Applying Social Procurement Principles to Infrastructure Investments Will Achieve the Greatest Possible Value for Canadian Communities

Submitted to the Government of Canada Consultation Request for Comments on Infrastructure Investments

Submitted by Buy Social Canada – www.buysocialcanada.ca

David LePage, CEO

August 31, 2016

We commend the government’s very significant $120 Billion commitment to infrastructure investment over the next ten years; particularly the attention to the critical needs of Aboriginal communities and seriously needed social infrastructure. We welcome the opportunity to participate in the consultation process on how the government investment in infrastructure can serve Canadian communities most effectively.

Along with our praise for the infrastructure investment decision our advice is that government can achieve significantly greater return on investment for the taxpayers and attain significant economic, employment and social impact in communities across Canada by applying a social procurement lens across the entire infrastructure contracting and delivery process.

Applying social value principles to the tendering and implementation of the infrastructure investment will also avoid the social value leakage and unintentional socio-economic damage that may occur using the current price-driven procurement policy.

Leakage is commonly understood as not getting greatest value when purchasing or investing because a value “escapes” somewhere in the process. Or as it is often colloquially referred to as ‘leaving money or value on the table’ when making a decision. In the history of infrastructure procurement government leakage has been not capturing the potential additional social impact that could have been leveraged from the same financial investment.

We believe that the federal government is able to effectively use the planned infrastructure investment to help tackle several complex social issues in our communities, including: enhance the training and employment for persons with barriers; expand SME suppliers market opportunities, especially focusing on the social enterprise sector; and empower Aboriginal community economic development initiatives. The infrastructure investment will require setting priorities and making choices, whether related to congestion in our cities, reducing the impacts of climate change, or building a more inclusive society, but in every case we believe a social value impact lens will maximize the potential whole-value creation.

 

Recommendation #1:Utilize a Cross Ministerial Collaboration Approach to Infrastructure Goals

Cross-ministerial collaboration will be step one to achieve the potential leveraging of greater value from the infrastructure investment.

If we examine the overlap of Ministerial mandates across government focused on social and economic development, it becomes imperative that the Ministry of Infrastructure and Communities include in the infrastructure implementation process the Ministries of Employment and Social Development; Innovation, Science, and Economic Development; Indigenous and Northern Affairs; and Public Services & Procurement.

As Tony Dean of University of Toronto’s School of Public Policy points out in his recent book Building Better Public Services “A comprehensive approach to tackling big policy challenges requires deep collaboration and joint working among several ministries as well as non-governmental organizations…”[1]

Recommendation #2: Apply Social Procurement Policy to Infrastructure Contracts

“Social procurement combines the instrumental activity of procurement with the strategic intent of generating social value in response to identified societal needs, such as local employment creation and development of the third sector.” [2]

Social Procurement has many forms; most common on major infrastructure programs are Community Benefit Agreements. “Community Benefit Agreements (CBAs) are a strategic tool used in the process of building community wealth. CBAs are negotiated agreements between a private or public development agent and a coalition of community- based groups.” [3] In Canada CBA’s were used effectively to leverage jobs and local procurement in the 2010 Winter Olympics, and are now an active component of Metrolinx construction in Toronto.

Other applications can be utilized as well, [4] such as:

  • Request for Proposal (RFP) social value evaluation criteria
  • Unbundling of large contracts
  • Selective contracting through use of established financial thresholds
  • Use of trade agreement exemptions to contract with Aboriginal suppliers, non-profit social enterprises and employers of persons with disabilities.[5]

Recommendation #3: Achieve Social Innovation through Infrastructure Purchasing Demand

The government mandates in several ministries are exploring and working toward greater social innovation learnings and outcomes. The infrastructure investment is an excellent opportunity to use this demand opportunity to achieve social innovation learnings and impact.

$120 billion over ten years is a very significant ‘demand’ for goods and services.

In the same manor that Canada has achieved technology breakthroughs using the demand power of government purchasing, we can now also use that same mechanism to achieve innovation in social impact outcomes.

Government procurement has been the source of technological and supply chain innovation over the past 60 years. Multiple Government purchasing programs specifically encourage and reward innovation. [6]

Government procurement is shifting internationally, “…contemporary social procurement is no longer an add-on element: it is a strategic and integral part of the social policy and service delivery armory.” [7]

“With regard to stimulating social innovation, Edler and Georghiou (2007, p. 949) suggest, “Public demand, when oriented towards innovative solutions and products, has the potential to improve delivery of public policy and services, often generating improved innovative dynamics and benefits from the associated spillovers”. They particularly explore the demand-side as a driver to fuel innovation.”[8]

 

Recommendation #4 Establish a Cross-sectoral Roundtable Implementation Design and Monitor Process

Successful implementation of the recommendations above will take more than the traditional top-down, government alone process. Multiple reports and analysis indicate that government alone will not solve the complex issues.

