Giancarlo de Vera
Solving complex social problems have plagued civilisations for time immemorial. These days, not-for-profit organisations increasingly face constraints that inhibit their ability to achieve their respective social missions. All too often we hear of non-profits needing to consolidate in a competitive funding landscape, constantly needing to balance rising costs and demands, or to diversify their funding or cost reductions. For some, non-profits have been labeled as ineffectual, as fragmented and better off merging to achieve social impact, or as inflexible and rigid.
Regardless of perceptions of non-profits, they certainly do play an important role in society. Notwithstanding their immeasurable social impact and positive change they affect in the lives of individuals, families and communities, non-profits also play a vital role in maximising Australia’s future growth opportunities. The Positioning for Prosperity? Catching the next wave report released by Deloitte last year identified twenty-five sectoral hotspots and the not-for-profits feature prominently in Deloitte’s ‘Growth 25’ sectors. As Partner of the not-for-profit practice, Chris Campbell, noted: “for Australia to take advantage of the future growth opportunities, the Not for Profit sector will need to play a significant role in their own right and in combination with government and corporate enterprises”.
Further, in the context of what William D. Eggers and Paul Macmillan coined as the ‘Solution Revolution’, the traditional divide between public and private are converging to form what they also coined as the ‘Solution Economy’: an emerging economic and social order that is set to prime all stakeholders involved in the complex social problems that face non-profits, to think and act as collaborators and not adversaries. In essence, thorny complex social problems in the Solution Economy become immense opportunities when industry, philanthropy, government and non-profits start to think entrepreneurially and leveraging each of their own strengths to tackle and solve thorny social issues.
Indeed, evidence of the Solution Revolution and the Solution Economy can be found widely, indicating a tantalising future for non-profits. Driving the revolution is the emerging global infrastructure and ecosystem for the impact investing marketplace, which seeks to use profit-seeking investment to generate social and environmental good. Activist investors looking to use investment strategies to gain a social and financial return on investments have moved from the periphery to the core of mainstream financial institutions, with some estimating the global market worth to be between US$450 billion and US$650 billion. Matched by political will both globally and domestically, impact investing has caught the eye of a specialist G8 task force, as well as an Australian Senate Inquiry that resulted in the establishment of three Social Enterprise and Development Investment Funds to increase supply of finance into the nascent impact investment market. And with 2014 being declared as the year of the ‘mega gifts’, high-net worth individuals and well-endowed private ancillary funds are also coming to the table. As Louise Walsh, outgoing CEO of Philanthropy Australia noted, these ‘mega gifts’ will have an huge impact on the Australian community as Australia continues to take her next big steps toward developing a mature philanthropic culture.
Structurally, the public and private divide has continued to be blurred, as Australia followed in the wake of America’s low-profit limited liability companies and flexible purpose corporations, and the UK’s community interest companies, by launching B-Corps in late 2014. The launch of B-Corps in Australia has sparked a discussion on how Australia can set up its own legal structures that can access debt and equity finance to fund social enterprises dedicated to solving seemingly intractable social issues.
Herein, this is where the consulting industry can really drive innovation for not-for-profits. Of the sectors expected to possess the most potential to lift Australia’s growth trajectory over the next twenty years, Deloitte’s Positioning for Prosperity report highlighted a strong set of sectors not-for-profits already play a vital role in. Unsurprisingly, the sector involved in financing the future was labeled as a high growth sector, as government-only solutions to funding social goods and infrastructure increasingly require non-governmental support. Hence, the line between private and public will continue to blur as a role for private funding through innovative financial products such as social impact bonds and corporate investment programs will play an stronger role funding society’s needs. As a result, non-profits who provide key social services will need the financial expertise, analysis and project management knowledge of the consulting industry to drive innovations in the funding of social service provision. For instance, The Benevolent Society, in partnership with Westpac and Commonwealth Bank, developed a social impact bond that raised capital to provide an intensive family support program designed to encourage the restoration of children with their own families and avoid entry into the government funded out-of-home care system.
Another sector that non-profits play a vital role in, and was marked as a high growth sector is education. The not-for-profit sector is set to affected in two main ways. Firstly, as a lack of appropriately skilled workers continues to plague not-for-profit intensive industries like childcare, and health and social assistance, opportunities for education providers to cater both for globally mobile students and an ageing workforce looking to re-skill will lead to an increasing need for non-traditional and flexible modes of education delivery. This means consulting can provide a direct way for not-for-profits to innovate by lending expertise in areas like information and communications technologies, business venture development, and project management to ensure flexible modes of education delivery address skill shortages. Secondly, non-profits involved in employment assistance and job and work readiness programs will need to become more aware of projected productivity policies, to ensure the beneficiaries of employment assistance programs are not locked out of future employment opportunities through the lack of education for sought after jobs. Hence consulting can provide support through areas like the necessary research and policy analysis, corporate partnerships knowledge and networks, and program development and evaluation to ensure those in need of education and training the most receive the education that they need to participate in the workforce.
Lastly, and unsurprisingly, the largest mega-trend affecting Australia’s future, an ageing population, featured predominately in the sectors expected to possess the most potential to lift Australia’s growth trajectory over the coming decades. Aged care, retirement living, community care and the health sectors are expected to provide a host of growth opportunities. Hence, as the needs of the community changes and evolves, non-profits would benefit from consulting expertise in a number of ways. Firstly, consulting has a wealth of cross-sector and multidisciplinary understanding of how to best navigate a highly regulated environment and ongoing reforms like the National Disability Insurance Scheme. Organisations will face difficulties as existing approaches make way for new ones. The consulting industry can provide expertise in many ways such as change management, strategic planning, leadership development, and how to best scale social impact, to ensure non-profits are in the best position to innovate in ways that ensures they are at the vanguard of change and opportunities in rapidly growing health sub-markets.
Hence, the emergence of the Solution Revolution and the Solution Economy poses some interesting and novel opportunities for non-profits to achieve their social missions. No longer can non-profits work in isolation, as the traditional private and public divide becomes increasingly blurred. The consulting industry has the ability to drive innovation in the non-for-profit sector, and non-profits would benefit immensely if they started to think entrepreneurially. Indeed, consultants, through their deep subject matter knowledge and multi-disciplinary approach to problem solving, can provide the key to turn the social missions of non-profits into gold. To do so will not only unlock the success of individual non-profits, but it will also unlock Australia’s future growth potential.