Enabling Social Innovation in a Changing Work Environment

By Tahlia Beckitt, Curtin University, Y20, 2023

Executive Summary

Social issues have become more pronounced in Australia due to a number of recent challenges, leading to increased inequality and hindering individuals’ ability to contribute effectively to the economy. Social enterprises are organisations that serve as intermediaries between government policies and communities, directly engaging with these communities to tackle social issues while also generating economic opportunities for participants (Social Traders, 2021). Currently, social enterprises contribute $21.3 billion to the Australian economy per annum (Social Enterprise Australia, 2023).  

This paper recommends the national adoption of the Victorian Social Enterprise Strategy 2021-2025 (SES), to introduce sufficient federal support for such enterprises. This will improve the business skills and capabilities of social enterprises, whilst enhancing their connectivity and ability to alleviate social issues being experienced in Australia. In implementing this policy, existing and potential barriers such as community suspicion, openness and fraud will also need to be addressed.

The first recommendation proposed to mirror the SES is the introduction of 1200 initial $2000 grants for youth or Indigenous social enterprises in the start-up stage. Such monetary support will encourage a new generation of involvement in social innovation by increasing the accessibility into the career path. This is estimated to cost $2.65 million and is modelled on the successful UK Social Enterprise Boost Fund (SEBF) (UK Department for Culture, Media and Sport, 2023). 

The second recommendation is to incentivise the introduction of university studies relating to social innovation, to allow further interaction with such concepts by youth and Indigenous Australians. This will cost a total of $1,050,000, bringing the total cost to $6.1 million when combined with staffing, operations and advertising costs over five years.

Problem Identification

The need for social innovation within Australia is undeniably increasing, due to environmental factors like the COVID-19 pandemic, climate change and global supply chain issues that have created a cost-of-living crisis (McDonald, 2023; Commonwealth Parliament 2022). In September 2023, 75% of people receiving income support payments were under significant financial distress and could not afford basic necessities (ACOSS, 2023). The introduction of artificial intelligence technologies will also exacerbate these crises, with homelessness and unemployment rates increasing, as certain jobs are absorbed by technological advances and capabilities (Lloyd and Hicks, 2020; Trading Economics, 2022). 

In Australia, 20% of businesses fail within their first year, with the statistic significantly higher for social enterprises, particularly when lacking a significant financial backing (Kepka, 2020). Young and Indigenous Australians are especially less likely to take on the risks associated with starting a business, as youth frequently lack the savings of older generations (United Nations, 2013), whilst Indigenous Australians are generally less wealthy than non-Indigenous Australians (ACOSS & UNSW, 2018).  

Context

Role of Social Entrepreneurship

Social innovation refers to the introduction of new solutions to generate change in a specific issue or area with the ultimate goal of improving wellbeing and welfare of individuals, groups, communities and potentially the broader Australian populace (OECD, 2021). Through this, social issues refer to current events or underlying societal inequalities, viewpoints or problems that cause harm and negatively impact the wellbeing and welfare of individuals, groups or communities (Gale, n.d.).

Social enterprises are uniquely situated to assist in the sustained mitigation of such issues by providing the necessary support and utilising social innovation to improve wellbeing without reliance on sustained government funding. However, these businesses frequently lack the commercial goals of traditional business models (Hidayat & Putra, 2020), and have traditionally been excluded from government policy (Social Enterprise Australia, 2023). Despite this, social enterprises contribute $21.3 billion to the Australian economy each year and have a workforce equal to that of Australia’s mining industry (Social Enterprise Australia, 2023). 

Youth and Indigenous Australians in Social Entrepreneurship

Youth (aged between 15 and 30) and Indigenous Australian social entrepreneurs are particularly affected by public policy gaps as they lack the existing networks, voice or experience to facilitate the creation of a social enterprise (Bakator et al., 2022).  However, youth participation in social entrepreneurship endeavours has the potential to create a more sustainable future of work (Strielkowsk et al., 2019), whilst encouraging Indigenous involvement can allow for more successful resolution of issues facing Indigenous Australians and will encourage greater implementation of cultural practices into society (Logue et al., 2018). Furthermore, a 2015 study found people aged 18-34 were the most likely to become social entrepreneurs, making an increase in support for this demographic vital to improve growth in the sector (Bosma, 2015).