“When government are dealing with complex issues…they should start by declaring their inability to solve them on their own.” [9] And as Dean stated, big policy challenges require “collaboration and joint working among several ministries as well as non-governmental organizations…[10]

We recommend that a multi-sector Infrastructure Implementation Roundtable representing government ministries, private sector developers, social enterprises, SME’s, and community service providers be established. The roundtable advice and recommendations will support successful implementation, and be mandated to capture and share learnings for the larger social procurement community of practice.

 

Recommendation #5 Partner with Buy Social Canada, a Social Procurement Intermediary Service

We recommend that government engage with Buy Social Canada as an external intermediary service that shares their infrastructure investment goals.

Buy Social Canada, a Community Contribution Company, is excellently positioned to work with the necessary multi-sector partners to connect and coordinate the multiple partners: government purchasing, major contractors, social enterprises, multiple suppliers and community based social interests.

As recognized by Barraket et al, “Intermediaries are primarily focused on networking, advocacy and disseminating information and thus play a significant role in navigating institutional boundaries.”[11]

In addition, evidence from Scotland indicates the value and increased potential for success of social procurement through the use of a Social Purchasing Intermediary. Ready for Business[12], is a community-private-government partnership model that connects the sectors, provides training, and creates relationships.

Buy Social Canada, a partner in the Social Enterprise Ecosystem Project, can provide analogous Canadian services.

We look forward to collaborating with the Ministry of Infrastructure and Community to create the infrastructure investment model that will create the greatest possible value for all Canadian communities.

[1] Building Better Public Services, Tony Dean, Friesen Press, 2015, page 31; Professor University of Toronto School of Public Policy and Former Secretary of the Cabinet and Head of the Ontario Public Service

[2] Social Procurement and New Public Governance, Barraket, Keast, Furneaux, Routledge, Taylor and Francis Group.

[3] http://atkinsonfoundation.ca/wp-content/uploads/2015/08/Mowat.AF_CBA_82415.pdf

[4] http://buysocialcanada.ca/files/2014/05/Exploring-Social-Procurement_ASI-CCC-Report.pdf

[5] https://ccednet-rcdec.ca/en/new-in-ced/2015/04/10/new-ccednet-report-primer-trade-agreements-social

[6] Examples: “The Government of Canada’s Multi-sectoral Partnerships to Promote Healthy Living and Prevent Chronic Disease program, which invests $20 million per year in innovative projects and partnerships that focus on addressing common risk factors, such as unhealthy eating, physical inactivity, and smoking, to prevent chronic disease” http://news.gc.ca/web/article-en.do?nid=1037789Accessed August 20, 2016

“Are you looking to finance your innovation activities? Whether you’re working on products or services at the research and development phase, or looking to market your innovation at the commercialization stage, there are a number of government programs available to help you.” http://www.canadabusiness.ca/eng/page/2772/ Accessed August 20, 2016

[7] ibid, Barraket et al

[8] ibid, Barraket et al

[9] OECD Studies on Public Engagement Focus on Citizens Public Engagement for Better Policy and Services, page 221

[10] Building Better Public Services, Tony Dean, Friesen Press, 2015, page 31

[11] ibid Barraket et al

[12] http://readyforbusiness.org: “The public sector in Scotland spends £10 billion annually on goods and services and Ready for Business works with commissioners and buyers to encourage the adoption of social value in public procurement and to increase the share of these services that the third sector delivers. We do this in a number of ways including promotion of the Public Social Partnership model, Community Benefit Clauses and the delivery of social value through the Commissioning process.”

Major step for social enterprise in Canada… federal government launches social enterprise directory…

With little fanfare the Federal government has taken a major step forward this week in supporting the social enterprise sector – providing clarity on a definition and supporting the development of a national directory.

