the day but this morning there were a lot of people here and a lot of lunches being made. How many lunches got made this morning?
LK: Every day we give around 1600, 1700 lunches to kids in 48 schools in Auckland, Hamilton and Wellington and that’s on the give side and then what people buy varies every day like today I think it was just under 1000 of those made as well.
SW: Those are two different models, there’s a model there buy one give one and then there’s the employed staff so that the actual employment itself is the purpose of the social enterprise. Yours is the what you give free, that’s the purpose of that that and enabling people to come through that. Alex, those are two different models, are there other models of social enterprise?
Alex Hannant: Yeah. We largely see three or four core models and there’s variations on all of them. The first one would be that you have a business which creates profit which then enables you to then fund the delivery of other services or products.
SW: That’s Eat My Lunch.
AH: Yeah and the buy one give one is a kind of sophisticated model there where it’s not making money over here to maybe give something which is quite unrelated over there. It’s actually, there’s an integrity between the product and service. The second model would be where the impact is as a result of the people working within the enterprise very much like Kilmarnock. Another example would be something like Pomegranate Kitchen a start up in Wellington who also are catering social enterprise but in that case, it’s around providing employment integration, language training, livelihoods to former refugees who use their strengths to create food of middle eastern cuisine and then that’s sold. Then the third bucket is where the impact is actually as a result of the direct service so there’s an innovation which is actually overcoming a market failure or just simply doing something different in a better way.
SW: An example of that would be?
AH: Would be Thought-Wired, a tech company which actually developed software to enable people with profound disabilities, locked in syndrome, to actually use computers with their thoughts. They’re also developing that in a way where that technology would be accessible to many rather than be something which is elite or exclusive, very much driven about trying to solve that problem rather than maximise the profit.
SW: Does that take us to part of our core definition of what social enterprise is driven to solve that problem rather than to maximise profit, is that what it is?
AH: Yeah. I would say it’s exactly what it says on the can. It’s an enterprise, so it has to be commercial, it has to be viable, it has to stand on its own two feet, but that is in service to a social environmental mission. It’s as simple as that. The thing is there’s a huge amount of diversity and in some ways rather than a thing, it’s better to understand social enterprise as an approach. Charities use social enterprise models, businesses might focus all their commercial expertise on changing something around an environmental or social agenda. It’s not so much a core identity, it’s more an approach which any number of organisations can do to sustain themselves and deliver a change in the world.
SW: The question of the relationship between charity and social enterprises is quite an important one but to be able to distinguish the two … or am I seeing that wrong?
AH: I think the main is mission first, so charities exist to deliver a social mission for charitable purpose, social enterprises exist to deliver a social mission. The key thing about social enterprise is that it delivers that through a commercial model, generally the trading of goods and services but as I said , charities can also be social enterprises. It’s not really about this identity, it’s more about how do you get your resource in order to deliver your mission.
SW: Kilmarnock started life as a charity, am I getting that right?
MS: Very much so and our changing point was really about seven years ago when we lost the ANZAC poppy contract, so before that we operated very much with a charity mentality. We had one contract which was a commercial contract, we had one contract which was government funding and the rest was donation and grants and things like that. When we lost that commercial contract, it really made us think about how could we become more self-sustainable, how could we ensure our future, how could we put that into our own hands.
SW: Does that effectively mean how do we operate as a business?
MS: That’s right, correct. We came in, we basically applied really stringent really strong business practises, we diversified significantly and the really exciting thing that I love is through the fact that our commercial business has grown and has become very commercially focused, the social impact of what we do has become equally, the curves follow each other which is fantastic and that’s what you want. So it’s not “or”, it’s “and”. Commercial and social.
SW: Lisa, your story is quite well known. You and your partner had an epiphany, “what are we doing with our lives” and decided on Eat My Lunch. But you didn’t decide to set up a charity, you decided to set up a business. Tell us about why you made that decision?