Indigenous Australians also face a significantly higher proportion of social issues in comparison to non-Indigenous Australians (Hendrix et al., 2019) because of the enduring effects of British colonisation (Calma, 2007). Social enterprises can intervene in such situations where government assistance may be viewed with suspicion due to government mistrust, as they work alongside communities to resolve or reduce existing issues and can provide economic opportunities, education and promote sustainable development (Sopact, 2023). As such, amending public policy to improve accessibility for social enterprises has the potential to catalyse action in these areas and create an overall reduction of social issues in the future.  

Australian Policy

In 2023, the inaugural government policy regarding social innovation and entrepreneurship was negotiated by the government and existing social enterprise groups. The recently implemented $11.6 million ​​Social Enterprise Development Initiative 2023 (SEDI), will boost the functioning ability of existing social enterprises by providing online training, formal mentoring and increasing the long term resilience of enterprises (Social Traders, 2023). However, the policy falls short of effectively interacting with early social enterprises or the recruitment and growth of this sector, as it fails to promote awareness of social entrepreneurship as a marketable and viable career and option. This, combined with the lack of national funding for social enterprises in the start-up stage, limits their ability to engage with the concepts of social innovation (Department of Industry, Science and Resources, 2023). 

Under the SEDI, online communities and training will become more available; however, this is limited by medium, accessibility and recruitment capabilities, such as decreased awareness, network and platform limitations and a lack of accreditation (Social Traders, 2023). As such, support for potential social entrepreneurs is not readily available and awareness of the opportunities provided by social innovation and entrepreneurship is severely lacking. This is compounded by a lack of state support, with the exception of Victoria, which supports Indigenous Australians in social entrepreneurship (Department of Jobs, Skills, Industry and Regions, 2021). 

Likewise, the upcoming introduction of the Outcomes Fund (OF), designed to work in tandem with the SEDI, will work to increase social enterprise involvement in government initiatives to further promote the reach and success of such enterprises (Department of Social Services, 2023). The fund will act as a social procurement plan to promote relationships between the government and enterprises, whilst also providing grants to engage existing entrepreneurs and provide growth opportunities. This will promote the longevity and long term resilience of social enterprises, however it will not assist the introduction of new enterprises.

The UK India Education Research Initiative study found that university education regarding social entrepreneurship correlated with significantly higher engagement with the career path (UKIERI, 2019).

Indeed, in comparison to the United Kingdom, which boasts the Social Enterprise Boost Fund (SEBF), a program designed to support social enterprises in the early stages of their existence (UK Department for Culture, Media and Sport, 2023), Australia’s policy framework has been criticised for lacking sufficient support and enabling measures (Mason et al., 2021). Although the SEDI and OF will provide monetary and education based assistance for existing enterprises, there is still a significant lack of support for enterprises in the early stages of business, especially for key demographics such as youth and Indigenous Australians. 

Policy Recommendations

The following recommendations will complement the SEDI and OF to create a modified and federally funded version of the Victorian Social Enterprise Strategy 2021-2025. 

The SES outlines four key areas of focus in generating a comprehensive strategy that promotes social entrepreneurship growth, uptake and sustainability. These are:

1. Theme 1: Building business skills and capability and capturing impact

2. Theme 2: Enhancing recognition and access to innovative financing to scale impact

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

4. Theme 4: Opening doors for social enterprises across government

Currently, the combination of the SEDI and OF satisfy much of the four themes contained within the SES, however they fail to build recognition or provide initial support for new entrepreneurs who are not currently operating within the field. As such, the policy addition will ensure Australia has a comprehensive national framework and strategy for social entrepreneurship.

This paper’s recommendations are specifically proposed to address the lack of support for social innovation for youth and Indigenous Australians, by generating an increased focus on these demographics in the social enterprise conversation and government support provision.

In order to address these shortcomings, the following recommendations are made to the Australian Federal Government:

1. Introduce specific nation-wide funding for early youth and Indigenous-run social enterprises

2.  Incentivise universities to develop social entrepreneurship courses and studies to promote youth awareness and involvement

Both of these policies should be managed and implemented through collaboration between the federal Departments of Education and Social Services. As the SEDI and OF will already fall under the Department of Social Services’ jurisdiction, the policies will be run from that department, with consultation from the Department of Education. The task force will focus on grant provision and assessment, advertising and communication with grant recipients to mitigate fraud and misuse of funds. A team of three employees will be responsible for managing the project’s $3.7 million budget and its implementation, and will report to the broader SEDI and OF team. An additional $500,000 will be allocated to the team for operations purposes, to allow for oversight over funds usage by recipients.