The directory defines social enterprise as “an enterprise that seeks to achieve social, cultural or environmental aims through the sale of goods and services. The social enterprise can be for-profit or not-for-profit but the majority of net profits must be directed to a social objective with limited distribution to shareholders and owners.”

http://www.ic.gc.ca/eic/site/ccc_bt-rec_ec.nsf/eng/h_00016.html

The Ministry of Innovation, Science, and Economic Development’s definition is clearly signalling that from their perspective a social enterprise has to blend a community impact and insure the majority of profits are also reinvested in community. Rather than looking at a corporate structure, they have opted for a performance based model, which allows several different corporate forms to be included – if the purpose and the structure both align with and meet this definition.

What it doesn’t allow is a company that has a good CSR program or donates a percentage of profits to charity to claim social enterprise ‘status’. Just being a ‘good’ company or a valued corporate citizen, or using social washing in marketing, doesn’t make you a social enterprise. But, if your purpose is to create social value and your structure commits the majority of your profits to a community development goal, you do have the opportunity to register on this directory.

The directory will be a valuable tool for social enterprises to identify with a defined model, allow purchasers to know how to find social enterprise suppliers, and raise awareness on the website of the strength and value of the sector. The definition includes social impact, like employment for persons with barriers; it includes cultural impact, like so many of our local arts and theatre groups; and environmental impact, like community owned alternative energy.

There is no monitoring body or gatekeepers, so we will all have to be diligent to insure social enterprises that meet the criteria are posted and asking others that are not meeting the definition to use other directories, like CSR lists, Fair Trade and B Corps certification websites.

Without a doubt the social enterprise definition debate will continue. Some people will think this definition too broad, others will think it too narrow… but that is all right in my mind – because this step definitely contributes to the real discussion — social enterprise is a means to build a social value market place that contributes to creating healthy communities.

Vancouver Inner City Social Enterprise Survey Results

24 Social Enterprises Generating $14.92 Million in Revenues

& Creating over 1500 Jobs

ASI CCC and Buy Social Canada is pleased to share with you some very impressive income and employment statistics on social enterprises located in the Vancouver inner city.

Social enterprises play a significant role in the economic and social well being of DTES and surrounding communities. There are over 40 non-profit market-based social enterprises focused on employment, arts, and Community Economic Development in this geographic area. Beyond that, there are many other non-profits that provide social, health, housing and related services on a performance based contract basis for the government and other funders.

The information was gathered through an on-line survey of targeted social enterprises in summer 2016 and is presented in aggregate only. The survey respondents are predominantly, but not exclusively, serving the Downtown Eastside community residents.

 

Social Enterprises focused on Employment, Arts and CED

Sample size: 24 Social Enterprises

Full time workers: 92

Part time workers: 1,470

Total workers: 1,562

Gross annual revenue: $14.92 million

Total annual sales: $12.14 million

Total annual expenses: $14.32 million

 

A subset of the total survey group are Social Enterprises that are focused on Employment and / or Training:

Sample size: 11 Social Enterprises

Full time workers: 40

Part time workers: 1,277

Total workers: 1,317

Gross annual revenue: $8.32 million

Total annual sales: $7.76 million

Total annual expenses: $8.12 million

 

This information is merely a surface view, more research and deeper analysis is definitely needed to assess the economic ripple effect and the social impact of social enterprise in the DTES.

 

 

 

Social Enterprise: If you want the title you have to live the values too!

Now, quite unexpectedly, every body is a social enterprise or a social entrepreneur. Not that many years ago the early proponents and pioneers were looked upon with kindhearted dismissal. Social enterprise was an oxymoron. You were a charity or a business – and please, don’t blend the two together! But suddenly in the last few years every one wants to claim the social enterprise mantle.

But some of us that have laboured in this field for years want to remind you that if you want that title you have to live the values too! And what is that you ask? Well, it’s quite simple. You are operating a social enterprise if all of the following criteria are present:

1) You’re a business selling something in the market place.

2) Your business has a definable and measurable social, environmental or cultural value.

3) You prioritize your community impact above any financial profits.

4) The majority of any profits go back to the social purpose.

Social enterprises almost always use corporate structures that insure transparency and guarantee their social value in perpetuity. They are non-profits, non-profit co-ops, or hybrids.

It is great to see that many businesses are emerging with stated social values, constantly increasing the number of what would be social ventures. They reflect and practice many of the same values as social enterprises but they retain a private, profit based ownership model. We should encourage them and more through our purchasing choices and supply chain relationships.

Adding social values into a business can represent a positive and real shift in thinking and behaviour. Benevolent capitalism, B-Corp certification and CSR can play an important role in the business environment and add value to communities. But remember, they can be very temporary until the IPO, the corporate buy out or the next owners come along without the same value or goals.

