How NFP The Big Issue restored financial sustainability

The Big Issue chair Sonya Clancy shares the model for growth that turned the social enterprise around with the help of homeless, marginalised and disadvantaged people.

In 2004, when Sonya Clancy FAICD became chair of social enterprise The Big Issue, she faced three urgent priorities.

“One, we owed more than $250,000 to the previous chair’s business. Two, we couldn’t pay the staff salaries. And three, we were technically insolvent,” recalls Clancy.

The Big Issue is best known for its fortnightly magazine of the same name, sold on street corners by homeless and marginalised vendors. The magazine was founded in 1991 by British politician, John Bird, who had been homeless as a child, and Gordon Roddick, co-founder with the late Anita Roddick of The Body Shop franchise. The principle behind this model is that vendors can work their way out of poverty and recover their self-esteem through the dignity of having a job.

In Australia, it costs taxpayers at least $20,000 to keep someone on the streets, including the services they need or tie up, such as hospitals and police, says The Big Issue CEO Steven Persson. “When they become housed, they move from drawing on the dollars to contributing to society by paying their taxes.”

The first Big Issue magazine rolled off the press here in 1996 and Australians soon became familiar with buying from the unusual vendors. But what nearly brought this enterprise to its knees; and led it to recover beyond its single focus to include an additional five social enterprises? 

Steps to recovery

When Clancy became chair, she had to staunch the bleeding fast. She negotiated a grace period with debtors and appointed Persson as CEO to implement a restructure of the enterprise. Persson brought 30 years of experience in both for-profit and not-for-profit sectors to the role. “I knew how challenging not-for-profit business was, so went into for-profit,” he says.

“I often heard how different it is. In fact, it’s not.”

Clancy insisted everyone in the enterprise adhere to the same fiscal and reporting disciplines expected of her as a senior executive, then at the ANZ Bank. That means executives produce reports for the board, and board members read them before meetings. And Clancy doubled those board meetings from bimonthly to monthly and kept them tight. “Board members will say, ‘I’ve got this idea about homelessness, or about the magazine, or about our vendors,’” she says. “While valid ideas, they’re not appropriate in monthly board meetings where you need to focus on issues material to the organisation. We now have a full strategy day [annually], offsite, where the board can brainstorm topics.”

Persson, with his background in business as well as social work, appreciated Clancy’s approach. “I was fortunate enough to be involved with people who decided to treat the organisation as a business, not a charity,” he says. “We provide a unique opportunity for people to work, whatever their circumstances, for an hour or for seven days a week.”

Persson had much to do to turn the enterprise around. Occasional reports of vendors shouting at people who didn’t buy, or turning up to their jobs drunk and dishevelled, had tarnished some of the goodwill of people towards the enterprise. He instituted training and a code of conduct. Anyone can become a The Big Issue vendor, however all vendors must now sign the organisation’s code of conduct and complete an hour or two of orientation.

The magazine content also needed attention, says Clancy. She and Persson appointed a new editor in 2006 — Walkley Award-winning sports journalist Alan Attwood. During the next 10 years, Attwood built content quality in The Big Issue, attracting impressive regular contributors, such as comedian Fiona Scott-Norman and musician Ricky French.

In April 2016, Amy Hetherington, former deputy editor of New Idea, stepped into the role, broadening the editorial and updating the look. Clancy, these days chief people officer at Bank Australia, says, “It was about improving the content, improving the look and feel and the front covers so the vendors and the public feel it’s a more saleable magazine, and promotes advertising in the magazine.” 

More than magazines

Circulation of The Big Issue has increased from 7000 in 1996 to about 31,000 today. Since the magazine’s launch, more than 7000 vendors have sold more than 12 million magazines, generating $29m in income. Research conducted in 2016 by consultancy RMCG found The Big Issue magazine generates a social return of $5.50 for every $1 invested in the enterprise, due to a reduced demand for social, health and justice services among its vendors.