LK: It came back to sustainability and also scalability. The problem of kids going hungry, we estimate there’s probably around 25,000 kids in New Zealand a day. To be able to get to our mission of making sure none of them are going hungry, we knew it always had to be scalable and self-sustaining. Setting it up as a charity, relying on donations and funding, as Michelle said, once they stop your good work has to stop as well. We came from corporate backgrounds and so we took business skills, business models and tools and applied it to this problem. That’s how we started with a business but at the heart of it is our social mission. What we found is really amazing that even though we are a business, we still get volunteers. This morning there was at least 25 volunteers in here making lunches for the kids, we’ve had over 4,000 people come and do that even though we’re a commercial enterprise.
SW: You actually run like a roster, don’t you?
LK: People just sign up online to come and volunteer and we have a two month waiting list at the moment for volunteering and I think it goes back to, Alex says it’s the mission that comes first. People buy why we do what we do not necessarily the lunches and people would just want to get involved, regardless of whether we’re a business or a charity.
SW: In fact there are two ways that you can get involved by buying lunch or you can get involved by helping.
LK: Yeah.
Nick Wells: The other thing I find quite interesting about Eat My Lunch, if you don’t mind me talking about your debt programme for a minute, is to actually have a social enterprise, go out and seek to raise expansion money through debt, that’s actually quite a powerful tool.
SW: Can you explain that?
NW: Knowing that they were expanding to Wellington in particular and into Hamilton there were a number of lunches that were going on, I watched from the side, in relatively close quarters, seeking to raise debt capital for the expansion. Part of the debt capital, you were raising money through debt, that was a successful raising, so that’s positive and then the bond holders had an option, you could either take one level of interest and there was free lunches with it or another level and you got one free lunch or no interest at all in which case all lunches were supplied. There was a nice social edge to the debt raising as well.
You could invest in the company and get expansion capital, because that’s the trouble that some charities face for example, a pure charity, because they haven’t got an economic return to fund debt or things like that so it limits so it was quite a lot. That was quite an ingenious way for a New Zealand social enterprise to raise capital and expand.
SW: Nick, are you seeing a lot of this?
NW: No, not actually a lot. That’s actually why Lisa, and Eat My Lunch, was bit of a pace setter out there in raising capital and it can get a little bit tricky because you need debt governance as well as the things that come with it. It does require a bit of care. There is quite a lot of this of course in the Māori economy because on the Māori economy side we say that we are by our very nature social enterprises because we take our profits that we earn, and we reinvest them back into social outcomes be that te reo, be that health, be that housing and education in particular.
Often it’s got a bit of a charitable arm and they will raise debt to secure that. In their case they tend to have a very land based portfolio that’s easier to raise debt against. Again, for Māori and hapu, it’s also a natural tension because you want to invest your money to earn money but also there’s a tension there because your social enterprise, you’re responsible for sometimes 60,000 people who could actually take all the money right now. You got an intergenerational balance, what you earn for the future versus what you pay up now so it’s often really viable now.
SW: Which is quite considerable in the Māori economy.
NW: It’s huge and I do have to balance that day in day out. The nice thing, I suppose, if I think about a model like Eat My Lunch or a model in the iwi environment, you can say the success of Ngai Tahu in the south, or Tainui in the Waikato, has actually being to provide models that others can follow. Then you actually get a nice bit of competition as between iwi and how we should be going. And you’ve got models that are proven, because you can fit it into any context, try to completely reinvent the wheel and that can distract you quite a lot. They have proven models out there in any of these Māori social business context that are well understood, which is quite important so you don’t have to invent everything from scratch.
SW: You’re a head of a corporate law firm, you’ve got an engagement particularly through the Māori economy is pretty strong in the area at least but you’re not the only ones. Is this way of doing business, you said it was small, but is this way of doing business something that is growing fast? Something on the side?
NW: In Aotearoa, I think we’re extremely lucky that we’ve got a growing Māori economy because it’s at the core of that economy that you give back and you’re actually doing that work growing an economy for a social purpose and I think that leads us to being much more tolerant and understanding as to social businesses in particular. I think those that do well in a social business environment are those that get it. As a corporate law firm, we could partner with such businesses and charge them a fee like any other client but if we actually connect with a purpose the chances of us growing that practise and then being a trusted partner are much higher.