For some other businesses it’s merely ‘social washing’ when in actuality profits underly and drive the decisions; or when social values are based on chasing after a market opportunity; or social image is a marketing position?

Social enterprise is an explicit business model designed and operated to transform our communities. They promote social inclusion, economic equality, cultural diversity and environmental well being.

Social enterprise is not a market strategy. Social enterprise strives to transform the business world into a social value marketplace.

 

(Thanks to the several colleagues who contributed, especially Norman, David and Andy.)

Public Sector: The emergent early adopters in the Social Procurement Paradigm Shift!

The dominant paradigm is how we define the current standard practices, and the routine pattern of behaviour. A paradigm shift is a move to a new dominant paradigm. The change goes through several phases: first exploration, then experimentation and then the early adaptors. The identifiable presence of the early adaptors signals that the groundwork is laid, the stage is set for the surge of others to participate in a new model.

The social purchasing activities of the public sector in Canada are announcing a new procurement paradigm. Governments are strategically using their existing purchasing to create social value. Social procurement is utilizing procurement policies and practices to affect social impact. Social impact results in measurable improvements in the living standards of individuals, groups and communities.

In 2013, when I wrote a research paper “Exploring Social Procurement” it was almost entirely theoretical because of the lack of evidence, case studies and relevant research. The paper was a review of the barriers and the opportunities of public sector social procurement along with a set of recommendations to move forward. It seems the paper, commissioned by Employment and Social Development Canada, a federal government ministry, was a harbinger of a purchasing system ready to spring out of its old practices and patterns.

Today we can actually track many of the early explorers, experimenters and early adopters in the social purchasing paradigm shift.

In 2003,Vancouver’s Fast Track to Employment launched the first Social Purchasing Portal, SPP, as an early experiment in utilizing the demand side of the market place to create targeted employment. Mills Basics Office Supplies was an early SPP employer/partner and continues growing as a social values business. The Caledon Institute and Vancouver Social Venture Partners were early explorers.   In 2005 the City of Vancouver under Larry Berglund’s leadership adopted an ethical purchasing policy. Although a valuable policy, it didn’t get the traction that was expected. In 2010 the Vancouver Olympics did some social purchasing trials. The 2010 efforts influenced games related social purchasing at the Glasgow Commonwealth Games. Then there were Pan AM games employee diversity initiatives in Toronto in 2013. All of these Canadian initiatives and other isolated experiments were part of an international growing interest in social procurement and Community Benefit Agreements in Australia, Scotland, and Britain. These were the explorers and the experimenters of social purchasing, leading the paradigm shift into new territory beyond just price, quality and green.

After years of many players nourishing that supportive environment on the supply side, and others planting the seeds on the demand side, the conditions were established for a tipping point. And over the past three years there has been a dramatic acceleration of public sector social procurement activity, leading the way of early adaptors in the paradigm shift.

Our recent Buy Social Canada webinar explored the latest developments in Canada’s Public Sector Social Procurement. We can now identify activities at every level of government and in several Crown Corporations:

Municipal Examples:

Vancouver City Council endorses social procurement and Buy Social in November 2015

Vancouver puts social enterprise criteria into an RFP for office supplies in early 2016

The village of Cumberland, population 3500, adopts a social purchasing program in the spring 2016, and uses it to help select a contractor for a road construction project.

Canada’s largest municipality of Toronto passed a social purchasing program focused on creating employment opportunities in the spring of 2016

Provincial Examples:

British Columbia published the Social Purchasing Guidelines in November 2014

BC issues an RFP for security services at SDSI offices with a 20% value for social impact created through employment of persons on income assistance or disabilities support.

Ontario Government introduces Infrastructure for Jobs and Prosperity Act (Bill 6) in 2015

Manitoba puts social purchasing into their Social Enterprise Strategy, 2015.

Quebec has a social economy purchasing strategy since 2014.

Federal Examples:

Mandate letter for the Ministry of Government Procurement includes ‘social purchasing’

MP Hussen’s Private Member’s Bill 227, promotes the potential to add social value unto federal infrastructure spending. It has had an initial reading in Parliament, and moves to further debate on September 23.

Crown Corporation Examples:

BC Housing has contracted with social enterprise CleanStart for a multi-million multi-year junk removal contract after including a social enterprise emphasis in an RFP in late 2014

Manitoba Housing commits over $10million towards social purchasing that targets employment development for persons with barriers

The perceived risks of rising costs and trade agreement transgressions are being proven wrong. Rather government is obtaining even greater value for taxpayers and communities through social value purchasing decisions.