Table One: Department Salaries*
Levels	1st Yearly Salary	2nd Yearly Salary	3rd Yearly Salary
EL1 (DSS)	$118,106	$122,594	$126,762
APS 6.3 (DE)	$107,880	$111,979	$115,786
APS 4 (DSS)	$84,700	$87,919	$90,908
Total	$966,634 over 3 years.
5 Year Total (anticipating interest: 1.03% p.a.)	$1,663,856

*(Department of Social Services, 2024: Department of Education, 2024)

Policy Recommendation 1: Introduce specific nation-wide funding for early youth and Indigenous-run social enterprises.

This recommendation proposes the introduction of an initial $2000 grant for youth and/or Indigenous enterprises in the start-up stage with an evidenced social focus. In order to be eligible for the grant, enterprises must:

1. Have a leadership team made up by over 50% young (aged 15-30) or Indigenous entrepreneurs

2. Satisfy the requirements of a social enterprise classification

3. Have a clear and comprehensive plan for impact

4. Demonstrate evidence of commitment to the cause

Usually, start-up costs range from between $3000 and $5000 (Muro, 2020), and while the grant will not cover them entirely, a significant proportion of new enterprises’ start-up costs will be covered, thus reducing the initial cost barrier for young and Indigenous entrepreneurs. This support, combined with the resilience building measures of Recommendation 2, will equip businesses with the necessary tools to survive in the future and will enhance the success rate of businesses.

Implementation

The grant will require government advertising to the amount of $250,000 to ensure existing social enterprise hubs and groups are made aware of the grant so that they can further advertise it within their networks (Department of Finance, 2017). However, after initial government advertising, it is expected communities and existing social enterprise hubs will naturally promote the grant within their networks thus eliminating the need for further spending. The task force must also work in tandem with community leaders such as Indigenous Elders, universities, schools, and local/state governments to promote the involvement of young and Indigenous Australians through community advertising and encouragement.

Success in this recommendation would be defined as the number of social enterprises in Australia increasing by a total 10% at the end of 2030, with the policy to be implemented from 2025 onwards. Currently, there are approximately 12,000 social enterprises in Australia, meaning that this target will require 1200 new social enterprise start-ups run by youth and Indigenous Australians by the end of 2030 (Social Enterprise Australia, 2023). These enterprises would also need to be viable and report to the taskforce to ensure the proper utilisation of funds. Existing social enterprises and groups can also be approached and surveyed by the taskforce regarding their perspectives on the effectiveness of the grant. These meetings should occur annually over the five year period.

As such, 1200 grants will be available over this time period, however should demand exceed this availability, it can be increased as necessary to avoid hindering growth of the sector. Therefore, the total cost of the grant provision will come to $2.4 million, combined with $250,000 in advertising, as seen in the table below.

Table 2: Recommendation 1 Cost Breakdown
	Cost	Total
Grant Provision	$2000 per start-up	$2000 x 1200 = $2,400,000
Advertisement/Community Interaction	$250,000	$250,000 x 1 = $250,000
Total	$2,650,000

Policy Recommendation 2: Incentivise universities to develop social entrepreneurship courses and studies to promote youth awareness and involvement.

The second recommendation should work alongside Recommendation 1 and the SEDI’s online training courses to improve the accessibility of relevant education and capabilities of social enterprises and entrepreneurs. This will contain a specific focus on enabling youth innovation through the introduction of university courses and opportunities to build social innovation and entrepreneurship skills. These courses will likely form part of a larger business degree, however delivery and form may be determined by the university, provided they meet accreditation standards and are not restricted in their accessibility to students. 

Provision of the necessary skills through these measures will then allow for increased long-term resilience of enterprises whilst also upskilling entrepreneurs to increase the accessibility of the career and promoting the reduction of existing community social issues.

Implementation

Here, educational institutions will be offered initial monetary incentives of $50,000 for up to three universities per state/territory, to implement relevant courses to increase the accessibility of the career path. The $50,000 should cover 1 year of teaching costs for minor or specialisation subjects (equivalent of four units), as part of a broader undergraduate degree (Department of Education, 2020). Additional lecturer salaries will be covered by the cost of the course for students, in line with existing costs for business and commerce related courses. This is to ensure accessibility, competition and choice for students and universities, whilst preventing oversaturation of the market.  As the $50,000 is meant to incentivise course offerings, it will be limited to teaching and the development of such courses, with universities to provide evidence of responsible spending to the Department.

The implementation of these courses should coincide with increased economic resilience through independent further research under course development, and networking opportunities provided by the university system. Here, university students will have access to informal mentoring opportunities outside of government opportunities, with further research in these areas allowing for greater insights into the social and economic demands of social entrepreneurship.