You’ll actually see and I think a lot of New Zealand businesses not just us engaging with social business, engaging with them trying to get a social purpose as well I think that’s great because that actually leads to better societal outcomes. We not only have to think about our own profits but actually how we work in a sustainable way whether it’s with the environment with our own people or whatever. I think it makes us a healthy place.
SW: Alex, what do you think about that, the social enterprise where does it sit in the mainstream economy, is it on this side, is it on modifying the mainstream economy? What’s its role?
AH: I think simplistically it complements the mainstream economy, it’s a hybrid. But I think it’s more interesting to think about where this is going. The future is already here but it’s not evenly distributed. Rather than thinking about where it sits in the current economy, I think this is the signal of actually where the economy is going in the future. I would say if you’re looking at some of the drivers of social enterprise you’ve got to a certain degree the social sector leaning into taking a more enterprising approach, and the commercial sector leaning in to understand that society and the environment matters, not just to them as humans who are generally good people working in organisations, but just for the sustainability of business in itself.
I see this as a convergence agenda and what we’re seeing often with these of great stories, but we are still finding our way in terms of how visible it is, is the sharp end of the curve.
Also we make a lot of play around why this is great because we can find a financial model to deliver social goods. The other thing about the financing piece is not just the sustainability. If you’re not dependent on the generosity of your funders you’re more likely to be able to innovate into the problem.
I’ve come from working in the background of NGOs and charities and you spend too much of your time worrying about what your funders think, not looking at the people your serve. The other thing is there’s an empowerment agenda here and I think this is really relevant to the Māori economy and also to community enterprises across the country in terms of rather than being the recipients of services and generosity it’s about ownership of assets, it’s about design and delivery of their own services and community has actually taken development into their own hands. So sustainability but also innovation and empowerment.
SW: How do those things apply to you would you say, not having to answer to your funders in the same way, that must make life easier?
MS: Yes, in fact we now see government as an example, we now see government as a keystone customer rather than as a funder. We’re delivering a service and that changed the relationship which was fantastic. I think what Alex is saying is absolutely right, that by no longer being reliant or dependable on one income stream through good business practise regardless, it drives innovation. It has literally changed our whole landscape. The future of Kilmarnock is so exciting now, because it’s sustainable, it’s replicable, it’s scalable those things it wasn’t before.
SW: Are you scaling? That’s the big plan.
MS: We’ve already scaled to some degree I don’t know if you’re aware but we’re at the end of a three year project where we’ve just built a brand new designed new bespoke designed building it’s called Basecamp so we’ve relocated from our old site which we’re on 40 years which had grown iteratively to a brand new design purpose built site and the opportunities there are huge for us now. The next challenge for us now is what does growth look like beyond Basecamp, is it a model where we start on operating in other cities, is it bigger in Christchurch, is it diversifying further into the education space?
SW: Are there corresponding organisations to yours in other cities as social enterprises or are there charities?
MS: A real mixture, the spectrum is huge. There are probably four or five examples of organisations similar to us who are trying to take a similar path at different stages of that journey.
SW: The point that Alex raised before about empowering communities is that an issue for you? Are you working in a community that can be empowered, or how can it be empowered?
MS: I would say that interestingly, if we go back to our charity model that we were operating in about six years ago we did it and our operation was entirely dependent on the community yet somehow transitioning into a social enterprise model we’re doing this with the community. It’s been amazing how that transition has allowed us to get the community…
SW: You’re talking about families…
MS: Every aspect of community, every single stakeholder in the community whether it’s families, whether it’s schools, whether it’s local businesses, the philanthropic sectors. It’s been quite amazing the change, we were operating very much in a silo before now we’re doing so amongst a community that is very willing to get involved which is fantastic.
SW: Lisa, you’re expanding to take over the world really, is that the way it’s going to go?
LK: Just New Zealand at the moment.
SW: Is that easy to do?
LK: Yeah, if you look at us purely like a startup and we’re two years in it’s always really difficult, funding, and having enough capital for expansion. We go through the same pains as growing a business but I think as Michelle says when you’ve got this big social mission people are incredibly generous and they do come on board. A lot of our suppliers give us favourable costs on some of the things we buy, we got a lot of help that I think if we were purely a business we wouldn’t get.