The shift is happening in the public sector purchasing that will inevitably result in their private sector suppliers to ‘figure it out’. Private sector providers will adapt their services to include opportunities for social enterprises with a demonstrated and measurable social value.

We are on the cusp of a paradigm shift to where social value is an embedded component of procurement policy and practice.

For further information or support in your social procurement process contact david@asiccc.ca and visit the Buy Social Canada website.

 

 

 

“Peers and Turkeys” help us see the real Social Enterprise Challenge/Opportunity!

Social enterprise is the business model used to create a social value marketplace and provide the economic foundation for healthy and inclusive communities. We often refer to social enterprise as a verb, as a route to a desired end.

With that design and goal in mind, we realize our biggest challenge is not the oft mentioned, ‘get to scale’ expectations. But in fact the real social enterprise challenge is the threat it poses to the current dominant economic system. Rather than designed to extract private capital for shareholders, social enterprise is designed to contribute and build wealth and capital within the community.

The last 300 years of a purely economic based marketplace has become the dominant culture and practice of business. Social enterprise disrupts that traditional model by focusing on building a new culture and practice based upon accruing social values and community held capital.

And recently our real challenge was eloquently expressed in an episode of Downton Abbey.

Downton Abbey is a television show set in England 100 years ago, and watches the transition of an aristocratic family within the dramatic social and cultural reforms of the time. Violet Crawley, Dowager Countess of Grantham, or ‘granny’ is the matriarch of the Crawley Family, and spokesperson and protector of all things traditional. Granny epitomizes resistance to change when she says: “A peer (royalty) in favour of reform is like a turkey in favour of Christmas!”

I think we can understand the fundamental message from Granny’s viewpoint: the dominant ‘social and economic system’ will not engage in and change or innovate if the change is not directly serving their perceived needs, or protecting and serving their current status and values. Why would an aristocrat wish to share property ownership with the tenants or share decision-making with the peons? Obviously, no more than a turkey would wish to convey its own death sentence by celebrating Christmas dinner!

How does this principle of ‘peers and turkeys’ apply to the potential growth of social enterprise? Because one view is that social enterprise directly challenges the dominant business model of private wealth generation and shareholder supremacy.

While trying to build a social value marketplace we are challenging the dominant market culture and behaviours of solely using a financial measurement of success.

But let’s take a step back and consider; do we in truth aim to undermine the historic foundation in its entirety through social enterprise? Or do we seek real growth in a preferred model of socially enterprising economy and a social value marketplace?

On the macro scale, there might indeed be the opportunity to use an “economy of choice” to influence the dynamics of the hitherto established economy, for consumers and service users looking for a grounded and value adding alternative.

Social enterprise, seeking to use a business model to create social impact, challenges the standard business model value to maximize financial return. And this challenge to the standard model can bring social enterprise as a principle into conflict with those of the traditional “school”. Or – we can identify a space of influence and voice, bring a demonstrable alternative and model an economy “of moderns”….as Downton’s Granny might have said! We know that today’s society does indeed identify increasingly with the need for a more modern way.

—-

Building business skills in the social sector and social values into business schools turns traditional curriculum and learning models upside down. This can but doesn’t have to bring conflict – and it certainly does bring innovation through social enterprise – most often at a furious, exciting pace.

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When organizational purchasing seeks to include a social value in the decision making process, it challenges the merits of merely getting the lowest price possible. Social enterprise introduces “modern”, added value and sustainable dimensions into the marketplace; values which multiply and propel whole communities, and their enterprises forward.

So whilst there is a real challenge presented by social enterprise to the traditional economy, should we lift our eyes from that page and see also the opportunity that sits alongside it? And use the innovation so innate within our sector to craft and strongly shape the social economic platform that inspires and dramatically shifts the traditional economy, levering all the opportunity that such a position affords?

Granny didn’t foresee or appreciate the global crises of 2008, neither its causes nor its aftermath. But today’s society does indeed identify increasingly with the need for a more modern way in the wake of these economic tsunamis and ongoing social crisis.

In 2016, consumers, service users and institutional purchasers are increasingly highly discerning. They are actively seeking value. They are actively seeking a value added choice. They know about and look for social and environmental sustainability.

So is the real challenge in fact, right back to our social enterprise community, and for us to provide the resilient avenues and real time alternatives for these choices to be fulfilled?

