Co-Mingling: An Interview with Ernst & Young's Les Hems

Listen to the Interview by doubleclicking on this link, note the link will be available for 24 hourts from 19 April, 2015 10.05 WST After this time the interview can be accessed from the next edition of Australian Prospect (www.australianprospect.com.au -  the social impact investment state)

This interview covers a lot of territory including the following:

-    the emergence of the social investment state under UK Prime Ministers Tony Blair and David Cameron

-    thinking about how Australia had not created the levels of “social impact funding” but in some areas had gone beyond UK social impact models

-    the emergence of a clear road map towards social impact investment in the UK and a muddy road map in Australia

-    the reason for the new move towards social impact investment “civil sector organisations have the potential to make better use of the funding that’s available

-    the emergence of public sector mutuals in the UK that have grown to the point where there are now 100 public sector mutuals with a turn-over of over $3 billion employing 35,000 employeeS

-    the importance of building an evidence base for new models of enterprise development

-    The Kimberley Institute has been working on a community investment model since 2012 more recently Ernst & Young (ET) have been working on the development of payments by results strategies to convince social investors and government that they should invest in the unique Broome Aboriginal organisations with their unique innovative entrepreneurial spirit and resilience.

-    The discussion compares Australia’s current situation of budget cutting and the way this impacted on the Indigenous Advancement Strategy with the UK and the austerity measures introduced after the Global Financial Crisis. The difference was that even though the British cut backs were severe many organisations were multi-functional and survived by re-defining themselves.

- The great danger of the current situation in Australia is that whole inter-locking networks of Aboriginal organisations could be wiped out by the effect of the budget cutbacks delivered through the Indigenous Advancement Strategy. Les Hems says it is of the highest priority to do “network analysis” that is understanding all the resources the community has at its disposal. “Often in communities the strength of communities is the relationships between organisations in the community.. My fear is that when you have got networks, strong networks, such as in Broome, if you lose too many of those nodes in the network then there is risk that the whole network will collapse. .. Before you change funding mechanisms make sure you understand the network! … you remove a bit of funding and the flow on negative multiplier effect is phenomenal. … I don’t think we’ve done enough in understanding the system and the network of the organisations and the people within those organisations”

-    “building an evidence base for social impact investment is a worthy investment…”

-    “evidence and outcome measurement can be embedded into quite small organisational practice it doesn’t have to be rocket science”

-    “transparency is very important”

-    “getting unit costing into the public domain is crucial”

-    “social franchising is an important way of sharing best practice strategies across civil sector organisations”

-    Social Return on Investment analysis is cost benefit analysis that recognises financial as well as social benefits for multiple stakeholders

-    Co-mingling is about working across different financial supporters and trying to use the different criteria required by investors and funders to increase social impact investment strategies and better operability for social organisations. This is perhaps the major way forward for struggling Indigenous organisations who have been hurt by the current Federal government’s Indigenous Advancement Strategy. But the risks of the current Federal cutbacks with no analysis of the networks supporting social and economic outcomes are disturbing.

The views expressed in this interview are the views of the interviewee, not Ernst & Young. This interview provides general information, does not constitute advice and should not be relied on as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Liability limited by a scheme approved under Professional Standards Legislation.

Les Hems: A Short Biography

Les Hems has spent the past 20 years undertaking a range of major initiatives to develop the evidence base for third sector research, policy and practice. Les is a Director within the Climate Change and Sustainability Service of EY. He recently transferred from the Net Balance Research Institute which he founded. The Research Institute focused on strategically important emerging issues, theories and trends which have the potential to transform businesses, not-for-profit organisations, social enterprises and government conducted and the value they create.

Prior to Net Balance, Les was the Director of Research at the Centre for Social Impact, UNSW between December 2009 and January 2013. Les was responsible for CSI’s portfolio of academic and applied research, development, measurement, and knowledge exchange activities. Les led CSI’s recent research on social impact measurement, social finance, impact investing, creating shared value, capacity building, and workplace giving.

Les has been involved with several Social Enterprise projects including:

-    Developing and implementing an innovative integrated program that generates employment and housing outcomes using a sustainable social finance mechanism for the Northern Rivers Social Development Council.

-    Developing a Social Impact Measurement System to enable NGOs to accurately measure and improve their social impact. The Framework also enables NGOs to: provide people with a disability, their families and carers more choice and opportunities by being able to demonstrate their impact and; attract and form partnerships with potential investors including government by providing them with a methodology to demonstrate their social impact

-    Developed a feasibility study for social impact bonds for NSW Government which included the development of the payments-by-results mechanism for Uniting Care Burnside

-    Leading the research and publication of a Green Paper on Public Service Mutuals and subsequent Ministerial launch of the PSM White Paper for the Business Council of Co-operatives and Mutuals.