Opinion piece: why social enterprises are financially resilient than charities?

This is my first time writing a business opinion piece. I wasn't expecting I would write this after 6 years running a social enterprise business so here it goes!

In this opinion piece I will explore my perspectives on financial resilience differences between not for profit and social enterprises.

Running a business is such a hard work, especially if you are being a founder and social entrepreneur. It such a lonely world, and indeed full of efforts and heart to make worth it. I have seen lot of businesses in a charity/non-profits and social enterprises sectors did not last long due to struggles financially and capacity to manage. This may be why the leaders may not think strategically about their revenue streams.

In 2018, when my business Nature Freedom became a not-for-profit organisation, I wasn't sure if this business model is going to be a right one because I was aware of challenges from other charities calling out for funding and resources for many years. I felt like didn't want to experience these challenges. So, down the track as the organisation grew we started to see challenges as a charity in reality. The challenges that stress me were:

• taking a lot of time writing grants, and even if they are not successful
• relying on volunteer to make ends and complete tasks
• being in competitive environment against other not for profits for funding, resources and space

What I have learnt from these challenges once were became a social enterprise in the beginning of 2021 is that financial resilience, risk management and accountability has helped me to understand how businesses can thrive for long-term. Despite COVID-19 hit us hard in 2020, and severe weather impacts from 2019 and 2022 has caused further impacts on our cost of living and changes in society trends (volunteering, socioeconomic status and workforce changes). This has affected us as well.

But, what a difference it makes, even we survived from those natural disasters?

Learning about the changes from the adverse impacts caught my attention about financial resilience and long term sustainability. My team has brought up a few times about taking for a long hard road. Why, because the impact we are creating, including myself was unemployed person with a disability struggling finding a job. Others in my community also experienced same challenges due to socioeconomic disadvantages especially participation in labour force and social community.

Today, I am starting to see more non-profits/charities starting to change into a hybrid business model with social enterprise model. This is such a major trend today regarding to business viability, sustainability and financial resilience. In my opinion I see that the combination of not for profit and social enterprise in our business model is more successful because:

• reinvestment of profits from trade and commercial activities will be distributed to non for profit arm of the same business
• this helps to reduce reliance on applying grants and donations which that takes more effort and time than delivering trade activities
• social impact data and analysis will be more deep dive than standalone charities
• long-term sustainability from reinvestment will mean non competitive challenges to solve problems, and be more innovative
• more likely to function the capacity to manage than volunteer based organisations
• solutions in workforce will be easily able to identify risks earlier so solutions financially will be addressed before the impact occurs

So what you have realised from my perspective? Is this something you have wondered?