——-

David LePage, Principal, Accelerating Social Impact CCC

david@asiccc.ca

Rachael McCormack, Director, Lanarca

rachael@lanarca.co.uk

 

Social Enterprise Reflections: 2015 Hope and 2016 Challenges…

Pollster Doug Miller in his recently published book, “Can the World be Wrong?” predicts social enterprise ‘as the next big thing’ as we face “the ever-increasing pressure on business to act better in society’s interest…”[1]

His prediction just might be confirmed by the amazing shifts and developments in the social enterprise arena across Canada in 2015. We have witnessed public policy changes, market growth, increased social impact reporting and emerging new partnerships all contributed to a more vibrant social enterprise sector.

Some of what we’ve witnessed in 2015…

In government policy we saw some major steps in new supportive directions, examples include: Social Purchasing Guidelines in BC, Social Enterprise strategy policy initiatives in Manitoba, Ontario, Newfoundland / Labrador, Quebec, and Nova Scotia; and most recently five Federal Government Ministerial mandate letters supporting areas of social enterprise, social finance and social purchasing!

The sector is reaching new business and market share levels. Here are some Vancouver area achievements: CleanStart won a major three-year competitive contract with BC Housing; EMBERS Staffing Solutions is consistently employing over 150 people weekly; and Common Thread expanded their customer base to include sewing contracts with local boutique designers and is launching a training course to meet commercial sewing demand. The same stories could as well come from Halifax, Toronto, London, Manitoba, or just about anywhere.

More and more evidence of sector social impact across the country is emerging. Just take a few minutes to read through the Social Enterprise Sector Surveys. – www.sess.ca; review the stories on the enp-Canada newsroom, www.socialenterprisecanada.ca; or scan the recent Demonstrating Values reports, www.demonstratingvalue.org.

Social purchasing initiatives, like the Toronto Social Purchasing Project and the emergence of Buy Social Canada, www.buysocialcanada.ca are focusing on creating greater demand for social enterprise products and services and building a Canada based social enterprise certification program.

2015 also saw some encouraging new initiatives. To maintain and build upon the core learnings developed by enp-Canada and others the on-line Social Enterprise Institute is under construction, www.socialenterpriseinstitute.ca. The planning for a social purchasing partnership and marketplace between Chantier de l’Economie Sociale and Buy Social Canada is underway. ESDC issued an LOI for the potential funding of a collaborative social enterprise intermediary.

But with the hope of each 2015 advancement, comes a whole set of challenges for 2016!

Social enterprises will have to be even more business savvy and impact conscious to meet the growing demand as social purchasing is imbedded into corporate and government supply chains. Operating in the larger commercial market requires providing competitive products and pricing along with social impact!

As social enterprises grow and scale, they face financing needs along the way. Social financing tools, such as new forms of equity-like patient capital, that fit the evolving growth and needs of non-profit and hybrid social enterprises will have to emerge.

Expanding the social enterprise markets and financing requires supportive and effective intermediaries that can create and nurture new supply chain systems and relationships; mediate financing arrangements; and provide advanced business capacity.

Governments will have to move from the initial strategy and policy level of support, to implementing services that create a ‘level playing field’ for social enterprise businesses.

The private sector and government need to move further along in the process to integrate social value into their supply chains and procurement practices.

As blended value becomes the standard of business success, reporting we will need financial and social impact measurement that is simple, accessible and effective.

And finally, creating a supportive social enterprise ecosystem means greater collaboration within the community sector and externally with the public and private sectors. Collaboration like we have never seen before will be the backbone of any significant steps forward.

Here’s to hoping we meet the challenges of 2016 – which just might move social enterprise further along the path to being ‘the next big thing.’

 

 

[1] “Can the World Be Wrong? Where Global Public Opinion Says We’re Headed”; Greenleaf Publishing, 2016, p. 160-161

Social Enterprise Definition Debate: Is tweaking capitalism enough?

I admit that I have been on both sides of the debate about the definition of social enterprise: sometimes staunchly defending it as critical and essential, and at others times avoiding it as not pertinent and a waste of our time.

But now I realize it is important that we do define social enterprise. Because the argument is not about the meaning of social enterprise itself, it is not just about describing an alternative business model. Defining social enterprise is all about determining the values of the marketplace we wish to create.

In his new book Robert Reich, Saving Capitalism: For the Many, Not the Few helped me focus on the social enterprise debate. He argues that “The central choice is not between the “free market” and government; it is between a market organized for broadly based prosperity and one designed to deliver almost all the gains to a few at the top.” His goal to adjust the prosperity gap is great, but his method that if we change the rules, and let government direct the market then we can level the playing field, falls short.

