Eat My Lunch lunches being prepared. Eat My Lunch is a private business, but free volunteer labour has enabled it to grow. It says over 10,000 people have volunteered since it was founded.

When you pay your $12.95 for Eat My Lunch, it's nice to know a needy child will get a school lunch.

But you don't know how much of the price you paid for your luxury lunch goes to provide that lunch, and Eat My Lunch isn't saying.

Social Enterprise is on the rise in New Zealand, with businesses selling their wares to consumers with a promise that each purchase is doing good.

But New Zealand is increasingly looking out-of-step when it comes to the transparency required of social enterprise overseas.

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Social enterprise, and especially the "buy one, give one" social enterprise, or BOGO business model, where consumers pay over the odds for a product in the knowledge that a similar product will be gifted to a needy person, are business buzz-words of the moment.

SCREENSHOT Eat My Lunch images set the expectations of the quality of lunch the needy children get.

But there's no clear definition of how much good a business needs to do before the act of calling itself a social enterprise verges on being a marketing wheeze trading on the desire of consumers to be seen to be doing good.

For some in New Zealand, the concept of "trust us, we are a social enterprise" should no longer be tolerated.

WHAT SHOULD BE KNOWN

Professor of Ethics and Sustainability Leadership Marjo Lips-Wiersma from Auckland University of Technology believes any business calling itself a social enterprise should tell consumers some key information to justify their claim.

- What percentage of the income earned is spent on the actual beneficiaries. Like charities, social enterprise should have to publish accounts, reveal salaries (especially of the chief executive) and other expenditure. They needed to be available to ensure volunteer labour and donations did not turn into private profit, Lips-Wiersma said.

- If the social enterprise makes claims such as organic, fair trade, or made in New Zealand, they must prove it. "One of New Zealand's oldest social enterprises, Trade Aid, can be trusted because it is accredited by the World Fair Trade Association," she said.

- Their environmental sustainability. "The public would not expect a social enterprise to do good by doing harm somewhere else," she said.

- How they treat and pay both local and overseas workers.

SUPPLIED KidsCan founder and chief executive Julie Chapman says social enterprises must become as transparent as charities.

COST OF LUNCH

Eat My Lunch, the most famous of the Kiwi BOGO businesses, does not meet Lips-Wiersma's desired levels of transparent.

People buying one of Eat My Lunch's $12.95 to $18.95 lunches is not told how much of the price goes to providing the lunch given to the needy child under its BOGO model.

Only if a consumer is armed with that model can they decide whether they wouldn't be better just buying a more modestly-priced lunch, and gifting the savings to charity.

Julie Chapman from the KidsCan lunches into schools charity said: "At a minimum, people who support social enterprise should know how much of their purchase is going to the cause".

Without hard facts, consumers perceptions of the good being done are likely to be led by advertising, and statements on a social enterprise's web page.

CAMERON BURNELL/STUFF Lisa King founded Eat My Lunch.

Eat My Lunch, for example, says children get lunches that look and tastes like they're home made, and has appetising pictures which show the kids' lunch alongside the luxury lunches sold to consumers.

But BOGO social enterprises often have a product mismatch.

The paying consumer gets premium quality. The recipient of the freebie gets something less.

The average cost of a "basic" week's food for a 10-year-old is $52, according to the Department of Human Nutrition, University of Otago' food costs survey.

SCREENSHOT Brinks is a sponsor of Eat My Lunch.

That's less than the $64.75 cost of ordering a Classic Eat My Lunch lunch for five days.

There's a tab on Eat My Lunch's website which a consumer can use to pay $10 to buy two children's lunches to be delivered to needy children in schools.

But what do those lunches cost to make and deliver, or does the $10 include a profit margin for Eat My Lunch?

Lisa King did not respond to requests for comment, including the cost of the children's lunches.

Eat My Lunch says over 10,000 people have volunteered since it was founded.

It also gets donations of food from companies like chicken supplier Brinks.

KWAKU ALSTON PHOTOGRAHY Toms founder Blake Mycoskie for One Day with Shoes campaign on April 29th. For Zest style briefs.

WAKE-UP TO PROFIT

The world really woke up to social enterprise as hard-nosed business in 2014, when a private equity fund with its eyes firmly fixed on profit, bought a stake in Toms Shoes , an American social enterprise selling glasses, clothes, and shoes.

The sale valued Toms at US$625 million (NZ$925m).

The purchase sent a clear message. Social enterprise was business, which can make owners a lot of money.

New Zealand had a similar moment when Foodstuffs bought a 26 per cent stake in the Eat My Lunch in September last year.

Though the price was kept private, the actual price paid for the stake appeared to value the business at just over $10m, a source said, though Foodstuffs would not comment.

SUPPLIED Steven Moe, a Christchurch lawyer and author of a legal guide to social enterprises, says New Zealand has the opportunity to be a world leader in the field.

As a locally-owned company, Eat My Lunch, which sells high-priced lunches to consumers, while delivering lunches to needy children in schools, does not have to make its financial statements public, like charities do, and chooses not to.

United States academics Christopher Marquis and Andrew Park in their 2014 paper Inside the Buy-One Give-One Model noted how powerful the marketing cache of being a social enterprise was. Which was why it was mostly widely used in the luxury, often high-margin consumer products industry, particularly clothing.