SW: If you’re getting favourable costs those sorts of things that’s great for you but it also suggests that it’s not necessarily a model you could roll up right through the economy because somebody has to pay somewhere. Would that be fair?
LK: Yeah and we have 99% of our relationships with our suppliers are commercial but because people love what we do they do come on board and they’re a lot more generous with our relationship.
SW: This is one of the big questions I think and it really does interest me, is the extent to which social enterprise either reinforces or modifies the mainstream economy. Is capitalism stronger or weaker or better or worse or what is it?
NW: I think it’s absolutely stronger and it’s not just in New Zealand, so one of the things that really surprised me I was lucky enough to go to Colorado on a leadership course with 11 people around the globe. This is going to sound like a bad joke, one was an admiral, and one was a general, there was a guy that ran a power company in Jamaica.
AH: Is there a punchline?
NW: The punch line is actually they were really interested in what we were doing in New Zealand around the Māori economy and the social side and then they equated to the social enterprise. When you look overseas you can see large corporates actually starting to lean in and I think as they lean in and as social enterprise leans in you actually will get a convergence. In a funny kind of way that has to be the idea of the contract with the state. We actually give back to our community because that’s the most important thing. Businesses that don’t connect and look after the environment and the people in the community around them. If we get to the state where that is the exception as opposed to the rule, I think that’s a powerful place to be.
While overseas are trending that way, I think because we’ve actually got a strong Māori base here, 15-16% of the population, large volumes of wealth in Māori economy, they’re now talking about $50 billion we’ve got a strong base that leans that way, as well as social enterprise in its own right, as well as charities that move that way. We’re a small transparent country with very low levels of corruption so we’re actually at a good place to be a bit of a Petri dish for the social enterprise.
SW: To stay on that big question, if there are a few things that are now widely accepted and one of them is probably that we are in a stage of history around the world where there is an economic system and it is capitalism and it’s enlightened or less depending on where you are, but the competition to overthrow it doesn’t exist anymore in a way that it did during the cold war. Another one is that we have climate change rushing at us. And then the third one is that there’s an enormous will in society where we have a developed economy with resources we want to make sure that there’s a degree of fairness and opportunity that is shared our. I think those things seem to me to be givens now, that’s where we are. Is social enterprise in the forefront of that? Is it rushing along behind, is it going to change to change the way in which the economy goes around?
AH: I think if you’re going to be really hard nosed you could look at this from the lens of risk. The whole idea that we know we’re on a ball of rock in the middle of nowhere, and there are systems that are very benign but if we influence or tip them over life gets a lot harder for everyone. If you’ve got more business activity which isn’t externalises costs into the environment, you’re managing that risk. So again social enterprise is social and environmental enterprise. It’s about not externalising costs it’s about externalising benefits, the same thing you can say from a social point of view. We’re living in a time of extreme inequality and I wouldn’t want to be trite around why all of a sudden we see all these political risks arise.
You would have to say inequality is somewhere in that mix and having organisations which are thinking about vision of creating the conditions for more people to thrive, thinking about inequality as a major driver of managing social risk, these things are important. I think with social enterprise again what it represents is an approach to creating value which is not externalising costs and is redistributing more value for more people. In that economic argument that’s the way I see social enterprise. Because in practise you still want innovation, you want diversity and you want it to be a chaotic messy competitive world. That’s in the practise of it, but from a strategic point of view that’s what we’re seeing social enterprise doing.
SW: Others agree with that?
NW: I take a bit of comfort that it evolves in consumers, and that consumerism rather being a negative actually demands it, so that’s where you can interface with Kilmarnock and interface with Eat My Lunch because you can say look, compared to other options even an individual consumer or business, I prefer to interface with a social enterprise because I’m giving a social good as well. And it allows me to tell a story when I go back home, or I tell my own customers. Actually increasingly for a law firm our size, we actually are getting our clients saying well how do you look after the food chain, so they’re demanding our story of us. We’ve got to be mindful of that and actually even if we didn’t do it because we wanted to, we’ve actually got to do it because you’ve got to. And that actually becomes an important part of the landscape. That’s where you get a quite powerful dynamic.