Taxing the wealthy, limiting the power of banks, establishing a living wage, annual guaranteed incomes, and many other schemes for adjusting the current wealth distribution through government interventions are all valuable objectives, in the short term. But only using government rules and regulations to adjust the controls and influence the current private-wealth focused market will not offer an enduring solution.

Building a social value into the marketplace requires establishing the foundations of a business model that exemplifies a social impact principle. So insuring that the definition and measurement of social enterprise success includes both social impact and capital re-investment becomes emblematic of a dramatic shift in why and how we trade; and implicitly directs a social value result into our marketplace transactions.

Relying on government rule changes or letting any ‘good’ business be a social enterprise is just tweaking the underlying values the current marketplace. And in the long term, just tweaking the wealth-driven marketplace of capitalism will do as much good as assuring that the food banks are all well stocked!

To substantially and permanently address issues of poverty, social exclusion, and employment challenges requires adjusting the value base of the market itself.

We have to decide– will we regulate morality in a market that is based on trading in the pursuit of private wealth or use social enterprise to stimulate and fashion a market that creates a healthy local economy?

 

 

Opportunity for City of Vancouver to lead again by becoming a Buy Social city!

The City of Vancouver has recently passed the Healthy City for All “a long-term, integrated plan for healthier people, healthier places, and a healthier planet.” The City’s DTES strategy “provides a vision, policies, and strategies for the Downtown Eastside that focus on ways to improve the lives of low-income DTES residents and community members.” Both policies include a social purchasing strategy to achieve those goals.

Vancouver is already recognized as a Fair Trade City, a Living Wage Employer, and striving to become the world’s greenest city. At next week’s council meeting Councilor Reimer will submit a resolution that the Vancouver City Council endorse the work of Buy Social Canada and directs staff to consider the Buy Social certification program during the development of the City’s social procurement framework as part of the Healthy City Strategy.

Social purchasing leverages existing public purchasing to add social value. The concept is simple; when spending taxpayer dollars for goods and services, the city will also be a catalyst for positive social change.

Social purchasing follows the pattern and builds on the lessons of the environmental. Using the demand side of the value chain, the purchasing power of entities like the city of Vancouver, stimulate greater sustainability in the products and services they purchase.

Along with price, quality, and green, a social lens will help the city achieve greater value through existing purchasing, and move even further along the path to a truly sustainable city.

Cumberland, the small municipality on Vancouver Island was recently recognized as Canada’s first Buy Social Certified municipality. “The Social Procurement Framework ensures that we still access goods and services through a competitive and transparent bidding process, but we are now being a lot more strategic and proactive in procurement. Staff will leverage existing spend to achieve desirable community goals, while working in alignment with community values and maximizing returns for taxpayers” said Mayor Baird.

Social purchasing is not new here. The 2010 Olympics included steps in that direction in their sustainability initiatives. You might remember the beautiful flower arrangements presented to the medal winners that were produced by a local social enterprise providing employment training.

Increasing the business opportunities for social enterprises increases their social impact. Vancouver’s social enterprises every day employ hundreds of people with barriers, and many re-entering the employment. Social Enterprises like Potluck,

H.A.V.E., EMBERS, CleanStart, Mission Possible, Common Thread, JustWorks, Cleaning Solution, Starworks, and Atira represent one of the most vibrant social enterprise clusters anywhere, and their social impact in the community grows every time their business grows.

Social purchasing is emerging as an effective way to address social issues without added costs. The Buy Social certification program began with the Social Enterprise sector in the UK and is now growing internationally.

The city has the opportunity to leverage its existing direct buying, its entire supply chain and development related community benefit agreements to achieve greater social value.

Joining the Buy Social certification program will be a clear signal to the community of the city’s commitment to sustainability integrating a economic, environmental and social values.

Background:

Buy Social Canada is an internationally recognized third-party program, that certifies organizations and government partners, who have demonstrated a commitment to the Buy Social principles, and are proactively working to ensure that procurement works to add, rather than diminish, social value in society.

Buy Social Canada, affiliated with Buy Social UK, was launched in the spring of 2015. Buy Social Canada is working with partners across the country to certify social enterprise suppliers and promote social purchasing in the private sector and across government. Buy Social Canada offers certification and program services for social enterprise suppliers and social purpose purchasing entities.

For more information: www.buysocialcanada.ca.

