10 Questions with Mike McKinstry, CEO, Social Traders

1. Let’s talk about Social Traders – who are Social Traders, and what do you do?

Social Traders is an intermediary organisation within the social enterprise sector. Put simply, we help to create jobs and other social impact by connecting business and government procurement teams with social enterprise suppliers.

These social enterprises supply competitive quality products and services that customers want, and in the process, these enterprises create jobs for the most disadvantaged Australians throughout Australia. It’s that simple – we look to create a marketplace where economic impact and social impact are delivered at the same time (and we can prove we have done that so far, and now we want to scale our impact nationally).

Many social enterprises can also deliver other significant social and environmental outcomes, but there’s no doubt that helping create positive social change through job creation for Australians facing disadvantage is a big part of what we do.

Social Traders have 120-plus business members who we support to build the procurement systems, structures and internal culture to prepare them to buy from social enterprise. Social Traders has been through a rigorous certification process with 500-plus social enterprises and are actively working with them to strengthen their business models and build their capacity and capability. Importantly, Social Traders also advocates for government policy and frameworks to help build a self-sustaining social enterprise marketplace in the longer term.
 

2. What exactly is social enterprise procurement and how does it work?

There’s a lot of jargon out there about social enterprise procurement, but at Social Traders, we work closely with organisations to help show that it’s not as complicated or as scary as it first sounds if you plan it well – whether you’re a buyer or supplier, or you want to invest to help support the sector to develop and grow. Every year, governments and large, medium, and small businesses spend billions of dollars in running their operations – fact.

So, when a business or government chooses to target to buy a percentage of their annual procurement spend from social enterprises, that’s social enterprise procurement.

Social procurement is a way of acquiring quality goods and services while also achieving multiple Sustainable Development Goals and achieving ESG goals. Social enterprise procurement is a specific type of social procurement that creates some of the most impactful procurement outcomes, that complements broader sustainable and inclusive procurement.

Some of Australia’s leading brands across all industries are already buying from social enterprises. John Holland, The Victorian Government, Microsoft, Lendlease, Westpac, Coca Cola Amatil, Mirvac, Microsoft, SAP and Transurban are just some of the well-known brands leading the way.

The best part is that this is money that these organisations have planned to spend anyway in running their businesses. It’s not additional money budgeted separately for CSR or ESG, yet it achieves the same sustainability goals.

For example, many multibillion-dollar government infrastructure contracts include a contractual commitment from large suppliers to include evidence of social procurement in executing the contract. Large organisations such as John Holland have been awarded significant multimillion infrastructure contracts, and as a tier one supplier, John Holland have worked with Social Traders to cascade this social procurement spend commitment into their supply chain.

As the tier one supplier, John Holland awarded tier two contracts to McConnell Dowell, who in turn sourced road and environmental clean-up services from a tier three social enterprise called Outlook Environmental. Outlook are a Social Traders certified social enterprise and are very competitive at what they do - they provide employment opportunities for people with a disability. That’s a real example of supply chain planning and social enterprise procurement in action.

It shows how social enterprise spend commitments being cascaded through supply chains can be a very effective way of delivering social outcomes.

Organisations can also choose to buy directly from a Social Enterprise. A good example would be Fruit2Work in Victoria who are a Social Traders certified social enterprise who deliver fresh fruit and milk to Melbourne and Geelong businesses. Whilst providing a quality delivery service, they provide employment for those impacted by the justice system and they very effectively support and prevent people from reoffending. They have a very impressive zero recidivism rate, and they reunite people with their kids, their families, and their partners creating a positive ripple through society. Again, social enterprise procurement in action.
 

3. Social Traders recently received a $1 million grant from the Gandel Foundation. You’ve also been supported by The Ian Potter Foundation and the Helen Macpherson Smith Trust – how does philanthropy help you do your work?

The social enterprise sector is not yet a mature sector and requires ongoing investment support to deliver the kind of social outcomes mentioned earlier. These important and welcomed investments from Gandel Foundation, Ian Potter Foundation and Helen Macpherson Smith Trust will enable Social Traders to provide enterprises with capacity building and business development support, helping to strengthen and grow the social enterprise sector.

In addition, intermediaries such as Social Traders also look to take a complex systems change perspective to enable the whole ecosystem to flourish. It’s fantastic to see philanthropy recognising the need for ongoing ecosystem development and investment if we are to create a thriving social enterprise sector in the long term. These investments will also support the implementation of Social Traders’ bold Vision 2030 - to scale the social enterprise procurement market in Australia to $5 billion and help create 44,000 jobs by the end of the decade. These jobs would support Australians facing disadvantage of differing kinds, whether that be supporting marginalized women or young people, long term unemployed, refugees, or providing meaningful work for people with a disability.

Philanthropic investment into that overarching vision is crucial to success, and we would clearly like to talk to other partners to support in delivering our vision.
 

