Key terms

A financial tool that enables private investors to fund social impact projects, with the potential to earn a return if the project achieves its targeted outcomes. If the project succeeds in delivering the desired social or environmental results, the government and/or other actors ‘purchase’ the outcome, which enables investors to be repaid with interest. If the project falls short of its goals, investors may lose some or all of their investment. Social impact bonds are a type of ‘payments for outcomes’.

Often used interchangeably with ‘impact investment’. Sometimes used to specifically denote impact investments made to address ‘social’ challenges rather than environmental ones.

The development and implementation of new ideas, strategies, or solutions that aim to address social, cultural, or environmental challenges more effectively than existing approaches. Social innovations often involve collaboration between various sectors, such as non-profits, businesses, government agencies, and communities, to create sustainable and scalable solutions that improve people's lives and promote positive change.

The provision and use of capital to generate social and financial returns. Often used interchangeably with ‘Social Finance’.

Social procurement is when governments, businesses, or other organisations use their buying power to achieve not only the best value for money, but also positive social, environmental, and community outcomes. In plain terms: - It’s about choosing suppliers and contractors not just because they can deliver a product or service at the right quality and price, but because they also create broader benefits. - These benefits might include providing jobs or training for people who are disadvantaged in the labour market (such as long-term unemployed, people with disability, or First Nations peoples), supporting local small businesses, using environmentally sustainable practices, or reinvesting profits into community programs. - For example, if a council needs catering for an event, they might hire a social enterprise café that employs young people who are at risk of homelessness. The catering still needs to meet price and quality standards, but the purchase also creates social value by helping those young people gain skills and employment. It’s essentially buying with impact, making purchasing decisions that deliver the required goods or services and contribute to wider positive change.

A framework for measuring and communicating the social, environmental, and economic value created by an organisation or project, relative to the resources invested.

The quantifiable impact of an organisation's activities on the well-being of individuals, communities, and society as a whole, often expressed in monetary terms or other standardised measures.

The individuals employed by an organisation to carry out its day-to-day operations and activities.

Any individual or group with an interest in or influence over an organisation, such as customers, employees, investors, suppliers, or communities.

The process of actively involving individuals, groups, or organisations that have an interest in or are affected by a project, initiative, or business. This involves communicating with stakeholders to understand their needs, concerns, and expectations, and working with them to address these issues.

The individuals, groups, or organisations that have an interest in or are affected by the activities and decisions of a social enterprise. These can include employees, customers, investors, suppliers, partners, local communities, and government agencies.

Bodies that establish and maintain certification schemes and benchmarks for social enterprise performance and impact. Standards may be related to specific areas of impact (e.g. animal welfare), specific products (e.g. Fair Trade), or whole of organisation (e.g. People and Planet First).

State and Territory-level government bodies that oversee regional social enterprise policies, development strategies, and regulations.

An outline of an organisation's long-term goals and the actions needed to achieve them, covering areas such as resources, milestones, and performance measures.

A high-level articulation of what an organisation intends to do, why, and how it will do it. It outlines the key steps, resources, and decisions needed to reach the desired goals, while also considering how to manage risks and potential challenges along the way.

An organisation that aims to increase the participation of Indigenous businesses in the supply chains of Australian companies and government agencies. It certifies Indigenous businesses and maintains a directory of Indigenous suppliers.

Refers to something that can be maintained or continued over the long term without depleting resources, harming the environment, or compromising the ability of future generations to meet their needs. It often relates to practices that balance environmental, social, and economic factors.

A strategic planning tool used to evaluate an organisation's strengths, weaknesses, opportunities, and threats.

The process of identifying and addressing the root causes of social or environmental problems by changing the fundamental structures, policies, and practices that contribute to these issues. This involves working collaboratively across different sectors and stakeholders to create long-lasting, sustainable improvements in communities and society as a whole.

In a systems context, where interconnected but autonomous actors are seeking ways to work with each other, governance can also be understood as the process of maintaining coherence and ensuring collective decisions are attuned to the wider, changing environment.

An approach to problem-solving that involves understanding and transforming the complex, interconnected systems that underlie social, economic, and environmental challenges. It goes beyond addressing individual issues in isolation and instead seeks to identify and change the root causes, structures, and patterns that perpetuate these problems across multiple domains and scales.

A charity registered with the ACNC and endorsed by the ATO to access tax concessions such as income tax exemption, GST concessions, and FBT rebates.

The Commons: Refers to a broad set of resources - physical, natural, social, and/or cultural - accessible to all members of a community or society. Commons are owned, sometimes collectively, sometimes individually. How they are used is determined collectively.

A hypothesis that articulates how an organisation's activities will contribute to its intended impact, by mapping the causal links between inputs, outputs, and short-term, medium-term, and long-term effects. A theory of change should also outline the assumptions that the hypothesis is based on. The term ‘theory of change’ is often used interchangeably with ‘impact model’.

A global effort to promote and support businesses that prioritise social and environmental objectives alongside financial sustainability. It encompasses a diverse range of actors who work together to create an enabling sector for social enterprises to thrive. The movement aims to transform traditional business models and economic systems to be more equitable, and sustainable, addressing pressing societal challenges. It advocates for greater recognition and resources for social enterprises as key drivers of positive social and environmental impact.

A framework that measures an organisation's performance and impact in three areas: social, environmental, and financial, recognising the interconnectedness of these dimensions in creating sustainable value.

An individual responsible for overseeing the management and administration of a charity or trust, ensuring that it operates effectively and ethically in pursuit of its mission.

Understorey exists to grow participation and capability in the Australian social enterprise sector. It is a digital commons: an online resource available to all, and shaped by all who choose to take part. Understorey is a place to learn and exchange about social enterprise. It’s also a place to navigate the sector. It does this to help social enterprises thrive and contribute to a better future. It is part of the Social Enterprise Development Initiative (SEDI) – an initiative of the Australian Government.

An organisation without a separate legal identity from the owner, who bears full responsibility and liability for the organisation's actions.

Funds that can be used for any purpose to further an organisation's objectives.

The process by which an organisation generates social, environmental, and economic benefits for its stakeholders, through its activities, products, or services.

A statement that explains the unique benefits or value a product or service offers to customers, and why it’s better than alternatives. It answers the question: "Why should a customer choose this over others?"

Expenses that may change from month to month depending on the organisation's activities, such as venue hire for workshops.

A concise, aspirational description of what an organisation aims to achieve in the long-term, reflecting its core values and purpose.

An individual who offers their time, skills, and services to an organisation without receiving financial compensation, often driven by a desire to support the organisation's mission or cause.

Social enterprises that provide employment and pathways to employment for people who experience structural barriers to mainstream workforce participation.