 

Defining social enterprise… it’s a verb and not a noun, and how it’s marketplace value

This blog was originally published on KPN Blog site, “David LePage puts his cards on the table about the definition of social enterprise, why it’s a verb and not a noun, and how it’s marketplace value.”

The definition of social enterprise continues on as a fascinating issue. In fact it seems like the definition quandary just continues to go in every direction possible, and in the last couple weeks it may have gone to completely unsurpassed extremes. Some groups seem to be recognizing any manner of company or entrepreneur that just happens to “do good” through some of its products or social responsibility activities as a social enterprise, even if their profits are the key objective and purely for the shareholders. On the other side, in a recent blog it was stated, “A social enterprise is any entity that exists with the sole purpose of benefiting humanity.” The author argues that doing business is not a requirement of social enterprise, just being a non-profit organization makes an entity a social enterprise. (Indianewengland.com, August 15, 2015)

Will we ever get past the debate of social enterprise definition? Personally I sure hope so, but I don’t think quite yet for two reasons.

One: because the more the sector grows in size and influence and impact the more we need to capture social enterprise as the valuable tool for social impact it can be, before the term becomes a diluted form of social washing or disregards the social and economic change we really wish to create.

Two: because we have to understand social enterprise is a verb, not a noun. I use the term ‘tool’ above, because social enterprise is not the “entity” it is the manner in which we do business. Social enterprise is about the social and economic value we create through marketplace activity.

Does this mean other businesses don’t achieve social value? Not at all, lots of businesses do good and contribute to the community, through products, customer targets, social giving, profit sharing, co-operative structure, and more, but that doesn’t make them a social enterprise – many of us call those them ‘social purpose businesses’. They do lots of good but ultimately operate and evaluate success in the traditional shareholder, revenue driven economy.

Yes, there is a growing new energy emerging in the business world, such as B Corp Certification and the Harvard-based Shared Values movement. Social enterprise includes these values, but also includes another goal that goes beyond just doing and being good citizens, or adding a social value to your products, or being really green – social enterprises want to change the marketplace value system.

For me the best way to understand social enterprise is as a verb. Social enterprise is a way to do business, rather than merely a noun, or a thing. It is not the entity; it is the values it brings to the exchange of goods and services.

So social enterprise isn’t a single model or simple definition, it is the business activity that integrates and prioritizes social impact over private values.  Social enterprise is ultimately about shifting the very tenets of the capitalist based economy. We need a social enterprise marketplace, where we trade goods and services, based on social and community values that drive the economy.

I think we can best define social enterprise by understanding the values that social enterprise operates within, and how it operates, rather than the thing that it is. For me social enterprise operates with a set of values:

  • Why it does business – primarily it has a social, environmental or cultural purpose
  • Who it benefits in the market– its products and services contribute to building a healthy and inclusive community economy
  • How the profits are distributed – primarily to further its social purpose

Social enterprises’ primary purpose, their mission, is to create a social, cultural or environmental impact; they are a business, selling goods and services generates the majority of their income; and they reinvest all or the majority of their profits into the social mission.

Yes, they use a business model.  Social enterprise definitely trades in the market place. It sells something; it is a supplier of goods or services to a buyer. And income is primarily derived from sales.

But, the Social enterprise prioritizes the social over the financial return on investment. It operates a financially sound business, however the social impact dominates or displaces personal or shareholder profits.

And it is incorporated in a way to insure this profit distribution happens in perpetuity. The value created is not just a charitable set-aside, temporary sales or marketing plan, a promotional gimmick or a share valuation scheme.

But ultimately, whether we argue the definition, and where we land in 5-10 years is not the real discussion. The real discussion is about the social value we create through the market place activities. We are building a long-term change in how the economy serves a community; so in the interim, the social enterprise story of its impact becomes tantamount to describe itself.

The Social enterprise quandary is not the definition of what it is, it is understanding social enterprise as part of the process of changing from a short term, shareholder, financial value driven market place, to the trading of goods and services as a means to create social value and a community economy.

While we are in this process of transition, the stories we share about our progress are critical to the defining social enterprise. We have to describe how social enterprise is impacting peoples’ lives and creating new opportunities. We have to continue to find the channels to share stories, to build the evidence, to encourage others.

Kibble’s Podcast Network, KPN, is definitely a part of that journey.

http://podcasts.kibble.org/blog/the-social-enterprise-definition-debate-its-necessary-but-only-a-temporary-issue-because-its-not-a-business-model-its-a-marketplace-value