Fawning articles in the media, employee retention, higher pricing, marketing power, customer loyalty were all benefits to businesses styling themselves as social enterprises, the pair found.

To compete with ordinary businesses, BOGO social enterprises had three options: charging a premium price for their product, finding ways to reduce costs, or accepting a lower profit margin.

FUTURE TRANSPARENCY

Social enterprise legal specialist Steven Moe believes it's time to create a transparent legal entity that is neither a charity, nor a full limited liability company.

SUPPLIED Ākina Foundation general manager Louise Aitken.

Britain decided order was needed, and created the social benefit corporation, which are not legally bound to to maximise shareholder value, but are legally bound to pursue social benefit, and to report transparently.

Italy, Canada, and many US states have similar entities. Australia's heading that way.

"Other countries have been doing this for the last decade," said Moe. "In New Zealand, we haven't had that."

Louise Aitken from the Ākina Foundation is working with the Government on charting a future for social enterprise, including defining what social enterprise is, in part to prevent "impact-washing" – profit-driven companies pretending to do good in a bid to win customers – and in part to grow the sector.

When you have no definition, she said, people made up their own definitions.

SUPPLIED Little Yellow Bird founder Samantha Jones picking cotton.

"One option is self-regulation, one could be certification, one could be a new legal entity, one could be to tweak the current structures," she said.

Many in the sector want rigour, but sensible rigour that doesn't load small social enterprises up with too much cost.

Some small social enterprises are proving that's possible.

IMPACT REPORTING

When Wellingtonians Miranda Hitchings and Jacinta Gulasekharam started Dignity, they adopted the BOGO model.

Their plan was to use the 'buy one, give one' approach by selling sanitary items to companies like ANZ for use by their staff.

The buyer knew that for each purchase sanitary pads and tampons would be made available in schools where "period poverty" was causing girls without access to them to stay home and miss out on education.

Gulasekharam said the pair liked the scaleability, and the discipline, brought by operating a business, not a charity, but from day one they were keen to demonstrate their impact, and be transparent.

"We provide our consumers with an impact report each term," she said.

"It was always the plan. It's about being transparent."

STUFF Canterbury chef Ben Atkinson's Fill Their Lunchbox Scheme is being wound down.

Another leader in transparency is Wellington's ethical clothing company Little Yellow Bird, which has gone down the certification route, getting itself designated a B Corp, which is an international social enterprise certification process.

It's now using blockchain to verify its supply chain.

"I do think there are a lot of people green washing, and making claims because they know its trendy," founder Samantha Jones said.

LIVING WAGE EMPLOYERS

Some believe that to be a social enterprise, and not to contribute to society's problems, social enterprises must not be minimum wage employers, and volunteer labour should not morph into private profit.

Gulasekharam is among them.

"Having a business model with a margin built in allows us to scale, and to employ staff on a good wage."

"The bottom wage is a living wage."

The Living Wage is currently $20.55. It has no legal status, like the lower minimum wage of $16.50.

This was brought into sharp focus this week when chef Ben Atkinson announced his Fill Their Lunchbox social business is being wound down.

SCREENSHOT Eat My Lunch claims 290,000 children go to school without lunch every day.

Fill Their Lunchbox delivered 54,000 lunches using a BOGT (buy one, give two) model to school children in need since Atkinson founded it in February 2015.

Atkinson could not make the business stack up.

"Some weeks I struggle to pay my rent, some weeks I don't eat very well," he said.

"I'm 32 now, I'm looking towards my future, I need to look at putting myself in a better situation to do these things."

"Not all social enterprises make it. They get to the point where either it falls over, or becomes a passion project," Jones said.

OVER-CLAIMING

It's not only the value of the good done that needs to be transparent.

There are some concern that BOGO models can lead to claims of social problems being exaggerated.

Eat My Lunch's website claims: "1 in 4 Kiwi kids (approximately 290,000) live in poverty and go to school without lunch every day".

The 290,000 is broadly correct, figures on child poverty from the University of Otago show, but the "and go to school without lunch every day" is not, Chapman from KidsCan said.

Food availability in poorer households was variable, with parents doing their best, but running out of food at points during the week, she said.

In lower-decile schools where KidsCan works, on average 22 per cent of children need lunches during a week, though individual children often don't need them every day.

Chapman's best estimate is that around 55,000 children need lunch help one or more times a week.

The Office of the Children's Commissioner follows child poverty statistics closely.

It says there are around 290,000 children in households with income poverty, but the number of those children in material hardship is 135,000.

Asked whether the Eat My Lunch claims that 290,000 children went to school without lunch every day, "I wouldn't be confident about that at all," commission spokesman Chris Nichol said.

Eat My Lunch also does not guarantee the truth of everything it claims on its website.

"We do not warrant the completeness or accuracy of any information on the website..."

DOES BOGO EVEN WORK?

There's been a lot of criticism of the BOGO model, including that it treats the symptom, not the cause.

Hannah Ritchie is a graduate in Environmental Geoscience from the University of Edinburgh said in 2016 that poverty was not caused by a lack of resources.

"Insufficient access to basic goods is a symptom of underlying issues rather than the cause of poverty itself."

"Simply donating goods or resources therefore does nothing to address the core underlying causes of poverty," Ritchie said.