LK: We have a lot of big corporates that are partnering with us now.
SW: What does that mean, you’re doing their lunches?
LK: Yeah, they’ve made us a preferred internal caterer supplier. For example, the Air New Zealand’s of the world. And in a year they have given 20,000 lunches as an organisation and that’s something they can go back to their staff, to their board and to their consumers and customers and say this is what we’re doing. Doesn’t cost them anymore, in fact our lunch is probably cheaper than what they can get from other caterers but there’s a story behind that and they’re actually doing good at the same time and there’s more and more. Every week we’re signing up a new customer to be their preferred supplier of that.
AH: Again, if you wanted to be hard nosed about it, it is not just about doing something which is nice and good it’s about getting more value. I was going to buy my lunch anyway so why wouldn’t I want to actually provide an opportunity for someone else to have one. There’s an Aussie social enterprise called Who Gives a Crap toilet paper and so they divert some of their profits into sanitation projects in developing countries. Now you think like why wouldn’t our ministry of foreign affairs and trade buy all their toilet roll from Who Gives a Crap because it’s basically subsidising or supplementing our development budget.
SW: The particular beauty of that project is the purpose of it is actually transformative? It’s sanitization projects change people’s lives, make everything else possible and they have clean water in a clean glass.
AH: This myth that we’ve had trade offs, like commercials over here and social environments over there. I think a lot about this movement is about saying actually this is about adding value. Be it in investment, getting more return and also getting other value be it about procurement or purchasing decisions or be it in just in the way that we are as organisations.
SW: Does this mean that consumerism is the new politics? Consumerism and politics used to be posited as opposites that you, you either consume, or you get out there and change the world. But actually the way in which you consume, the choices you make as a consumer have political ramifications and they don’t have to be bad ramifications, obviously. Is that what’s happening here?
AH: I’ll put it in another way, if you think about where you have agency in your life, you can influence how you are to people, you can influence where you work, you can influence what’s said in society and you can influence things you buy. Absolutely, I won’t say this replaces and I think that would be a lazy thing to think, we still have to be active members of civil society, but absolutely, we can also have a change in influence of where we spend our dollars.
MS: Just to support that, it’s interesting I feel that a lot of our customers who engage with us do so because they’ve realised that in order for them to retain their really good employees, the new generation, they actually have to do things like engage with social enterprise because they demand it. Yes, I support that entirely. And just going back to the previous point it’s very interesting one of our biggest quests that we’re enjoying almost proving to the business community is by outsourcing with Kilmarnock, you’re absolutely not jeopardising any quality or any of those things that you would expect from a purely commercial organisation. In fact I would say that in many cases social enterprises do it better because we’ve had to be innovative, we’ve had to try really hard to get to where we’ve got to and so it definitely is a value add rather than [a compromise].
SW: I can imagine a world where your operation and your customers will tell a whole lot of other companies and corporates, actually we need to keep up. We need to develop a more ethical approach to what we do because customers are, consumers are demanding it. Do you see that happening?
NW: What I was seeing, was there was not only the customer side but thinking of professional service, our biggest need, because it’s one thing to service our clients but the other market we’ve seen is the recruitment market and when you’re looking at millennials, so young lawyers out of law school, there’s an expectation that: “I want to work in a place that yeah, will further my career and I will learn fantastic skills but actually that is actually doing good as well so I want to earn them a living. I want to improve my skills but I want to work in a place that makes me feel good”.
That also fits into the social enterprise side of things as well and that’s why you see not only social enterprise but the rise of the CSR programmes, amongst most professional service as well. Then you’ve now got a competition basis, they’re competing with each other for doing the greatest good but that’s actually not a bad place either because actually everybody is focused on lifting the community and social environment. It’s actually quite a good place to be.
LK: We recently advertised for a role and had like 60, 70 applicants in a few days and so it speaks to the power of what we do and a lot of them were in corporate companies saying, I actually want to get out of that and do something good.
