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«Centre for Responsible Citizenship and Sustainability Working Paper Series MEASURING PERFORMANCE: A STORY OF ‘CLOSING THE GAP’ THROUGH INDIGENOUS ...»

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Centre for Responsible Citizenship and

Sustainability

Working Paper Series

MEASURING PERFORMANCE: A STORY OF

‘CLOSING THE GAP’ THROUGH INDIGENOUS

SOCIAL ENTERPRISE

Version 1

June/2015

Volume 1, Issue 1

ROCHELLE SPENCER

Centre for Responsible Citizenship and Sustainability

MARTIN BRUECKNER

Centre for Responsible Citizenship and Sustainability

GARETH WISE

Nuwul Environmental Services

BUNDAK MARIKA

Rirratjingu Aboriginal Corporation Centre for Responsible Citizenship and Sustainability Working Paper 2015-1

MEASURING PERFORMANCE: A STORY OF ‘CLOSING THE GAP’ THROUGH

INDIGENOUS SOCIAL ENTERPRISE

ROCHELLE SPENCER

Centre for Responsible Citizenship and Sustainability rochelle.spencer@murdoch.edu.au

MARTIN BRUECKNER

Centre for Responsible Citizenship and Sustainability m.brueckner@murdoch.edu.au

GARETH WISE

Nuwul Environmental Services castlesaburac@yahoo.com

BUNDAK MARIKA

Rirratjingu Aboriginal Corporation Against a backdrop of government efforts to mainstream Indigenous economic participation for achieving Indigenous equality in Australia, examples of Indigenous entrepreneurial activities in rural and remote regions represent more flexible and culturally appropriate approaches. The question remains however as to what the medium or long-term impact of Indigenous entrepreneurial activities on families and the wider community are and whether it is possible to measure them? This paper tells the story of the local entrepreneurial activities of a nonprofit social enterprise in the town Yirrkala in northeast Arnhem Land in the Northern Territory of Australia. It analyses these activities against an integrated framework for performance management of nonprofit organizations to demonstrate the social effectiveness of an Indigenous social enterprise as a pathway for community engendered income, employment and social capital. Wesuggest that this example represents a successful community-based pathway to increasing economic participation on local Indigenous terms at a time when national Indigenous unemployment is high.

Keywords: Indigenous social enterprise, social audit, performance measurement, Indigenous economic participation Introduction In the Howard era of Australian politics (1996-2007), refrains of increasing economic opportunity and freeing Indigenous people from the passive welfare trap prevailed under the rhetorical banner of ‘practical reconciliation’. The 2013 elected Abbott Coalition government (2013-present) has continued with this neoliberal paradigm1 to increase Indigenous economic participation. In his first annual visit to an Aboriginal community in September 2014, the Australian Prime Minister spent four days talking to Aboriginal leaders from the Gumatj and Rirratjingu clans in northeast Arnhem Land (the setting of this research) about the creation of jobs in this remote and isolated part of Australia where unemployment is high among the local Yolŋu. In contrast to this emphasis on self-determination though, we are seeing the genesis of a new phase in Indigenous affairs with the Creating Parity report on Indigenous employment and welfare prepared by Australian mining magnate Andrew Forrest and Here neoliberal is characterised as a set of political ideologies that favour privatisation, deregulation and cuts to social spending by the State with a greater emphasis on market driven forces (see Chomsky, 2002; Klein, 1999, 2007).

Closing the Gap Through Indigenous Social Enterprise 2 commissioned by the Australian government (Forrest 2014), which in pursuit of its program of full equality of opportunity recommends blanket welfare income management. Effectively autonomy will be withdrawn from Aboriginal communities, resulting in a deliberate shift from self-determination and economic empowerment. This report represents a profound incongruity between the announced objectives of ‘Closing the Gap’ (Council of Australian Governments 2008) between Indigenous and non-Indigenous Australians by way of government investment in Indigenous socio-economic advancement and actual approaches;

this stark contradiction is what defines the present landscape of Indigenous affairs in remote communities.

