Research program: Supporting development and growth in the community sector in Western Australia

The Bankwest Foundation is partnering with the Centre for Social Impact at The University of Western Australia (CSI UWA) to undertake a research program to help support the development and growth of the community and social enterprise sectors in Western Australia.

The aim of the program of research is to increase our understanding of what difference community programs make and what factors can enhance the resilience and long-term financial viability of Western Australia’s emerging social enterprise sector.

Improving the evidence base on the measurement of outcomes of community programs and of the financial sustainability of WA’s social enterprises will support growth and innovation in the community sector and build community resilience.

1. Measuring Outcomes for Impact in the Community Sector in Western Australia

The Measuring Outcomes for Impact in the Community Sector in Western Australia stream addresses the desire of community organisations to understand more about how to measure their social impact and implement improved outcomes measurement and the recognition of government, philanthropists, and impact investors that their funding should make an impact which needs to be measured.

The program has been developed against the backdrop of the outcomes-based procurement reform has been introduced in Western Australia by the WA Government.

The Delivering Community Services in Partnership Policy in Western Australia introduced a number of important reforms, most notably a commitment by the WA Government to work in partnership with the not-for-profit sector. It also provided the basis for a movement from an input/output based funding and reporting system to an outcomes-based funding system.

In such a system, funding to community organisations is based on a demonstrated capability to achieve improved social outcomes for clients and consumers.

We have also witnessed a similar focus among non-government funders of social impact (philanthropists, foundations, corporate investors) in Western Australia to fund for impact. It is now timely to produce a critical review of the WA Government outcomes-based procurement reforms in WA but more broadly to examine the state of play of outcomes measurement in the community sector in Western Australia.

Research aims:

1. What can we learn from international experience and models that may inform the development of outcomes measurement in Western Australia in the community sector?
2. What is the current state of development and evolution of outcomes-based measurement in Western Australia at both a system-wide community sector level as well as individual community organisation level? Where are WA community organisations at with outcomes measurement? How do they measure outcomes? Are they struggling to measure and demonstrate their impact? What barriers and challenges do they face in measuring outcomes?
3. What impact has outcomes-based procurement reform in Western had? What lessons can be learnt from the roll-out of outcomes-based procurement reform measurement in Western Australia? What has been the impact of outcomes-based procurement reform on community organisations?

2. Resilience and Resourcing of Social Enterprises: A Longitudinal Study

Contemporary approaches to social service delivery, combined with growing consumer demands for ethical business and new social challenges created by global economic trends have created an environment for growth of social enterprises, or businesses led by a social or environmental purpose.

Increased opportunities for and demands on social enterprise raise questions about their capacity to maintain the business sustainability necessary to deliver on their social objectives. There is very limited evidence on the access to and use of finance by social enterprise.

The available research suggests that social enterprises face similar constraints to small business in accessing commercial finance (Burkett 2010; Mavra 2011). Two studies of the financial needs of social enterprise in the UK (Mavra 2011) and Australia (Burkett 2010) respectively have found that lack of investor and funder familiarity with social enterprise constrains their development, particularly at the point of business expansion or replication.

Beyond questions of access, the ways in which social enterprises go about resourcing their businesses are linked to their social purpose. Social enterprises have to carefully balance the needs of generating revenue from business operations as well as maximising investment towards social mission.

Social enterprises often face financial resource constraints as they operate in areas where governments and markets have failed to address the social needs of community. Thus, social enterprises typically rely on a diversity of financial inputs beyond trading revenue, including volunteer labour, government and philanthropic grants (Barraket et al 2010).

The diversity of inputs and costs typically leads to complex financial reporting amongst the social enterprises which limits the transparency of such reporting, thus exacerbating the transaction costs for financial institutions seeking to work with social enterprises (Burkett 2010).

The objective of this study is to improve the financial resilience of social enterprises in Western Australia and beyond by better understanding their needs and behaviours with regard to accessing financial and other resources.

Research aims:

1. To understand the resource needs and behaviours of social enterprises and how these differ at different stages of the business life cycle
2. To examine barriers (and opportunities) to accessing financial resources by social enterprises
3. To examine the ways in which mission fulfilment informs resourcing behaviours and performance reporting