SW: Yeah, good because part of the aim must be eventually that corporates themselves, there aren’t so many people who want to escape corporate life because corporate life gets better. Nick?
NW: You often hear people complaining from my generation in particular, complaining about millennials and that they are all in it for themselves. But actually that’s not true at all, they want to see a purpose that is bigger than themselves. They want to engage with it. The corporates that are going to attract the best talent, maintain relationships with clients as well, they have to get their head around it. It’s much easier to embrace social enterprise as a law firm, as bank, because you want to and it’s a positive engagement. Because if you feel you have to, you give off that vibe.
SW: One of the difficulties of working in the area of politics and consumerism and private enterprise and all the rest of is that , every now and then the situation can become fraught with political risk. Lisa, I wonder if you could talk a little about the letter you wrote recently and just what happened there.
LK: The Tuesday that’s just gone we hit our half a millionth lunch that we’ve given to kids and we took the opportunity, we wrote an open letter to all members of parliament to put their money where their mouth is and we’ve demonstrated that there obviously is a problem.
SW: That phrase means something particularly to you, doesn’t it?
LK: Yeah and that we asked all the members of parliament to sign up and to buy an Eat My Lunch. As an organisation we have stayed away from politics. We don’t get involved but this was a bit of a challenge to the people who can make a actually make difference to kind of say, “Well let’s do something.”
SW: Of course when you go to parliament and you go to MPs, you are getting involved in those politics.
LK: Yes, it is.
SW: You made a disparaging reference to the process of legislation.
LK: I think we chose some words unwisely and we referred to the fact that they didn’t even have to pass any bills or –
SW: Any pesky bills.
LK: Any pesky bills or lift a fork that all they had to do was order a lunch. And obviously, we believe bills and policies and legislation are essential to solving the problem, it was a light hearted note to them to just say, but this is one thing you can do as an individual.
SW: What do you take out of that? What’s the lesson there for a social enterprise?
LK: For us, Eat My Lunch is all about doing good and it’s about staying true to our values and so very much it’s about inclusiveness, getting the whole community on board. I think the lesson for us there was the way that was messaged in the letter wasn’t true to who we were and I think when you are doing something good, there is a lot of scrutiny and transparency is absolutely key. We have to be absolutely honest and genuine about what we do. I think there’s a very fine line between this and we were trying to be a little bit cheeky and challenging and we kind of overstated that a little bit.
SW: Presumably the part of the messaging always has to be that what you’re doing is complementary to, you’re not solving poverty, you’re giving out lunches, but there are people trying to solve poverty and you’re not intending to step in their way.
LK: No, absolutely not we are a small part of it. Eat My Lunch came about because I saw on TV there are kids going hungry and I just wanted to make sure they are getting fed well at school so they could learn but it’s pretty much as far as it goes. We’re not about solving the root causes of poverty. We’re just a very small part of that puzzle.
SW: Alex, do you have a comment on that.
AH: The first thing I’d say is, no one organisation is going to solve a systematic problem but if you have a whole movement of organisations taking off small parts of the system working together collaboratively in different places and different cultural backgrounds with different passions and different networks then you will start to shift the dial. I take Lisa’s point, there’s always that risk of when you stick your neck out, the axe might come down on it a lot of it. I think there’s courage needed in terms of not just doing the work and the hours and the stress and the strain that goes into doing that but also sort of leading a story and beginning something that people are still trying to get their heads around and understand better.
SW: And when I asked before whether consumerism is the new politics. The upside of that is consumers can change the economy because they can buy things that are produced ethically, and the downside can be, if it’s only what I buy as opposed to what I say to my MP to get them to change a law then less progressive laws get enacted.
AH: We seem to have come very divided about this idea of capitalism in the economy in recent years. I tend to think that if you look at trade, trade is the primary human technology, it enabled us to survive by exchanging resources in the ice ages so it’s always been a thing which has defined us. It’s just I think, in more recent years it’s become dysfunctional. But trade is still our primary means of exchanging value and evolving and innovating so yes, consumerism or trade or commerce is something that is our tool we can use it how we want. But we’re also a civic society and so I don’t think you can rely on just the economic path. You also have to be political, we also live in communities and those things all have to go hand in hand
SW: If trade is at the heart of who we are as a community, that is the real essence of what’s good about what you do, isn’t it? that you involve people in the trading economy who a generation or two ago would have been thought not able to be part of it.