Unsurprisingly, in such a climate there are few examples of successful Indigenous-owned, community-based employment opportunities. Policies targeting mainstream employment for Indigenous Australians presume people will migrate from home communities because of the lack of employment opportunities in remote regions. Yet, not only do such policies align poorly with Indigenous cultural goals (Peterson 2005), they potentially disrupt local efforts to build economically sustainable and culturally relevant livelihoods (Brueckner and Spencer 2014). The disregard for cultural diversity in the pursuit of mainstream employment leaves little room for alternative approaches to Indigenous economic participation (Altman 2009;





Altman and Hinkson 2010). We argue in this paper that the growth of Indigenous entrepreneurial activities occurring outside the economic mainstream, especially in remote parts of Australia, offer culturally safe and appropriate pathways to economic participation.

This should sit alongside mainstream employment opportunities, not in place of them, for many reasons, including the lack of sufficient alternative pathways, and providing avenues to economic, political and cultural mainstream Australia, especially for young people. We apply an integrated framework for performance measurement of nonprofit organizations to an Indigenous social enterprise with a view to demonstrating the socio-economic efficacy and positive cultural impact of this local business.

Performance measurement in the nonprofit sector is more complex than in other sectors because nonprofit organizations “often pursue missions whose achievement is difficult to measure”, but nevertheless increasing scholarly attention is being given to this area (Lee and Nowell 2014: 2; also see Sawhill and Williamson 2001; Kanter and Summers 1994; Oster 1995; Forbes 1998; Drucker 2010; Bryson 2011). Currently, the nonprofit sector faces competitive pressure to secure government funding with a growing emphasis on accountability. Competition for funding becomes even more challenging in the Indigenous context in Australia with the recent rationalization of funding streams under the Indigenous Advancement Strategy, which effectively reduced what were 150 programmatic funding avenues to five. It is in this context that nonprofit organizations are under pressure to validate their performance in order to both secure more funding (Martikke 2008) and demonstrate their social and cultural impact in the wider community (Brueckner and Spencer 2014).

There is a wide diversity of approaches for measuring performance in the nonprofit sector where frameworks focus on particular aspects of performance, such as profit and economic performance, organizational effectiveness, services rendered, clients served and so on.

However, there is a range of different perspectives that can be distilled and synthesised from across the frameworks. Undertaking a meta-analysis of the literature on performance measurement of nonprofit organizations, Lee and Nowell (2014) have devised an integrated framework, which we apply in this paper to the entrepreneurial activities of Nuwul Environmental Services (hereafter Nuwul), an Indigenous social enterprise operating in Yirrkala in northeast Arnhem Land. The framework is used to begin to conceptualise and measure Nuwul’s social effectiveness within the local community, shedding light on the role of social entrepreneurship within a local, Indigenous-run business and to determine its Closing the Gap Through Indigenous Social Enterprise 3 influence on business success. Success is understood by Nuwul in terms of the creation of local employment and income as well as the generation of social capital, outcomes that are also sought by the Australian government under its Closing the Gap policy framework. The study is based on the premise that social entrepreneurship – community-orientated business models – provides an opportunity for Indigenous business success in both financial and social terms and offers a potential pathway for socio-economic improvements in Indigenous communities in Australia. Social entrepreneurial approaches to resolving problems in the world today are increasingly recognised within government, the nonprofit sector, the private sector, academia and the media (Stevens, Moray, and Bruneel 2014). Lui, Eng and Takeda (2015) observe that the explosion in the number of social enterprises is fuelled by the incapacity of the private and public sectors to adequately address social and environmental issues. There are many definitions of what a social enterprise constitutes. Austin, Stevenson, and Wei-Skillern (2006) argue that the current extant literature reveals an explicit focus on the creation of social value through entrepreneurial activities of selling goods and/or services (Nyssens 2006; Haugh 2007; Di Domenico, Haugh, and Tracey 2010).