In order to have 1200 new enterprises, initially made up of 2-3 students, 3600 students from the 21 selected universities must engage in the career path post/during study. This means that over 5 years, each university should look to have a minimum of 172 students undertake the courses. Recognising that not all students will engage with the career path post study, each university should then attempt to engage approximately 300 students.

The policy implementation should cost a total of $1,050,000, as shown in the table below. This grant will also require advertisement; however, this will be a joint action with Recommendation 1, thus eliminating the need for further spending, as the two policies are closely related.

		Table 3: Recommendation 2 Cost Breakdown
	Initial Costs	Total
University Incentives	$50,000 x 21	$1,050,000
Advertising/Community Interaction	$250,000	Nil (Combined with Recommendation One)
Total		$1,050,000

Summary

The total cost of these recommendations will be approximately $6.1 million over an initial trial period of 5 years.

	Table 4: Total Costs
Item	Cost
Anticipated Department Salaries (5 years)	$1,663,856
Operations	$500,000
Recommendation 1	$2,650,000
Recommendation 2	$1,050,000
Advertising/Community Interaction	$250,000
Total	$6,113,856

Barriers

This policy proposal must recognise four potential limitations of its recommendations. The first limitation is the existing cultural issues in Australian society and suspicion towards outsider or government intervention (Calma, 2007). This is particularly prominent with Indigenous Australians living in rural and remote areas, where information can be limited (Yashadhana et al., 2020), and the history of colonisation and government wrongdoings still affect the general consciousness (Calma, 2007). To reduce suspicion towards efforts that would solve existing social issues, this proposal therefore recommends the following measures be implemented through the recommendations:

1. Increasing support for Indigenous social entrepreneurship and innovation, which would allow for a greater understanding of the tensions behind the issues and provide more acceptable and applicable solutions (Austin et al., 2019)   

2. Collaboration with community leaders to encourage community involvement, both in terms of the advertising process, and in the later implementation of strategies

The second potential limitation of this proposal is the lack of awareness about social entrepreneurship opportunities for future entrepreneurs, therefore coinciding with reduced uptake of the courses offered via Recommendation 2. This is especially significant with youth, due to a lack of dialogue about social entrepreneurship (Griffin, 2017). As such, the advertising needs from Recommendation 2 would need to be specifically targeted at youth and the concept of social entrepreneurship should become more widely communicated through the advertisement process.

If the initiative is successful, by 2030, there should be approximately 13,200 enterprises operating in Australia. Moreover, by 2040, the average survival rate of a social enterprise should increase to approximately 3 years, in recognition of the increase in resilience skills from Recommendation 2.

The third potential limitation is the possibility of fraud, via the application and awardance of grant money. In order to avoid this, recipients will be required to report to the taskforce, with check ins scheduled to ensure progress. Evidence of expenditure will also be required to track spending and ensure responsible usage of funds. 

Finally, although the recommendations would be implemented in 2025 and would operate on a trial period until 2030, Recommendation 2 will likely remain in development stages until 2026, at which time the necessary courses will have been developed. As such, grant provisions will not be subject to quotas, and will likely see significantly higher uptake towards the end of the trial period. 

Conclusion

In order to generate a comprehensive national strategy that promotes and enables social entrepreneurship to effectively address many of the contemporary social issues Australia faces, youth and Indigenous entrepreneurs must be prioritised. Although recent policies will greatly improve the opportunities for social enterprises, initial grants and broader education access must be introduced. Such action will allow for greater employment and involvement of these more vulnerable groups. This will also support the SEDI and OF to further provide youth and Indigenous Australians with the skills required for social entrepreneurship and workplace resilience.

Social enterprises are uniquely situated to resolve many of the social issues faced by individuals and the broader community within Australia. Their role is especially vital in the modern Australian context, as new technology is now in the process of revolutionising the work environment (Bakator et al., 2022). Simultaneously, the social issues exacerbated by the pandemic are projected to continue into the future (Lloyd and Hicks, 2020). As such, increased social intervention and innovation is now necessary to both protect the Australian people and future work productivity and engagement, meaning that a national strategy regarding social entrepreneurship is urgently required. Although two policies were introduced recently in 2023 to support social entrepreneurship, they fail to effectively provide opportunities for youth and Indigenous social innovation, meaning that numerous societal issues cannot be addressed effectively. As such, entrepreneurship accessibility must be provided to these demographics, in order to effectively allow for the implementation of a national strategy that mirrors the priorities of the Victorian SES. 

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