MS: Entirely, that’s what we demonstrate not just to individuals but to society. That everyone who comes through the doors of Kilmarnock absolutely should be participating in the trading economy. One in five New Zealanders I think, is said to have a disability; and in a poll of what people with intellectual disabilities want from life, they want the same as the rest of us. They want to work; they just didn’t have the options to work.
SW: The strength of what you do [Lisa] is that in a trading economy, you offer people the opportunity to make an ethical purchasing decision that will not so much empower people, but actually feed a need.
NW: I quite like the thought, so to pick up on that, if I think back to the New Zealand of my childhood where the “Treaty gravy train” and a lot of what Māori were doing was viewed negatively by a large part of the population. They’ve actually grown and made a success of their social enterprises. You might not have political self-determination but you will have economic self-determination and they look after not only their own people but because they are successful in a trading economy and they’ve a social purpose that gives them political clout at a whole bunch of levels. I think if you then look through to social enterprises generally, the the fact that Eat My Lunch will actually make a political statement and they’re being successful and actually that’s the same with Kilmarnock as well, that actually resonates more powerfully because they have the economic strength to do it.
I think the odd pure charities struggle to make political comments because they are always charities, but social enterprises can actually say, the very fact that you need 500,000 free lunches actually points to the fact that things are perfect there. The very fact that iwi can say we are actually profitable, we’re delivering a whole bunch of social services but we can’t match demands either points to the fact that things are wrong, so it actually gets to the commentary.
AH: We’ve spoken a lot about what happens on the outside of a social enterprise but also it’s important what happens on the inside in terms of what are these like as places to work? To what degree actually are they providing respect and dignity? The point about empowerment. We haven’t talked a lot about co-operatives, but particularly in Spain and Italy if you talk about social enterprise you are talking about mutuals and cooperatives and this is where the people of a community actually own the thing. So it changes the relationship between labour and capital and there’s something quite powerful in that in terms of not just working for something but having ownership of the thing that you’re working in and actually being committed to the community that you’re in.
SW: One more point I wanted to ask about, and Alex, there’s something that you said recently: “a culture shift has to happen so we can consider the tensions in a way that’s not simply ideological.” And you went on to say, “We need some quality assurances that are self-declared mission first business is what it says it is.” In other words, transparency, we can see that this company that sets itself up to do good in the world actually is doing good in the world and we can have confidence in it and we haven’t really talked about that transparency side but you’re saying there that that’s so critical to this. Private companies of course don’t have to be transparent, normally.
AH: No, we don’t expect them to be and that there was part of my point so if a mainstream company does some good on the side we tend to think quite well of them. But we’ve seen actually a lot of challenge around entrepreneurs that say I’m in it for the mission but I’m not taking a charitable legal form so therefore we can make a profit. I think that’s still something that we’re working our way through so I think there is that cultural shift and we’ve got to get over the idea that the only way that we can actually develop some good is by having something that is completely locked down. Not least because, if you want to scale, if you can’t sell ownership, you can only take on debt and that’s a lousy growth instrument.
I know it worked for you but on the whole you need to raise capital but more than that it’s more of what is important here. The importance is the integrity of the organisation and the impact it’s creating. As long as organisations are accountable in terms of demonstrating, or there’s evidence in the change they’re making, so we can see that they’re not just saying this is what we’re all about but this is actually what they’re achieving. And also that we can see that it’s in their governance and their business model and their investment strategies, so there’s other ways to manage that risk rather than just saying let’s lock it down with a kind of charitable trust.
SW: How do you address that [Lisa]?
LK: I think we are probably one of the most transparent manufacturing businesses that the fact that we allow 4,000 people to walk through and see how we make the lunches and be part of it. There aren’t many other businesses that do that and I think that there’s a lot of transparency and we’ve actually got people coming in and making lunches and delivering them to the kids. They see it from, the whole process from start to finish. There’s obviously things measuring the impact that we have. We get a lot of feedback from the schools. But one of our next challenges is how do we measure that and a measurable way that, this is what we are doing for those kids. Anyone can walk in here as you guys did this morning and see what we actually do.