The Big Issue now has had a stable annual turnover of between $5.5m and $5.8m since 2014. It’s been an impressive turnaround, one that should warrant the attention of media business pages. Debts repaid, finances stable and, within three years of its near-death experience, growth. The Big Issue has started five new enterprises in the past 12 years, including the Women’s Subscription Enterprise (WSE) and The Big Issue Classroom, the Community Street Soccer Program (Street Soccer), The Big Idea innovation challenge and Homes for Homes affordable and social housing.

These are ambitious. It’s all about the primary purpose of The Big Issue to end homelessness, says Persson. “We give people the opportunity to work and now we’re working on the process of building more houses.”

Homes for Homes

Started in 2009, Homes for Homes is a project to fund social housing. Its goal is to contribute $1b to social housing by 2039. Owners register their home and when they sell, Homes for Homes gets 0.1 per cent of the sale price and the sellers claim a tax deduction.

“Homes for Homes is democratising the issue of affordable social housing,” says Persson. “Anyone fortunate enough to own a home, when they sell their property, makes a small contribution. Governments do what they can, but the issue is so large, we need to allow every Australian to take a small part.”

Already, the scheme has 500 homes registered and 5000 in the pipeline through partnerships with developers, amounting to an estimated value of more than $20m. In 2018, Homes for Homes distributed $500,000 — $300,000 in Victoria and $200,000 in the ACT — to housing organisations. In 2019, The Big Issue distributed a second round — $300,000 in the ACT and $140,000 in Victoria — to housing organisations.

Women at work

Most vendors are men, as selling magazines on the street is not always a safe or viable option for women, especially those caring for children or fleeing domestic violence. The Women’s Social Enterprise, which was set up in 2010, offers women jobs packing the magazine once a fortnight. There’s no pressure to sell — and, more importantly, it’s safe.

Initially, the WSE employed seven women. In the past couple of years, it has actively sought contracts to expand into packing services (including gift hampers), mailing list distributions (including print management), data entry and event support. Since then, more than 150 women have worked more than 1000 shifts in Melbourne, Sydney, Adelaide and Perth, packing 600,000 magazines for distribution to subscribers.

The big kick

Street Soccer, which offers weekly soccer training, helps kids boost their self-esteem and get fit. Trainers link the participants (10,000 since the program started in 2007) to other services when the opportunity arises. In 2009, an independent study on the program’s economic impact found participation in Street Soccer led to individual behaviour change and a reduction in high-risk activities. Participants have reported an improvement to their physical fitness and say they have felt encouraged to eat healthier food and develop a more positive outlook on life.

Talk the talk

In The Big Issue Classroom, homeless speakers talk about their lives with primary and secondary school children. Since 2009, 3500 speakers have addressed more than 100,000 children. And, says Persson, there is more to come: “We are now looking at how we can assist the youth in lower socioeconomic jurisdictions. That’s our next version of ourselves.”

The idea is still being researched, but early indications suggest that funding government and non-government schools in lower socioeconomic areas to enable smaller class sizes, better facilities and better-paid teachers both supports the students and helps the social environment.

“It helps the whole of Australia,” says Persson. “We have to be brave, intelligent and thorough in how we deliver those outcomes. We are data-driven, so we ask talented people who understand that world to look at the research.”

Such scholarship is possible, in part, because of The Big Issue’s remarkable brains trust — more than 40 advisers from the corporate and political elite. Persson says the secret to making the most of the goodwill of this advisory group is precision. “Someone once told me, ‘If you’re going to ask for help, ask for help with great clarity.’ What is it you need? Tell me, and I’ll give you a direct answer. Either I can or can’t.”

The growth model that turned The Big Issue around is one Clancy would like to share with the world.

“Steven is part of the International Network of Street Papers,” she says. “We had people come out from Finland some years ago. Soon, we will have people coming from Mexico. One future opportunity for us is to help other parts of the world with the techniques we’ve used.”