4. What do you believe is the best way for philanthropy to work with social enterprises? Is there a successful formula? An accepted or agreed approach?

Many trusts and philanthropic organisations have been supporting and providing grants to social enterprises directly for many years, and long may that continue. This support is, and remains, critical in supporting these individual enterprises, and Social Traders work alongside many of these enterprises to help capitalise on that support by assisting in building suppliers’ capacity and capability.

However, if we are to create long term social change, this requires systems thinking and ecosystems change as I mentioned before, and it is encouraging to see that many philanthropic organisations are now actively leading the way in investing in intermediary organisations like Social Traders to enable this to happen more effectively. Many businesses and corporates are also being active in their support in helping build this marketplace, and that is where Social Traders is unique in many ways in that we work on both the buyer side and the supplier side in helping to create this procurement marketplace.

Suppliers without buyers is only half of a market – we clearly need both, and Social Traders works hard to make those connections and facilitate contract awards that deliver both economic value and social value at the same time. This is not just a “good” thing to do – it makes business sense too!
 

5. What have you learned already from these philanthropic relationships? (The discussions, the negotiations, the considerations etc.)

As you might expect, the approaches differ somewhat from our experience. As mentioned earlier some organisations want to continue to support individual organisations, and that’s entirely appropriate. Some buy into the big picture and are quite agile in their investment approach, whilst others request a lot of specific detailed information as part of their due diligence and look at SROI etc. At Social Traders we recognise and respect the differing approaches. It’s encouraging to see some trusts also sharing due diligence information, and from a Social Traders point of view, I’m happy that this occurs.

I’d like to think that the support we have received so far confirms our strategy and that our Vision 2030 is real and deliverable. I view these important relationships being one of trust and confidence. It’s about longer-term partnerships investing in society, and ultimately, it’s about delivering impact in our communities.
 

6. You’ve had extensive commercial experience (in the UK, USA and Australia). How does that experience help your work at Social Traders?

I was a Procurement Director for Rover/Land Rover back in England and I spent many years running for profit organisations supplying into many different sectors in both the USA and here in Australia since. So, it helps to be able to look at procurement contracts and supply chains from both the buyer and supplier perspectives. I joined the NFP sector in 2015, and in addition to many other services offered, my previous organisation successfully runs several social enterprises, providing competitive quality products whilst employing 200+ people with a disability. So, it also helps to be able to look at social procurement with both a commercial and social lens at the same time.

For me it’s about balancing the head and the heart.

As an intermediary, we need to provide high quality support and help organisations deliver both short term and long-term outcomes – just like any other business.

Ultimately though it’s about helping deliver economic and social impact at the same time – and at Social Traders we put a lot of focus on being able to measure that impact in terms of the jobs that we help create for Australians facing significant disadvantage, alongside other social and environmental outcomes.

 

7. Do you find it’s harder to drive change in the social enterprise sphere than it was in a for-profit/commercial setting?

Yes and no. A friend who had previously joined the not-for-profit sector told me that in general in the corporate world, you agree the vision and the strategy, and everyone then rallies behind that to deliver it. In the not-for-profit sector, you outline a vison and strategy, and the organisation or sector then says: “Let’s talk about that!”. It hasn’t quite been like that, but in many ways the issues can be more complex in the not-for-profit sectors vs commercial. It’s about delivering social outcomes and sustainable economic outcomes at the same time.

So sometimes change does take time as a consequence.
 

8. You say on the Social Traders’ website that you want to change ‘business for good’ to become ‘business as usual.’ How do you do that? And what does that look like in practice?

I’d highlight three things in changing business for good:

  1. Grow the social enterprise sector significantly (these are the pioneers in embedding impact in business). We do this through certification and capacity building.
  2. Support for-profit businesses with the tricky internal change processes to build social considerations into their model. We do that through social procurement. It often means changing existing practices & mindsets, and we're here on the journey with tailored advice, training, tools etc., and
  3. Influence government policy changes – this will drive the change in business practices.

Practically, Social Traders with others can continue to advocate to government, but I believe that the voice of philanthropy is a strong one, and one that can really add weight to ask for government as a co-investor in this important sector.
 

9. Governments have social procurement guidelines in place – are they workable and sufficient?

State governments are taking the lead, and some good progress has been made, but there’s more to do. Various forms of social procurement frameworks and policies have been developed and implemented, but we would like to see more targets being set – Targets would change “guidelines” into action.


10. Have these guidelines helped shift cultural expectations and priorities around social procurement? If not, what more can be done?

Absolutely. I think that we wouldn’t have seen the growth in social enterprise procurement without it. It's why Victoria is the biggest social enterprise market at the moment. Great to now see other jurisdictions catching up, and we are now looking for more leadership from federal government too. As a national organisation, I think Social Traders has a role in help facilitate best practice sharing in both policy and in practice. 

I think there’s a really exciting time ahead in the social enterprise sector – and as I said earlier, it just makes good business sense too!

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