SW: Michelle, transparency?
MS: We would be the most visited manufacturing plant.
SW: Apart from the ice cream factory I bet.
MS: Yeah, so we have a mixture of externally audited, for example, ISO accreditation as an example, a food safety programme so those are externally-audited systems. We also invite the community in regular tours for example so I think in any year, probably two or three thousand people walk through doors of Kilmarnock and engage with employees. So parents, caregivers as well and also our customers. A lot of our customers as well, Air New Zealand, Fonterra, Foodstuffs, they all audit us as part of that relationship so we have to be entirely transparent. Something that we’re also working on as a whole impact measurement side of things. I’m bit of a closet Excel geek and I’ve created a system that works for us now but that’s something we want to really ramp up. In terms of being able to talk to actually this is the impact of what we’re doing. It’s not just what we think it is, this is genuine and tangible.
SW: Anybody want to say, in 10 years’ time, we’re going to be here? Who’s got a vision?
MS: In 10 years’ time I actually hope that Kilmarnock doesn’t need to exist in the form it exists today. That would be my statement. If we could exist more as a training academy and somebody who helps employers become disability confident employers, rather than as an employer, I would be very happy. That means the business community has realised and woken up to the fact that diversity as a work force is absolutely critical.
AH: I love the story in Scotland now. If you’re 12 or 13, you learn about business through the medium of social enterprise. You’re learning all skills around entrepreneurship and commerce but through a lens of care. And so you kind of think that if you start to build that kind of practise into our learning systems, what does that mean in terms of the next generation of entrepreneurs? There is this old cliché about putting yourself out of business but taking the word social away from the word enterprise. That’s just the way it’s going.
SW: Does that resonate for the iwi economy?
NW: I think it does. I think if we think where iwi will naturally go is they will funnel their funding back into education and health. It wouldn’t surprise me if in 10 years would see, out of probably frustration with the government systems, an iwi run school and they will feed the kids, they will have nurses available, the sort of thing Dr. Lance Sullivan has been talking about for a while. I think you’ll seeing an increase in social business, moving into almost what would be considered a governmental space at the moment and expecting that to continue. You’ll probably see a lot more interface between business and they will continue with that leaning in, and I think we will be stronger for it.
I expect an exponential increase, because there’s a large rump of, a large volume probably of Treaty settlements still to come and once those are complete, because some of them the hardest ones have been in the poorest areas. Once they go through, the impact of those on the social enterprises around them and their expectation of businesses they see alongside. Another example was we saw 30 Iwi come together and combine their fishing quota. They said, “Look, if you want our fishing quota, you’re going to have to tender for it.” One of the requirements of tender were very close social enterprise with a whole bunch of social outcomes; how you maintain a fishing quota, how you educate your own people, how you choose to educate our people. We will just see the prevalence of that sort of filtering through the whole economy.
It will continue to rise and expect to see more of us in the pure corporates sphere, and I think that’s a good thing and I think that will be a particularly good thing for New Zealand because of our small size and strong base there we’ll be stronger than other countries. I’ve also practised law in Australia, it’s not quite as prevalent over there because there isn’t such a strong, they’ve got some fantastic social enterprises, and those that touch base with the Aboriginal communities get exposed to them, but in New Zealand because of the strong Māori economy, the strong Māori base the exposure of social enterprise ideas, is just much higher.
SW: For Eat My Lunch, the buy one get one model right just through the entire economy in every sector, is this the idea?
LK: Maybe.
SW: It doesn’t have to be just food, does it?
LK: No, absolutely not.
SW: In fact, didn’t start with just food.
LK: Yeah, I think the concept and the big idea can be applied to anything.
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SW: Okay. Nick Wells, Michelle Sharp, Lisa King and Alex Hannant, thank you all so much.
The content is brought to you by Kiwibank in association with the Social Enterprise World Forum.
The Social Enterprise World Forum is on September 27-29th in Christchurch.