Is there more money than we think?
This post kicks off a series of 6 blog posts that will examine how social purchasing can support social enterprises.
Social finance concerns itself with finding capital for social enterprise. While there are many different types of social enterprise, they all have a common thread. They invest capital and use profit to meet social purposes.*
Social finance focuses largely on the supply side of the equation: the availability of capital. But the demand side of the equation – in the form of demand for goods and services produced by various social enterprises – is equally important. A major challenge for social enterprises is to figure out how to bolster interest in and purchase of their products.
I started to think about this question when the Caledon Institute was asked by the City of Hamilton to write a paper on the concept and practice of social inclusion. Social inclusion is a big idea with lots of applications. But we narrowed down this large conceptual tent into three major streams of actions related to: engagement, participation and employment.
On the employment front, in particular, we recommended several measures. One was to examine the hiring practices of the City itself. As a major employer, it should have a diverse workforce that reflects the community.
A second stream of action was to examine its purchasing practices. The City can affect employment not only directly through its hiring but also indirectly through its purchasing. Hamilton, like all other cities, requires a wide range of goods and services in order to operate effectively. In its upcoming role as co-host of the PanAm Games in 2015, it will need an even broader set of products than it normally does in the course of regular business.
Opportunity knocks. What a perfect time to encourage the City to include social enterprises among its potential list of suppliers. And what a perfect time to ask the City to incorporate a community benefits statement in all their contracts. (More on this in blog #2).
In the meantime, paying greater attention to procurement may yield positive results. Who is buying what from whom? How do social enterprises go to the front of the line – or at least be on the list – when important purchasing decisions are made? Of course, Hamilton is just being used here as a metaphor for local government and government more generally. There are many more prospective purchasers, and lots of potential dollars, to harness in support of social enterprise.
Social purchase is not a magic-bullet solution for supporting social enterprise – nothing ever is. And it is far easier said than done. But its wider application could help generate some badly-needed cash for a sector that certainly could use it.
There are two ways to encourage the practice of social procurement (or social purchasing). One way is for the buyer – in this case local governments – to purchase goods and services directly from social enterprises. Another route is to require that any enterprise which successfully wins a public contract create broader benefits for the community.
Purchasing decisions typically are made on the basis of three factors: consumer need, product quality and price. Increasingly, however, consumers are adding a fourth variable to the equation: their values. They may buy products, for example, which explicitly avoid the use of child labour or that are made with environmentally friendly ingredients. They may patronize companies that direct a certain percentage of their profits toward social or environmental causes, such as breast cancer research, wildlife preservation or earthquake relief. As consumers become increasingly aware of their power, many companies have linked with causes they believe will attract a consumer base that they otherwise would not have had. So how best to harness the value of values?
*Torjman, S. and B. Young. (2007). Money and Meaning: Blended Value in Community Enterprise. Ottawa: Caledon Institute of Social Policy, February.
Photo credit: http://www.flickr.com/photos/andreajoseph/860243833/
