The Victorian Social Enterprise Strategy 2021-2025 represents a plan to capitalise on increasing social procurement recognition to grow Victoria’s social enterprise sector, including through connections with businesses.The Victorian Government recently launched the Victorian Social Enterprise Strategy 2021-2025, marking a renewed commitment to creating a more inclusive and sustainable economy.

The strategy also sends a clear message to government suppliers that partnerships with social enterprises are becoming increasingly important.

Social enterprises are businesses that embody social procurement objectives, as they are led by a mission consistent with a public or community benefit (e.g. economic, social, cultural or environmental). Typically they derive a substantial portion of their income from trade, and reinvest the majority of their profit/surplus in the fulfilment of their mission.

The new social enterprise strategy builds on the strong foundation laid by the first strategy launched in 2017, which established the 2018 Victorian social procurement framework, SENVIC (Social Enterprises Network Victoria) and a partnership with Social Traders to develop social enterprise certification, research and build capabilities across the sector.

This latest strategy focuses on public, private, investor and philanthropic partnerships, and capitalises on growing social procurement recognition to support and enable a thriving Victorian social enterprise sector and supporting ecosystem. Through this it aims to grow and strengthen the connectivity of Victoria’s social enterprise sector, which is recognised as the largest and most dynamic in Australia.

There are currently more than 3,500 social enterprises trading across metropolitan and regional Victoria. They employ an estimated 60,000 people and contribute $5.2 billion to the Victorian economy. These social enterprises are embedded within our community across multiple sectors, including sport and recreation, retail, manufacturing, environmental and community services. They all have a strong purpose to enrich, support and benefit our community as a whole.

By their very nature, social enterprises are integral to Victoria’s social procurement framework. Given the increasing prominence of the social procurement framework, businesses that support social enterprises through investment, partnering or the supply chain, have greater opportunity for successful engagements with the Victorian public sector.

Social Enterprise Strategy 2021-2025

The launch of the Victorian Social Enterprise Strategy 2021-2025 was hosted by Nicholas Verginis, CEO of SENVIC, in early October. It featured the Minister for Employment, the Hon. Jaala Pulford MP, and the Parliamentary Secretary for Jobs, the Hon. Jane Garrett MP, who is also Chair of the Social Enterprise Strategy Reference Group.

More than 50 social enterprises contributed to the strategy, which also drew from research on the effectiveness of the 2017 strategy by the Centre for Social Impact at Swinburne University of Technology (CSI Swinburne).

The strategy is built on a four-year agenda across four key themes and 14 action areas. The themes are interconnected and mutually reinforcing – actions under one theme will support delivery of another.

The strategy also includes a focus to improve the measurement and reporting of the outcomes achieved by social enterprises.

As a first step, government will progress efforts under Theme 4 to open doors to social enterprises across government. These efforts will ensure there is a coordinated, strategic approach to embedding the strategy across government. They will also strengthen alignment with other key policies and programs, including the government’s social procurement framework.

Theme 1 – Skills and Capability Development

Social enterprises in Victoria are predominantly small to medium enterprises (SMEs) and face similar issues to other SMEs and start-ups; for instance building business acumen, accessing funding, business planning, marketing, budgeting and tendering.

This theme includes three actions centred around government and its partners building the business skills and capability to enable social enterprises to scale-up and compete in existing and new markets.

Theme 2 – Enhancing recognition and access to innovative financing to scale impact

Social enterprises often struggle to gain market access due to many factors, such as size, lack of visibility, a lack of established relationships and market knowledge, information deficits on growth opportunities, and capacity constraints.

The sector has consistently raised the lack of access to affordable, appropriate and tailored capital as a major barrier to growth and market access. This theme has two actions designed to increase access to innovative finance in partnership with the philanthropic and investment sectors.

Theme 3 – Fostering a connected and innovative social enterprise ecosystem across Victoria

An effective social enterprise ecosystem includes professional networks, support organisations, relevant government departments, partners and supporters, philanthropy and investors, beneficiaries and customers, and research providers. Cultivating a connected, cohesive and innovative ecosystem is crucial to the longevity of the social enterprise sector. This theme recognises the growing maturity of the sector as it moves from a collection of social enterprises operating separately, to a more collective and collaborative social enterprise market.

Under this theme are four actions designed to drive innovation and collaboration across metropolitan, regional and rural Victorian social enterprises.

Theme 4 – Opening doors for social enterprises across government (growing social procurement prominence)

This theme centres on growing the impact, recognition and use of the social procurement framework to ‘transform’ how government does business with the sector. It considers a coordinated, strategic whole-of-government approach to ensure government policies, programs and initiatives are inclusive of social enterprises, and create opportunities for social enterprises to deliver on government policy.

There are five actions that include: increasing the application of the social procurement framework across the government sector; and better integrating social enterprises into complex government systems, such as employment and education (e.g. fostering social entrepreneurship across the education system to grow a pipeline of social entrepreneurs).

Sedo’s view

We have already been seeing a growing increase in the inclusion of social procurement in government tenders. The new strategy indicates this will increase further as the government actively seeks greater procurement opportunities for social enterprises. Further, through the social enterprise strategy, the government will broaden the scope of social procurement to encompass local government and other Victorian government entities.

In one example of the increased application of social procurement, the Victorian Government Purchasing Board (VGPB) has updated its market engagement policy to include social procurement as a valid reason for seeking an exemption to not use a mandatory State Purchase Contract (SPC).

While growing the social enterprise sector is a positive move, we are hopeful government buyers consider it as part of a rigorous procurement framework focused on value for money outcomes.

Mia is a strong supporter of social procurement and we have a large focus on supporting social enterprises and helping mainstream businesses to partner with social enterprises. However, it’s important that government and businesses don’t just apply social procurement for the sake of ‘doing social procurement’ – particularly at the expense of other key outcomes.

It’s essential that all parties take the time to understand how a particular social enterprise can support long-term service outcomes that meet all the procurement outcomes – including best quality, low risk and best value use of public funds – while also creating a social impact. There is no point prioritising social procurement if it jeopardises the outcomes that led to the procurement in the first place. It also puts at risk the outcome we all want to achieve in building a sustainable social enterprise sector.

At the launch of the social enterprise strategy, Sue Boyce (CEO, Ability Works) described the importance of allowing (potentially) longer lead times in planning and executing social procurement strategies to create greater social impact.

The message here is the importance of businesses and government engaging early (pre-tender!) to understand how they can integrate social enterprises into their business and supply chains. In fact, within the government’s social procurement framework there is a requirement for government agencies to build social procurement opportunities into their 12-month forward procurement plan. This will help mainstream and social enterprises to identify, plan for and build responses and capacity that meet both the product or service requirements as well as the social procurement requirement.

For suppliers to government, the messages in the Social Enterprise Strategy are very clear. If you don’t have partnerships with social enterprises, then now is the time to establish them. The more your business can support social enterprises through investment, partnering or your supply chain, the better opportunity for success with the Victorian public sector. The strategy also represents an opportunity for businesses to support the sustainable growth of this important sector through training and business skills.

There are many benefits, social and economic, to mainstream businesses and government forming partnerships with social enterprises, but we must do so in the right way and for the right reasons.

Deirdre Diamante