Performance Measurement in the Nonprofit Sector Lampkin et al.’s (2006) report on nonprofit performance measurement in the US, refers to the 1990s as the “performance measurement era” where nonprofits were increasingly expected to measure their effectiveness. This occurred in an environment of “increasing competition from a proliferating number of agencies, all competing for scarce donor, foundation and government funding” (Kaplan 2001: 353). Lynch-Cerullo and Cooney (2011: 365) observe that performance measurement, with its focus on effectiveness, “has become deeply embedded in how policy makers and many funders and service providers think about programs designed to elicit changes in human beings”. Often funding bodies (public and private) require nonprofits to measure their performance as a condition of receiving funding in an effort to ensure the effectiveness of their activities (Carnochan et al. 2012: 1014-1015).

However, Forbes (1998) argues that implementing a performance measurement framework also allows nonprofits to strategically address goals relevant to the community being served and informs decisions potentially resulting in sustainability. When nonprofits came under increasing pressure to demonstrate their achievements to governments and funding bodies (Moxham 2009), accountability and transparency became central to nonprofit activities. What has become clear is that reporting against financial measures alone is not entirely representative of nonprofit activities that typically “pursue missions whose achievement is difficult to measure” (Lee and Nowell 2014: 2). Forbes (1998: 184) explains that nonprofits “frequently have goals that are amorphous and offer services that are intangible”.

Much of the literature supports the use of performance measurement as a critical tool for an organization’s development strategy (see for example Neely 1999; Boyne 2003). While accountability was the impetus for performance measurement initially and it remains a key purpose, Lynch-Cerullo and Cooney (2011: 370) argue that increasingly “program improvements, not external accountability” are being prioritised. There is no consensus in the nonprofit literature about what criteria should be used to measure performance. Moxham (2009) proposes the lack of consistency may well be appropriate for the diverse nonprofit sector, particularly because the measures need to be relevant to the social mission of the organization.

There are myriad approaches available for measuring performance span from logic modeling, standardization efforts, methods for calculating social value to broad performance measurement tools such as dashboards and balanced scorecards. Perhaps one of the most notable is the balanced scorecard developed by Kaplan and Norton (1992, 1996) for the private sector to measure four aspects: financial dimensions of an organization, the Closing the Gap Through Indigenous Social Enterprise 4 perspective of the customer, the internal process, and learning and growth within the organization. Kaplan has adapted and operationalised his balanced scorecard for the performance of nonprofit organizations. Notwithstanding the variety of performance measurement frameworks, a key theme running through the literature concerns the challenges associated with measuring the performance of nonprofits. This is largely due to the diversity of the nonprofit sector and according to Moxham (2010: 345) “the difficulties in identifying a causal relation between a particular activity and a particular outcome”.

One of the challenges for nonprofits is to sustain public confidence because they receive funding to deliver their services. The challenge is that funding is precarious and the intangible outcomes are difficult to measure (Poister 2003; Little 2005; Moxham and Boaden 2007;

Moxham 2009). To address this, nonprofits need to consider the social ecology of the context within which they work. The networks and stakeholders for a nonprofit provide the institutional legitimacy that contributes to the success of nonprofit organizations. Sanger (2008) (cited in Carnochan et al., 2012: 1016) observes that effective performance measurement adopts three core strategies: (a) nurturing local stakeholder involvement in the process, (b) creating goals that are specific and logically linked to metrics that measure progress toward those goals, and (c) continually fine-tuning measures and goals that are strategically linked to balancing the needs of federal and state funders with those of clients and local citizens.

Lee and Nowell’s (2014) integrated framework for performance management of nonprofit organizations provides a holistic framework for measuring the social effectiveness of nonprofits. Lee and Nowell (2014) synthesised the information from frameworks in the extant

literature and then distilled seven core perspectives on nonprofit performance measurement:



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