Social enterprise. If you haven’t heard the term before, expect to (hopefully) hear more of it in the future. Simply put, social enterprises are commercial operations that are founded with the express purpose of giving back. It is, as a Spinoff article succinctly described it, “a kinder approach to capitalism”. As opposed to lining the pockets of shareholders, the profits generated by these companies are reserved for more worthy causes, from grassroots community projects to international humanitarian endeavours.
Social enterprises are neither not-for-profits nor are they charities. Where charities are established to raise money for a cause, social enterprises are established to turn a profit that then goes on to financially support a cause. Where a charity might have a calendar of community fundraisers to finance their work, a social enterprise would seek to establish a sustainable business model that would allow them to make a steady profit to channel into philanthropic endeavours, hence “kind capitalism”.
As brand strategists, we recognise that brands are built on three cornerstones; ethics, aesthetics and functionality. Up until relatively recently, ethics has been somewhat of an aside. Aesthetics and functionality were – for a consumer base that was generally less discerning and informed – the primary drivers for brand loyalty. For example, Zara and H&M have had the aesthetics and functionality of their brand and products nailed for a while, but after attracting the ire of the public, have committed themselves to sustainability to save face and retain customers.
Shifting consumer perceptions and a rising demand for ecologically and socially responsible products are causing the ethics of brands to become increasingly important. Social enterprise puts ethics first, appealing to conscience and our natural compulsion to do the right thing. So what is the right thing to do? Here are some examples of social enterprises and what they’re achieving in an attempt to do just that:
FMCG – $5.8 million given to fund water access, sanitation and hygiene, helping to serve over 750,000 people around the world.
Eat My Lunch
Food service – 992,820 lunches given to Kiwi kids on a 'buy one, give one' model.
Search engine – Planted 38,223,282 trees from profits made from ad revenue.
Thankyou is one of the more visible organisations operating in this space. “Dear New Zealand,” reads the header copy on their NZ landing page. “Here’s an idea we think could change the course of history”. Started in Australia in 2008 and launched in NZ in mid 2018, Thankyou fields a range of supermarket staples, most notably bottled water (though this is not yet available in NZ). The idea is that their profits go towards funding initiatives related to the product they are selling. The profits generated by Thankyou’s bottled water, for example, helps to fund water sanitation and access projects all around the world.
The appeal of social enterprise is easy to see. It leverages the infrastructure of a free market, allowing customers to support good causes by simply changing which brand they choose to purchase. While the promise of ‘paying it forward’ is enticing, people are wary about things that sound too good to be true, particularly in the case of charitable organisations.
And they are right to be sceptical about the transparency of these companies. Not-for-profits being irresponsible with their finances are not uncommon stories; organisations operating in this space should be subjected to the appropriate scrutiny. But to answer the question you started asking two paragraphs ago, yes, Thankyou is legit; they publish an independent audit of their financials on their website every year.
When most consumers are so divorced from the manufacturing processes and the economic, social and ecological impact of their purchasing decisions, being able to quantify the positive effects of supporting a particular brand or service goes along way for shaping consumer behaviour. Keeping tabs on the good that has come about from social enterprise is called ‘impact tracking’. Impact tracking helps to contextualise our consumerism by offering us quantifiable insights on the power we have to shape the world around us simply by choosing one brand over another.
Social enterprise is nothing new. The concept has been kicking around since the late 1970s, but only recently has it begun to pick up momentum. Why this sector has experienced the growth it has as of late is a tapestry of interconnected factors; from increasingly ethically-conscious customers to a growing awareness of accelerating inequality facilitated by profit-hungry conglomerates. Social enterprise is a reminder that we all have the power to make profound a positive impact through small simple changes. Long-term never happens all at once. It's incremental, and it can all begin by deciding on which brand of bottled water to buy next time you go shopping.