Anticipating a changing government funding environment, this organisation has been steadily growing a raft of social enterprises.
The Spot Community Services, which provides services to children, young people, adults and their families, has experienced the highs and lows of government funding. In the past three to four years they have seen their 11 funded programs reduced to just two. Where once the organisation employed 30 full time staff, it now has approximately 12, with the same number of casual team members.
CEO Ken Houliston has spent the last few years preparing his organisation to become less reliant on government and more self-sufficient by carefully building a range of social enterprises around the organisation, as well as finding ways to commoditise the organisation’s substantial built and intellectual assets.
“We realised about six or seven years ago that social enterprise had to become part of what we do, to become self-sustainable, if possible. So that’s when we started to make everything we do saleable, not just to service clients, but to try and make money on it as well,” Ken said.
The Spot businesses
The organisation now operates five very diverse social enterprises out of its 18-month-old community hub premises in the southern Brisbane suburb of Parkinson. They cover the broad continuum of social enterprises from those that exist to meet the organisation’s mission, to those that trade purely to generate revenue to meet funding needs.
The first enterprise emerged from its core services to young people. The Rock indoor rock climbing gym began as part of its programs for young people, to build their confidence by overcoming the challenges inherent in the activity. What it grew into is a state-of-the-art facility also used by the local community, schools and even for children’s birthday parties. Still only breaking even, the enterprise meets the organisation’s mission-related goals as opposed to its funding needs.
Another enterprise, Spot on Homes, has alternatively poured over $200,000 into the organisation over the last three years; and is currently the only enterprise turning a profit. The business focuses on delivering a quality product – beautiful, high-end homes. It is run as a competitive business and does not, for example, necessarily seek to employ young people who are clients of The Spot Community Services.
“For a company to be profitable it has to compete in the open market just like any other company,” said Ken. “If you’re trying to run something to actually put money into the organisation…it has got to be run like any other company, it has got to be run profitably. It’s a big bad world out there and we have to compete in it.”
Riding on a wave of government funding and strong business support, The Spot Community hub was built with $2 million from the Arts, Business and Community Centres for Young Australians Initiative and significant venture capital raised through business partners and supporters. Located in an industrial estate and containing office space, meeting rooms and venue spaces, Ken saw the opportunity to bring local businesses and community service providers into the building, to complement the services provided there and to generate business.
The Spot Community Hub is home to the social enterprises operated by the organisation as well as its counselling, youth support coordinators, early intervention and prevention family support services. Collocated at the hub are not-for-profit service partners including BoysTown employment and training services, Open Minds and Access Inc. Local businesses that make use of the hub’s venues and training facilities include a dance school, transportation and storage company.
A café had been added to the suite of social enterprises at the hub and its success demonstrates the effectiveness of collaborating with collocated partners. “A café was obvious (in this) building here…in an estate such as this. It became a good training environment for young people as well. Two of the staff down there today…came through BoysTown Employment as well.”
When funding for a program helping young people to gain qualifications in the music industry was discontinued, The Spot found a way to earn income from the music studio already built in the community hub, while still being able to provide the same outcomes for service users. Sub-leased by a local music teacher, Brasswave Production operates as a recording studio and still provides Certificates I and II in Music in conjunction with The Spot (which is also a registered training organisation) to young people supported by The Spot Community Services and its partners.
The Spot’s commercial activities also extend to its intellectual property. Heart Ties is a relationship program developed by the organisation in collaboration with Griffith University’s Child and Family Studies in the School of Human Services and Social Work. The Spot is currently delivering the Heart Ties Enriching Parenthood program to other community organisations such as Mission Australia. In doing so, the organisation is building yet another social enterprise to support the ongoing delivery of such programs and meeting its core mission objectives by leveraging the efforts of other organisations, thus multiplying the number of people its programs can reach.
Two legal entities are required to appropriately separate The Spot’s commercial activities from its community service activities. Ken estimates that The Spot’s income now includes 25 per cent from government, 20 per cent from its enterprises and a further 20 per cent from sub-leasing its property. While the enterprises are not quite viable enough to replace government funding for services, they are continuing the organisation’s cash flow.
“It’s like a business. When someone starts a business, they never expect to get a return on it the day they open up. Most businesses take five years to establish, before they actually start to return. It doesn’t happen overnight, it takes time. That’s where it can either make or break you. It’s the old ‘cash flow is king’”, Ken said.
In Ken’s advice to other not-for-profit organisation’s seeking to build social enterprises, he highlights the need to be proactive, and seek out people in business who can support an endeavour, either with capital, connections or advice.
“You need people who know how to make money running your business. Their role is to go out there and make money. And they have a heart for community, but just get them to do their job, you do community over here. The most important thing is to get close to people who know how to do business and listen to them. Get good advisors around you but don’t tie them down to a committee. Build good relationships…it takes time.”
Case study key themes
Proactive – The Spot started developing social enterprises years before financial issues became a concern, when they were receiving a relatively high degree of government funding. Understanding that small businesses take time to grow, Ken knew he had to get started early in order to be in a good position when the organisation needed it.
Diversity of commercial activities – Something that stands out about The Spot is the diversity of its revenue streams, which include social enterprises, sub-leasing property, venue hire, fee for service, as well as government funding. By spreading the risk across these streams and different enterprises, The Spot is in a stronger position than if it had focused its efforts into just one business.
Enterprising – Ken is an entrepreneur. He thinks outside the box and looks for opportunities. He and his team have been especially good at looking at their existing built and intellectual assets and repurposing them or finding ways to commoditise them.
Expert skills and advice – While Ken is entrepreneurial and business minded, he recognised he still needed to draw on the expertise and advice of people with much more experience than he at operating businesses.
This case study appears in Rethinking Resources: Case Studies of Financial Resilience from Queensland Community Services.
Listen to the interview with Ken on StudioQ